Big Problem with Freehold Company of House

Fraise

bouicca21 wrote: »

Is this really worth fighting with all the attendant risks of ruining relationships with the other lease holders/directors? So the painting gets postponed for a year or two. Is it going to damage the fabric? Is it worth accepting and maybe running a little campaign for getting the painting done next year by just pointing out from time to time that the shabby exterior is devaluing all your flats?

As for using a management company, if that £3,000 is to be divided between 4, it means you will be paying £750 for being relieved of hassle and having some expertise at your service. Why not agree but ask for it to be subject to review within a specified period of time? That way there will be evidence to judge performance and cost effectiveness.

The relationships are already soured unfortunately, mainly due too 2 of them who have done sweet fanny adams in way of maintenance for the last 5 years (and the fund bank account was blocked by previous leaseholder who I purchased from, and when it was just share of freehold and not a freehold company)

The 3rd one who craves to be chairman is just as inept, is only interested in having a title (what a joke) and is also deceptive and cunning and wants to order everyone about. He's even told me to stop using my parking space on the driveway (which belongs to me and is registered as mine with the LR) and to stop using it as 'my own personal space!" He can't see by his lease that I own that part of the drive, and so doesn't believe I own it. The parking space once belonged to another flat in the house and the person I bought this flat from bought the parking space off the other flat-owner in 2002. It's all registered through solicitors and the Land Registry with its number etc, and maybe it was never added to his own personal lease ? I have no idea, but I do know I own the space.

The painting is indeed necessary, as the rendering is falling off due to the leaking gutters, and there's dirt marks all along the walls. It should have been done about 4 years ago and the lease states it must be done no later than every 7 years, but this bunch are making up their own new rules since the company was formed. The 'chairman' seems to think that now we have a company, and he has forced himself upon us as chairman (the other 2 are weak and lackadaisical) he can dictate and lay down new laws, irrespective of what is in the lease.

Regarding the management company, we ARE the company. I am a director and shareholder as are the 3 others. What the new one wants to do is employ a management AGENT, and that is money down the drain. Some agents are worse than useless, and charge exorbitant admin fees, and I'm not prepared to pay for something we do not need. Besides, a management agency cannot force us to maintain the property - we would be employing THEM and they would be working for us - not ruling us!

If we were a large estate then yes an agency would be necessary, but we are just one house divided into 4 flats with NO communal areas except for a large driveway that only one other person uses to get to his garage. We have our own private gardens (front and back), and own front doors . The only part of the property that we are all responsible for is the roof (which is relatively new), the gutters, the drains, maintaining the driveway i.e. weeding and cutting back shrubs/bushes, and redecorating every 7 years. It is very easy to arrange a drain man, roofer and decorator and get 3 separate quotes and then make a joint decision on who to employ to carry out the job. Why should we pay £3000 a year for an AGENCY to phone a plumber etc on our behalf? It is total waste of money and would be far better spent on the maintenance costs.

Fraise

Prothet_of_Doom wrote: »

Whilst we are think out of the box, the other directors are worried about the cost of painting, so you could suggest a cheaper alternative.

i.e. You rent scafolding, and each put in so many man hours at the top of a ladder.
Or if one person is say an accountant, they might offer a painter, a free audit of his books.

Think about why they want to delay.

It's a sweet idea but one that wouldn't really work. Besides, we have a fund set up to pay for the works and at present there's around £4,500 in the account.

It isn't just the decorating they don't want to do, they don't want to pay out of the fund for essential repairs, and as we need 2 signatories (we are all signatories) I can't force them to sign if they refuse. These are not rational people.

I recently had an emergency leak on my flat roof as a result of neglect, and the so-call 'chairman' emailed me and told me to claim off my insurance. The fund is set up for emergency repairs, and I pay into it, so why should I lose my no-claims and call my insurers, who would refuse to pay out, anyway, as the flat roof has not been maintained? I think it's outrageous. As it was an emergency I called in a builder who I know is good and does not overcharge, and I told the others that I was getting him to do the work as it was urgent (water was coming through my ceiling!). He has yet to be paid, as the 'chairman' is ignoring the builder's invoice.

