Leasehold/Freehold Legal complicated situation

Somerset

I'm posting this for a friend. He's got decisions to take, but it's a question of the best route.

He owns a two floor top floor flat in a building. The flat has the residue of a 999 year lease. The building has three flats ( originally was 4 ). Each of the other 2 flats has a 1/4 share of the company that owns the freehold. Friend has 2/4 ( since he bought 2 flats and amalgamated them ). Building is managed by an external agent ( who is pretty good ). Friend is a director of the freehold company, Mr A iwho owns one flat s the other director.

The building needs major repairs. The most urgent is a new replacement roof. Repairs have previously been done but the roof is knackered. Two issues, first because friend has top floor flat unless the roof is done his flat becomes uninhabitable. Second, the roof is unsafe ie flying slates. Solution - replace the roof. Problem - Mr A who is also a director doesn't have the money ( 1/4 of 15Kish ) and is refusing to agree. Friend has offered to 'lend' the freehold company Mr A's share to enable the work to be done but Mr A is basically trying to put everything back till it suits him money-wise.

Thoughts :
Lease ( as usual ) specifies freeholder must ...... normal external suspects including roof. No question it has to be done.
Health & Safety - Directors culpable.
No formal consultation but has been verbally agreed needs to be done for yonks
Managing agent says there's a clause saying directors can't sue re service charge dispute.

If friend 'forces' this through and fronts Mr A's share - how can he best guarantee he gets his money back ? Company will need to sue Mr A - if Mr A as a director can't counter sue re lack of service charge consultation ( and it's an if ) then Mr A gets a CCJ which isn't cash back. Plus this situation will be replicated next year re the other externals the building needs - Mr A will still be broke.

Any thoughts on other plans or sneaky thinking ? What friend would like is to get the whole freehold so he could just get all the works done and issue s/c demands ( the other woman is fine ) and sue Mr A. But everything is being done by 'committee' and softly softly - it's not working.

EdInvestor

The answer lies in the lease.The freeholder (ie the ltd co) needs to enforce the covenants in the lease (ie keep the building in good repair ) and the leaseholders have to pay their share of the cost.

If they won't pay then the bottom line remedy is to serve notice of forfeiture.This albeit draconion measure almost always does the trick.

More details here:

https://www.lease-advice.org.uk

Somerset

EdInvestor wrote: »

If they won't pay then the bottom line remedy is to serve notice of forfeiture.This albeit draconion measure almost always does the trick.

More details here:

www.lease-advice.org.uk

I'd not heard of forfeiture proceedings but I've read the link, thank you.

Have you any idea how long the LVT take re permission for urgent repairs ? That was also in the link and seemed the right path in friend's case.

Somerset

Urgent repairs require a S20ZA form to apply for a dispensation to dispense with the normal consultation procedure. Timescale 6 - 10 weeks for a decision. But you can start & get on with the works in the 'expectation' that the dispensation will be granted. If it's not - your stuffed.

Thought this might help someone else.

silvercar

If you really wanted to lend friend the money, friend could agree a charge on his property so that the money would be repaid when the property sold.

Somerset

No silvercar, my friend won't lend Mr A the money. He will lend the money to the Company. Therefore if Mr A refuses to pay his service charge he can either be sued in small claims court, or the Company can go for forfeiture as EdInvestor suggested. Lending this guy money ( even with a charge ) is not the right way to do it. They aren't friends. And this same situation will come up next year because the rest of the externals need to be done plus fire alarm upgrade. If it is all done through the Company, legitimately, then the Company can go after Mr A for unpaid service charges and it 'might' stop Mr A thinking he can pull the same trick again and again.

Right now friend just wants the roof replaced so he can live in his own flat. He was simply trying to figure out the best way of legally doing all this to a) have the best chance of getting his money back and b) stop the same thing happening next year when the rest needs to be done.

Somerset

silvercar

It's not even that straighforward. Mr A doesn't want to be lent the money. What he wants is for the roof replacement to be put off until 2008 or later. He wants a 'structured programme' which is debated and discussed. Ok in theory but the problem is - the roof is seriously leaking ( two buckets and plasterboard off ) plus the slates are coming off and landing wherever. So far only a cat has lost part of an ear but they could potentially kill someone. So there's no time for a 'structured programme' it needs to be done now.

Everyone involved, including the managing agent, thinks Mr A is blowing smoke because he dosn't have the money - so he wants to put it off. But he doesn't want to borrow the money either ( from my friend or anyone else ). He just wants to put everything off till he's ready. That's not acceptable.

silvercar

In the 80s I had a friend in a similar position to Mr A's; sorry if I 'm seeing things from the opposite viewpoint though I understand your predicament.

Friend lived in a large block of flats, some reason major work needed doing and he was told (separate managing agents) that he would need to find a few thousand. He didn't have the money and the managing agents threatened foreclosing his lease. What actually happened was that the freeholder or managing agent contacted his mortgage lender. The mortgage lender, in order to protect their interest in the property, increased the friend's mortgage to pay for the work. I remember he was unhappy as he didn't want a larger mortgage (and in fact the lender would not have lent him more money in normal circumstances), but he didn't have a choice in the matter.

Whether that is an option for you I don't know.