Shared freehold sinking fund.

Famo

Just a query. I have lived in my flat since 2015. I have been paying £100 per month into a sinking fund with 4 other's as part of a shared freehold. After 4 years I asked the individual who manages the account to provide me with monthly statements for the last 4 years. They were surprised and reluctantly provided the statements. Coincidentally I went through them and noticed I had overpayed by £300 over the 4 years and yet was not notified. As I side issue I was told to pay monthly which I had done religiously upon the purchase of the flat where as others were not up to date and payed quarterly in some cases. I have requested the last year's statements and it has not gone down well. My question in essence is do I have a right to view the statements ? Any who if anyone audits these accounts. My thoughts were that if I were a leasehold flat owner I would receive a yearly breakdown of the years account even if we're somewhat creatively edited as I'm sure some of these leasehold management companies know how to shuffle the figures ! At least there would be a level of accountability...Where do I stand ? (Thanks in advance)

AdrianC

You are a leasehold flat owner... (You just happen to also own a 20% share in the freehold, as well as your leasehold flat)

Yes, the person who manages the property on the behalf of the freeholders certainly should be providing full accounts for the service charge and sinking fund. That apart, he should be providing figures to you as a freeholder, too...

Famo

Thanks AdrianC I'm bemused why the request has met with such affront :-/

AskAsk

how is the freehold managed?  between the 5 owners?

eddddy

Is this a formal sinking fund that is described in the lease, with contributions collected from you as leaseholders? If so, you will have lots of statutory protection and statutory rights.

But if this was just an agreement between the 5 joint freeholders to collect money and put it in a sinking fund, you have no statutory protection. 

But hopefully, if it was an agreement between the 5 joint freeholders, the terms of the agreement were clearly documented - who has to pay what, when they have to pay, what the money will be spent on, who will make the decisions about spending the money. etc.   So you need to refer to that agreement, to see if other parties are breaching it.


Was there any particular reason why you all wanted to have a sinking fund? In your situation, it might be easier to discontinue the sinking fund and give everyone back what they contributed.

NameUnavailable

Is this £100 a month in addition to a maintenance charge? Presumably there is some anticipated upcoming work that the sinking fund is for?

Who manages the building - is it the same individual? Surely they should be providing annual accounts and statements as a matter of course, if I were responsible for such a matter I would want to be certain that everyone was informed and aware of the financial position!

As per AdrianC's response above you will have a lease - that should set out the basic terms of the arrangements for building maintenance, so you really need to read your lease as well.

Famo

The freehold comprises a Ltd company of which among the other 4 owners 2 are directors and 1 secretary.
I will need to look at the details in my lease. I do know that upon purchase the original agreed amount to contribute to the sinking fund was £60 pounds but all the owners agreed it should be  £100. I do know that we've agreed works to other flats in that time and made a one off payment in addition to the standard contribution of £1200 to bolster the fund and repair the roof. Ironically one of the directors flooded my living room after having work done to their boiler over a year ago and had been very unhelpful in repairing the damage.
It looks like I need a good read of the lease to determine if I have statutory protection.
The "Sinking" fund has been in place since I purchased as the other owners have all been here in excess of 20 years or so.
Thanks for all your feedback.

eddddy

TBH, collecting and spending other people'd money is always going to be contentious. (This is often a big problem with informal "share of freehold" arrangements.)

It either needs to be done 100% properly - with service charge demands, sinking fund payment demands, accounts showing income and expenditure, clear processes for agreeing how money is spent - or not at all.

If it's not done at all, repairs and maintenance can be done and paid for "as required". For example, when the roof needs repairing, somebody gets a quote, and then everyone pays a share of the quote.

AdrianC

Famo said:

The freehold comprises a Ltd company of which among the other 4 owners 2 are directors and 1 secretary.

OK - the freeholder is a limited company.
The limited company is run by three people - two directors and the cosec. (Is the cosec also a third director?)
Shares in the limited company are owned by five people.

The management is administered on behalf of the company, by the three directors, who have nominated one person (cosec?) to actually administer the sinking fund.

You, as a shareholder, have a right to question the directors at the annual general meeting, which must by law be held. Accounts have to be publicly filed, but not in what most people would generally regard as a timely manner...

So most of your rights here are coming from your other hat, that of leaseholder.

Famo

Oh yes to address a previous question...there are no additional maintenance or service charges just the sinking fund.
I did contact the leasehold advisory service a year ago but was told that their advice doesn't extend to shared freeholds !!
The other flat owner who has owned his flat equally for some 20 years is not named as a director.
I wondering who governs potential mismanagement of these arrangements ?
Thanks for all your contributions I will read more thoroughly once finished work.

blue_max_3

Do tread lightly though. The person who administers the freehold may be doing out of the goodness of their heart and not claiming a salary or expenses. By all means gather the information, but try not to prejudge too harshly. I'm sure it can be resolved if there is a discrepancy.