Share Of Freehold - advice on how money is spent needed

TallyCooper

Hi,

I recently bought a flat and own a share of the freehold of the building along with the three other flats. My flat and one another have our own private gardens, the other flats are upstairs and don't have access to them.

Each flat pays money in to the joint account every month and my understanding was that this money was to pay for communal areas (e.g. electricity/intercom repairs) and to build a pot of savings for bigger expenses, such as problems with the roof.

My downstairs neighbour, who has her own garden, has been in charge of the joint account for 27+ years but she's gone away for six months and left me in charge of the bank account for that time.

Looking at the checkbook she's left me with it seems she's paid a tree surgeon three times this year, each time around £450. No work has been done in my garden so this must have all been in hers. Is it correct that she's using joint money for her garden maintenance?

We had a situation last month when she fell out with one of the flats upstairs as they felt the building insurance should be paid out of the joint money already accrued but she refused saying that if we spent the existing money on that then we would never build an acceptable pot to cover future structural problems.

The money that she's spent on the trees in her garden this year is more than the building insurance and accounts for 60% of the money that all of the flats will have paid in to the joint account this year.

Before I raise this with her it would be great to have some advice of where responsibility for the garden costs lie and what joint money should be spent on. I guess that this could be an old gentleman's type agreement but if anyone else has a share of freehold it would be good to hear how your arrangements work - before I risk upsetting anyone!

G_M

Read the lease. What does it say? The print is too small for me to read from here!

my understanding was that this money was to pay for communal areas (e.g. electricity/intercom repairs) and to build a pot of savings for bigger expenses, such as problems with the roof.

Your understanding is only relevant if it matches what the lease says.

skintpaul

afaik, any bills over £350 need to have all leaseholders pay in?

Looks like 'tree lady' taking advantage- buildings insurance should be first priority, from any joint fund..

Also need to get joint signatories on the bank account, asap!

KiKi

TallyCooper wrote: »

Hi,

I recently bought a flat and own a share of the freehold of the building along with the three other flats. My flat and one another have our own private gardens, the other flats are upstairs and don't have access to them.

Each flat pays money in to the joint account every month and my understanding was that this money was to pay for communal areas (e.g. electricity/intercom repairs) and to build a pot of savings for bigger expenses, such as problems with the roof.

This is usually the case, yes. But it depends what the lease says. Mine is unusual - the walls and windows my side are mine, same for my neighbour - but the roof is joint. However, we're not in traditional flats, and it's more like a semi-detached property, which is why. Read the lease and see what should be paid for, it's the only way you'll know.

Looking at the checkbook she's left me with it seems she's paid a tree surgeon three times this year, each time around £450. No work has been done in my garden so this must have all been in hers. Is it correct that she's using joint money for her garden maintenance?

Possibly. Is there a tree in the front garden or outside the house that could be in an area considered communal? Again, the lease should explain what's paid for communally, and your individual leases should have a plan of the communal areas and which bits are yours. It's possible that anything 'underground' like tree roots *are* accounted for as a communal area - there may be a lease provision that says any tree roots which may affect the structure of the house / foundations are considered a joint cost.

We had a situation last month when she fell out with one of the flats upstairs as they felt the building insurance should be paid out of the joint money already accrued but she refused saying that if we spent the existing money on that then we would never build an acceptable pot to cover future structural problems.

You should agree between you whether the money you're putting in is paying for buildings insurance (priority), fire alarm testing, any other tests required, and whether it ALSO covers a 'sink fund' which is a long term fund to cover major works. You should ALL have an agreement and understanding of this - it sounds like this woman has managed and controlled it herself and no-one knows what it's really used for.

Before I raise this with her it would be great to have some advice of where responsibility for the garden costs lie and what joint money should be spent on. I guess that this could be an old gentleman's type agreement but if anyone else has a share of freehold it would be good to hear how your arrangements work - before I risk upsetting anyone!

Tree roots *are* a possibility. How about calling the company that did it and find out what the work was for?

As a current and previous freeholder, this was my set up:

1) One of three flats, equal SOF. Communal areas were the hallway and front door (although annoyingly I didn't share the hallway or front door, but still had to pay for them!), front garden, all outside walls, windows and the roof.

I managed ALL accounts because no-one else was interested. We paid in nothing each month, no joint account. I got quotes for all work required, got agreement from the other two, paid for it upfront then asked them to pay me OR got them to pay me first. This included buildings insurance, fire alarm testing, fire alarm fixing, joint elec for communal hallway then works on the roof, as well as getting the property painted. We had a great relationship to be able to do this.


2) One of two houses, equal SOF. Only communal areas is the roof - I have to sort my side, he has to sort his, but we have to share the payment.

No joint account (although I put money aside each month into my own personal sink fund!). The only shared cost is buildings insurance which I sort and pay for and my neighbour pays me his half, but I make sure I get it from him first as he's a bit flaky. No roof works yet!



Sounds like you need to sort out what this fund is for, and sort out a joint signatory on the account. Pronto. But don't rush in with accusations - there may be a provision for trees. If there isn't, ask nicely and say that you're sure it's been a mistake - perhaps she could clarify. For the sake of neighbourly relationship, give her an 'out' - but if she was wrong then she should pay the money back in.

HTH
KiKi

moneyistooshorttomention

Agreed - that the first question you need to ask is to establish exactly which trees it is that are being quoted for. It does sound rather like its her personal trees - but its wise to check first - just in case.

She definitely should be doing full accountability - full/accurate accounts regularly given to all concerned, a joint signatory for cheques, etc and not just doing what she personally thinks she will.

I would certainly object to paying a share towards someone else's personal expenses - so this does need clarifying.

I would also be asking for details of the bank account these monies are kept in - ie it had better not be her own personal one (just in case....).

eddddy

I'd disagree with some of the posts here.

This isn't about challenging a service charge levied by a freeholder. In fact, its much more complicated.

This is about a group of 4 people agreeing to put money into a pot for a particular purpose. And you feel that the money hasn't been spent according to what was agreed.

The content of the lease may or may not be relevant, depending on what was agreed. e.g. If the agreement was that the money was to "fulfil the freeholder's obligations under the terms of the leases" - then you need to read the leases. If the agreement was something else, then the content of the lease is irrelevant.

The real problem seems to be that you didn't have a process in place for approving spending. So one person spent the money without reference to the others.

So the most important thing to do is to decide the process for agreeing future spending.

If you (and the other 2) feel that the person who spent the money has breached the terms of the agreement you have, you can consider claiming that money back from them.

G_M

The answer really (apart from reading the leases!) is for all 4 freeholders to have a meeting.

You should certainly do this once a year at least, and examne the annual accounts, discuss maintenance etc.

I agree it would be sensible for the money to be held in a joint account requiring 2 signatures.

Formalise the whole arrangement by

* electing a chairperson to manage meeings
* a treasurer to manage the money (and ask for the 2nd signature when needed)
* a secretary to keep proper minutes (records of discussions/decisions)

Of course this all depends on the willingness of the other freeholders to get involved.........

I'm sure there are guides (google?) advising how to set up/run such arrangements.

theoretica

Has she had work done on trees in her garden? 3 x £450 would be a lot of work and you should have noticed it. On the other hand could a business with tree surgeon in the name have been doing other handyman work?