Usually, we should always get 3 separate quotes for non-urgent work, but when your ceiling is pouring water that is an emergency and cannot wait days for quotes to come in.

The joke is that the chairman (whose only lived here 6 months) wanted to pay to have trees cut down out of the fund, even though the trees are nor our liability (they are in one of the PRIVATE gardens) which we are all individually responsible for. Because I protested and said the tree felling could not come out of the fund as it's in a private garden, the chairman said the other 2 directors agreed it could and so I had been out-voted! But they are breaching the lease!

Yet when I said the gutters are leaking the chairman said we shall have to wait to get them cleared and repaired.

It is so wrong!

propertyman

As explained, it is a question of hats and the majority process in a company.

If the company votes to defer painting a director has to abide by that decision, having made the arguments against doing so. As a shareholder they can all into question that decision however in a small scheme of 4 there is no large rump of shareholders to do so i.e. a board of four, voting 3 to 4, with 100 shareholders, who if organised and so minded, might overturn that decision.

As a leaseholder the remedy would be to assert that the cost of the work will increase as result of deferral, e.g. the additional preparation, rot and even internal damage from water ingress, as well as the duration of the works interrupting your quiet enjoyment eg staring at scaffold for 12 weeks of the summer rather than 6 to 8,and that the SC you pay as a leaseholder is therefore higher than it ought to be.

As its November its rather a moot point. On a dry sunny day lean out the windows and patch prime any exposed wood the £15 will save you costs.

As to Managing Agents then it’s a question of the majority decision as above, as is the defence. Your argument is whether there is a need for an agent, and if the cost is recoverable under the lease ,if it is not then you seek a determination, as above that the cost is not recoverable ( or if it is the need and cost).

In both cases if you win, the company faces insolvency unless the articles or member agree to re finance it, and in most cases that would mean if your SC is lowered by say £1000, the other 3 would have to pay £250 each so the net benefit to you is £750.

Pause for thought.......

Or hiring a man for a day to patch prime exposed wood block wide, mastic the render to weather it etc.

Fraise

propertyman wrote: »

As explained, it is a question of hats and the majority process in a company.

If the company votes to defer painting a director has to abide by that decision, having made the arguments against doing so. As a shareholder they can all into question that decision however in a small scheme of 4 there is no large rump of shareholders to do so i.e. a board of four, voting 3 to 4, with 100 shareholders, who if organised and so minded, might overturn that decision.

As a leaseholder the remedy would be to assert that the cost of the work will increase as result of deferral, e.g. the additional preparation, rot and even internal damage from water ingress, as well as the duration of the works interrupting your quiet enjoyment eg staring at scaffold for 12 weeks of the summer rather than 6 to 8,and that the SC you pay as a leaseholder is therefore higher than it ought to be.

As its November its rather a moot point. On a dry sunny day lean out the windows and patch prime any exposed wood the £15 will save you costs.

As to Managing Agents then it’s a question of the majority decision as above, as is the defence. Your argument is whether there is a need for an agent, and if the cost is recoverable under the lease ,if it is not then you seek a determination, as above that the cost is not recoverable ( or if it is the need and cost).

In both cases if you win, the company faces insolvency unless the articles or member agree to re finance it, and in most cases that would mean if your SC is lowered by say £1000, the other 3 would have to pay £250 each so the net benefit to you is £750.

Pause for thought.......

Or hiring a man for a day to patch prime exposed wood block wide.

So can I get one thing clear please?

If 3 out of the of the 4 directors vote for something that is a) breaching the lease, or b) not even in the lease, are you saying we all have to go along with it as directors? Despite it possibly breaching the lease? And if one of the directors disagrees, then they can fight the proposal as a shareholder? Is that right?

So as a shareholder I can object to their delaying tactics as it is causing more damage to the property, and will cost me more to repair in the long run?

I can't lean out the window to patch up, I'm afraid. Ladders and skilled tradesmen are required. It's not just a small piece of rotting wood.

