Help, share of freehold, problems with management company!

Legacy_user

Hello all,

I own share of a freehold and have some problems with the management company overseeing the property. There are 16 flats as part of the freehold.

In no particular order,

1. One of the flats above me purchased the loft and paid an excess for it. I was travelling so did not receive notification of this but have no problem with the loft being purchased for development. The money for this should have been equally distributed to all of the other 15 freehold owners but the management company put it into a "pot" and assumed everyone was okay with this. I am not happy, I did not sign to say this was okay, is there anything which can be done to make sure I get my part of the fee?

2. For the last 8 years I've paid the management company on time, without fail. They don't seem to be doing anything for their money. I have raised the concern that the communal doors (this is for entry for 2 flats), the locks do not work. Unless someone has double locked the doors using the keys , anyone from the outside can push the door open. My neighbour (who rents) didn't double lock the door and we woke up to a randomer sleeping in the communal area. In a letter dated 2013 the management company said they would change the locks, this has not occurred. What can be done here? The management company is saying this will be done in months but it is a serious risk and i don't want to pay out of my pocket on top of everything else

3. Somehow there is a hole in the plastering, above your head as you walk into the building (Please note these are expensive flats!). Not sure how it got there, it just appeared over night, maybe dampness. 4 months ago the management company said they were waiting for the dampness to clear that week and the week after someone would be in. We have had a very hot summer and plenty of time to do the work, this has not been completed yet and she is saying "she will look into it". This never happens.

4. Finally, I informed her that if she doesn't do any work that I won't be paying the service charge and my solicitors would be in contact. Her response was "Please feel free to refer this matter to your solicitor whom I am sure will fully explain the obligation of your lease and requirement to undertake payment of the service charges."
Is this still required when there is neglect on their behalf on doing any work?

Thank you

NeilCr

If you own part of the freehold then, presumably, there are residents who are directors of the management company. They (you) will be responsible for employing the Managing Agent, who, I assume are the people you are talking to about these things.

From my point of view, as a director, I would expect the income from the sale of the loft to go into the communal pot which will be used for work on the development and reduce any increase in service charges - not be paid to residents. We did this with a sale of a small piece of land.

On the assumption there are resident directors perhaps you could talk to them about the delay in the works. They may have a direct "in" to the Managing Agent.

I wouldn't recommend withholding service charges. It can lead to legal action against you. While they may (possibly with good reason) not be doing the work you mention they may be carrying out their other duties okay.

SmashedAvacado

The directors have a duty to act in the best interests of the shareholders. By holding the money leading to a lowering of charges it’s hard to see that they are not doing that.

System

Thanks, is there any legal standing for the work not being completed or anything which can be used against the management company?

It seems that management companies earn a good amount of money but don't seem to do much for it. We asked for previous letters to be emailed to us and they said that they could post them at £25 fee per letter!

NeilCr

https://naylorllp.co.uk/2016/07/12/withholding-payment-of-service-charges/

Again, what about resident directors. You are part of the management company who appoint the managing agents. If you are dissatisfied with their service you, as a company, can get rid. We have just changed agents, ourselves, because of poor service.

But, it is best to try and resolve it before yo get to that point.

InterestedParty2018

I assume you are a shareholder in the company that owns the freehold. Is that correct? If so, you (along with the remaining shareholders) vote to appoint directors to act on behalf of you all, for matters relating to the company. They are "accountable" to the shareholders for their actions.

You should be able to request minutes/details of the decision relating to the sale (of the loft space) and the premium from them for review.

Does the income generated from the freehold company's sale of assets not go to the company first? Would I be opening a can of worms if I suggested that there would be tax due on such income. (maybe under the threshold, I dont know.)

What does the M&A's of the company say about making decisions? Did they decide that instead of giving everyone their slice of the sale profits, to place the full amount into the buildings reserve kitty? Are they permitted to make such decisions without a vote?

Of course there are benefits both ways. Either you get a lump sum payment now OR, your future major works projects get subsidised or covered by the healthy reserve kitty.

You could argue that you would prefer the cash now, in case you sell, but I am confident a building with a healthy reserve is very attractive to buyers.

As for the poor management service - once again, unless the lease ties you in to a managing agent (yes, I have seen this on a new build where the agent had a 4 year minimum appointment!), the directors can change the managing agent, subject to the notice terms/requirements in the management contract.

If it was me, I would make it my mission to email every Monday morning, asking for an update. Each week referring to the previous emails and the acknowledgements/excuses given previous. After a couple of weeks I would escalate it to management, and pursue in the same manner again. If necessary, request their company complaints procedure and follow this through.

Do not withhold service charges. You have a water tight legal obligation to pay these. Performance of the m/agent and their delays are less rigid.

At your next freehold company's AGM or meeting of shareholders, ask for the appointment of the MA to be discussed. If you are in the minority, then you may have to accept the status quo. However you may establish that other flat owners have similar issues and welcome the directors to begin a contract review and possible re-tender.

eddddy

flamewipe wrote: »

1. One of the flats above me purchased the loft and paid an excess for it. I was travelling so did not receive notification of this but have no problem with the loft being purchased for development. The money for this should have been equally distributed to all of the other 15 freehold owners but the management company put it into a "pot" and assumed everyone was okay with this. I am not happy, I did not sign to say this was okay, is there anything which can be done to make sure I get my part of the fee?

It seems like a reasonable thing to do (assuming that there are 16 flats, 16 joint freeholders each with 1/16th share of the freehold, and every leaseholder pays 1/16th of maintenance charges).

Instead of you (and others) being paid a chunk of money, then you gradually paying it back into the service charge account - the money is just put straight into the service charge account.


Whether your specific consent/signature was required depends on the freehold company agreement. Often the directors are allowed to make decisions on everyone's behalf - but sometimes a vote is needed.