I'm slightly confused by what you mean about a managing agent...all I know is that we are a small 4-flat house liable just foor the gutters, roof and drains and I am perfectly capable of arranging workmen to make repairs. If we were a big estate it would be different, but we're just one house, so an agent is not just unnecessary it's also a waste of money that could go towards the redecoration and maintenance of the property. I would like to think a judge would agree with me on that, especially as I am the only one eager to have any work carried out, and am the only one adhering to the terms of the lease.

propertyman

The wrong thing is that not avoiding the trap of falling into engorging concerns with rationalisations and justifications J.

Deep Breath…………

1 Parking- to the chair I draw your attention to leasehold title xxx and the attached plan showing that the parking space is demised to me for my use and is therefore my private personal space. If you persist in raising this issue this is a breach of my quiet enjoyment and I shall start proceedings for harassment, that breach of QE, seek damages and an injunction against you and the company.

2 External decoration and Gutter repairs; *(See below)Under clause(s) Xxx of my lease, the company is required to repair and redecorate externally every 7 years and as a result of a failure to do so in the last 4 years, water has penetrated my home and is increasing the cost of the eventual repair work.

In the circumstances as leaseholder of house x I am giving notice that the company must respond within 14 days with proposals of how it will agree a common specification and seek tenders for the work in accordance with the leases and the timing of the raising of and billing of funds, subject to section 20 of the Landlord and Tenant Act 1985 ( the LTA), which governs the contracts, the leases, between the company and individual leaseholders.

If you fail to do so then I will then proceed with court proceedings under http://www.justice.gov.uk/courts/procedure-rules/civil/protocol/prot_hou and then consider if as a result of the failure to repair that, the management of the building be stripped from the commonly and invested in an independent manager/receiver appointed by a Tribunal.

I will also seek a determination to limit the amount of costs that you can recover as a result of that failure, which could lead the company into insolvency.( see Continental vs White)



3 Insurance Claim As the company is responsible for the upkeep of the roof and insurance of the building, any consequential damage is covered by the building s policy (as might be what was damaged if caused by an inured peril eg high winds) As a director of the company I am authorised and empowered to instruct a contractor and to make a claim on the insurance policy. (if you don’t have the details) Under section 30A LTA 1985 and sch2 LTA 1987 I therefore require that you provide a summary of the cover and name of the insurer within 21 days and note that failure to do so is a criminal offence and I will if you fail to provide it, seek a prosecution in the magistrates court against you and the company.

I am out of time so the links of the insurance rights section 20 etc and tribunal manager appointment(not a managing agent) are here.


The biggest issue that you are going to have to accept is that your approach of “lets each get quotes and agree and cough up” is fundamentally wrong”

While a company can decide to do what it wants and when it wants as the articles allow, if the costs are recovered as service charges, then they can only be budgeted and collected as the lease allows, not ad hoc ( even then if collected by the company they can still be regarded as service charges and fall under the rules
set out in the leases and subject to the statutory controls and obligations - see Morshead Mansions).


The company should decide a common specification of the works and serve notice of intention on the four of you as leaseholders (back to hats) and then in due course seek competitive tenders from a list of contractors. They can be sent sealed and opened at a mutually agreed time.


The idea of a fund for this and that is also wrong monies held are only held in accordance with the lease and used in that manner, so with major works pending how and when you raise the money is crucial to make sure that they are enforceable invoices.

Finally the main thing to understand is as explained that the lease is the contract between the company and flat owners and the truces therein and the statutory controls on that apply even if your mutually owned company owns the freehold.

ValHaller

Fraise wrote: »

So can I get one thing clear please?

If 3 out of the of the 4 directors vote for something that is a) breaching the lease, or b) not even in the lease, are you saying we all have to go along with it as directors? Despite it possibly breaching the lease? And if one of the directors disagrees, then they can fight the proposal as a shareholder? Is that right?

No. If you cannot get the directors to see sense form your seat on the board, then as a shareholder, your only power resides in your power to motivate a majority of shareholders to support you in sacking the board or certain directors. And what you have told us makes it very clear that this is not going to happen.

Your power is as a LEASEHOLDER and when you exercise that power you need to be very clear that you are not wearing your director hat or your shareholder hat (to an extent you are now at war wit yourself wearing other hats).

Please take a few days to really understand how leasehold works (not that I understand it at all well) and looking at how you can enforce your rights as a leaseholder.

propertyman

Yes but you need to re read my post as you are trying to force it into your existing understanding- its more complicated and subtle than you want it to be. I have addressed the remedies of the shareholder, few in this case as either way you are only I of 4, and those as a leaseholder. Your remedy is to explain that their delay could reduce the amount you pay in service charges, “bankrupting” the company.

I am sorry that a stitch in time wont help here.

As to Agent you are forcing it again into your terms of reference. I have not referred to a managing agent but as posted removing the power to manage the premises from the company and handing it to a manager/receiver, who will act as the company should. This is not a question of size or cost but an answer to the question, how do I get things done.

Given that an a court order could well cost £2ooo to £5000 that’s cheaper than a years worth of fees for a Tribunal appointed manger.

Fraise

propertyman wrote: »

The wrong thing is that not avoiding the trap of falling into engorging concerns with rationalisations and justifications J.

Deep Breath…………

1 Parking- to the chair I draw your attention to leasehold title xxx and the attached plan showing that the parking space is demised to me for my use and is therefore my private personal space. If you persist in raising this issue this is a breach of my quiet enjoyment and I shall start proceedings for harassment, that breach of QE, seek damages and an injunction against you and the company.

2 External decoration and Gutter repairs; *(See below)Under clause(s) Xxx of my lease, the company is required to repair and redecorate externally every 7 years and as a result of a failure to do so in the last 4 years, water has penetrated my home and is increasing the cost of the eventual repair work.

In the circumstances as leaseholder of house x I am giving notice that the company must respond within 14 days with proposals of how it will agree a common specification and seek tenders for the work in accordance with the leases and the timing of the raising of and billing of funds, subject to section 20 of the Landlord and Tenant Act 1985 ( the LTA), which governs the contracts, the leases, between the company and individual leaseholders.

If you fail to do so then I will then proceed with court proceedings under http://www.justice.gov.uk/courts/procedure-rules/civil/protocol/prot_hou and then consider if as a result of the failure to repair that, the management of the building be stripped from the commonly and invested in an independent manager/receiver appointed by a Tribunal.

I will also seek a determination to limit the amount of costs that you can recover as a result of that failure, which could lead the company into insolvency.( see Continental vs White)



3 Insurance Claim As the company is responsible for the upkeep of the roof and insurance of the building, any consequential damage is covered by the building s policy (as might be what was damaged if caused by an inured peril eg high winds) As a director of the company I am authorised and empowered to instruct a contractor and to make a claim on the insurance policy. (if you don’t have the details) Under section 30A LTA 1985 and sch2 LTA 1987 I therefore require that you provide a summary of the cover and name of the insurer within 21 days and note that failure to do so is a criminal offence and I will if you fail to provide it, seek a prosecution in the magistrates court against you and the company.

I am out of time so the links of the insurance rights section 20 etc and tribunal manager appointment(not a managing agent) are here.


The biggest issue that you are going to have to accept is that your approach of “lets each get quotes and agree and cough up” is fundamentally wrong”

While a company can decide to do what it wants and when it wants as the articles allow, if the costs are recovered as service charges, then they can only be budgeted and collected as the lease allows, not ad hoc ( even then if collected by the company they can still be regarded as service charges and fall under the rules
set out in the leases and subject to the statutory controls and obligations - see Morshead Mansions).


The company should decide a common specification of the works and serve notice of intention on the four of you as leaseholders (back to hats) and then in due course seek competitive tenders from a list of contractors. They can be sent sealed and opened at a mutually agreed time.


The idea of a fund for this and that is also wrong monies held are only held in accordance with the lease and used in that manner, so with major works pending how and when you raise the money is crucial to make sure that they are enforceable invoices.

Finally the main thing to understand is as explained that the lease is the contract between the company and flat owners and the truces therein and the statutory controls on that apply even if your mutually owned company owns the freehold.

Thank you again Propertyman, I am grasping the situation now after reading what you've posted, and I actually feel this could well be resolved. I may be wrong, but perhaps my position is not as bad as I thought, I just didn't have the knowledge how to go about resolving this awful situation

ValHaller wrote: »

No. If you cannot get the directors to see sense form your seat on the board, then as a shareholder, your only power resides in your power to motivate a majority of shareholders to support you in sacking the board or certain directors. And what you have told us makes it very clear that this is not going to happen.

Your power is as a LEASEHOLDER and when you exercise that power you need to be very clear that you are not wearing your director hat or your shareholder hat (to an extent you are now at war wit yourself wearing other hats).

Please take a few days to really understand how leasehold works (not that I understand it at all well) and looking at how you can enforce your rights as a leaseholder.

Thank you too I think my leaseholder hat is the one to wear here!

propertyman wrote: »

Yes but you need to re read my post as you are trying to force it into your existing understanding- its more complicated and subtle than you want it to be. I have addressed the remedies of the shareholder, few in this case as either way you are only I of 4, and those as a leaseholder. Your remedy is to explain that their delay could reduce the amount you pay in service charges, “bankrupting” the company.

I am sorry that a stitch in time wont help here.

As to Agent you are forcing it again into your terms of reference. I have not referred to a managing agent but as posted removing the power to manage the premises from the company and handing it to a manager/receiver, who will act as the company should. This is not a question of size or cost but an answer to the question, how do I get things done.

Given that an a court order could well cost £2ooo to £5000 that’s cheaper than a years worth of fees for a Tribunal appointed manger.

So would the prospect of a receiver managing the company make them pull their socks up? Provided they understood the implications (which I don't understand myself!). Does it mean paying lots of money to be controlled by the receiver?

ValHaller

Fraise wrote: »

Thank you again Propertyman, I am grasping the situation now after reading what you've posted, and I actually feel this could well be resolved. I may be wrong, but perhaps my position is not as bad as I thought, I just didn't have the knowledge how to go about resolving this awful situation

I think my leaseholder hat is the one to wear here!

So would the prospect of a receiver managing the company make them pull their socks up? Provided they understood the implications (which I don't understand myself!). Does it mean paying lots of money to be controlled by the receiver?

Now you are beginning to understand how you can tackle this, perhaps you can begin to see that as a leaseholder you can enforce things at expense to all the leaseholders.

Once you get your head around the arguments and really understand how it works and how it could play out, you stand a fair chance of explaining it to the Wet Willies, in such a way that they can see that letting the chairman have it all his own way might not be in their interests.

propertyman

You will now understand that the company can do what it lawfully wants to do, but if that involves not doing something that they are contracted to do in there contracts- the leases- the person with the contract-the leaseholder-might sue or take it out of their hands(receiver/manager) if the situation is bad enough

The key issue here is that having read the section 20 guides on the LEASE site you contribute positively.

It might play out like this…..

Ok we agree that we need to do external works ( oh, and check if render is yours to repair in which case just get on with it) so what I suggest is

1 What works to include- if we each get our quotes and builders advice, we’ll end up with a lot of prices and more argument, and one builder cheap on one thing and another cheaper on another, and conflicting advice.

2 We can’t just bill as and when as our leases require us to bill at a certain time in a certain way for this work as service charges o if one of doesn’t pay we won’t be able to sue them. The rest of us will have to pay the builders bill until we can sort that out.

3 Lets employ a local chartered building surveyor to inspect and give us a report and options for repairs, together with a budget so we know what to expect from builders

4 Lets Draw up a schedule of works and agree what we get prices on ( via the notice of intention process) and that can include options if price is the deciding factor. It will include schedules of rates so if extra work is needed we know what the builder will charge and not be stuck with what he makes up on the spot, and agree when we pay him. If it’s complicated we can pay the CBS to do that as well.

5 Lets then agree who to get prices from send them the schedule and ask them to price, and send them in to us in sealed envelopes which we all open together.

6 We then serve the notice of estimates setting out all the costs and options and then discuss them and come to an agreement.

If we think this is too much the CBS can do the specification tendering and oversee the work, which a managing agent if we had one would do by employing the CBS for the project.

7 Having Read our lease the cost of this work has to be included in the estimate for the year and therefore we’ll need to have this done by March so that the 25th Mach bill includes what we need to pay, and this stays in the company service charge trust account until we, the company, are happy to pay as agreed with the builder.