Leasehold flat, dispute with leaseholder

locky25

Good day MSE Forum 

I live in a leasehold flat and I am one of Directors on the residents committee

 

one of the leaseholder is suing the residents company for loss of earnings. This is due to a roof leak ( two months where they did not have a tenant ) . We have a flat management company that we employ to manage the block. When they arranged the quotes for the work the Directors have always approved in a timely manner, but we feel that we cannot be blamed for the way and when the work is completed. This I feel should fall under the main responsibility of the flat management company ,that we employee and pay to manage the block. There has been a lot of communication between , tenant letting agent and  block management company that we were not included and were unable to control.

 

The leaseholder has now initiated a small claims against the residents company, that the flat management company are dealing with. As Directors we would like to know what we should be doing in order to complete our obligation if it does go to court. If we were to agree compensation this would need to be agreed by all leaseholders, that may also be disputed. If this was to continue to court with legal fees and compensation the residents company could go bust,?! Which would lead to more than one unhappy leaseholder. Directors feel that we have signed off the work in a timely manner and as always done everything in our control for the best of the block, but at the moment feel an amicable agreement on this, is beyond our control. We would very much like some free legal advice if you offer this service?, in the first instance to ensure we are meeting our current obligations. We have now been informed by roofers that the roof is now beyond repair and we need to raise funds for new that again  all lease holders would need to agree and  finance which will take time, in the meantime we have the ongoing legal issue, that may eat all the funds that would be better spent towards the roof.

 

The management company say a section 20 notice cannot be fast tracked, so we are kind of stuck in between a rock and hard place

I look forward to hearing from you, please let me know if you require any further information.

Thank you

Kind regards

nofoollikeold

1. Get the company's solicitors involved now.  It is not, in my view, an issue for amateur advice.
2. Make sure you have a documented time line of every 'phone call, email, text, letter or other communication from the discovery of the leak up to date.

locky25

ok thank you, the block management company are saying they are mediating with his solicitors at the moment to agree, but  if this needs to go to court then they will arrange legal advice for us, as they say they are dealing with it...  its frustrating not knowing, and not be able to take legal advice independently, without paying for it, which would be expensive for me and other committee members
 
thank you 

naf123

Why is this not covered by the block insurance?

eddddy

naf123 said:

Why is this not covered by the block insurance?

Do you mean repairs to the roof, or the leaseholder's loss of earnings, or the the directors liability to pay damages for negligence?

If you mean repairs to the roof, it doesn't sound like the damage was caused by an insured risk - like a storm, falling tree etc.

It sounds like general maintenance of the roof, and replacing a worn-out roof.

And even if an insured event occurred (like a storm, falling tree etc), buildings insurance doesn't generally cover loss of earnings.

eddddy

On what basis is the 'residents committee' responsible for repairs and maintenance to the building? Is it because it's a "Shared Freehold" company that owns the building, or is it a "Right To Manage" company?


The directors of the residents committee might be liable for the leaseholder's loss of earnings, if they result from the directors' negligence,

'Negligence' means that the directors did not act like a 'reasonable person' would act. For example, they didn't arrange leak repairs as quickly as a 'reasonable person' would. 


Usually, legal costs would be recharged to the leaseholders via the service charge. Any damages for negligence might also be rechargeable to leaseholders via the service charge. i.e. Any money that the residents committee has to pay out is just collected from the leaseholders - they each have to pay a share.

LeaseExpert

If your Residents Freehold Company or Residents Management Company or Right to Manage Company has legal proceedings commenced against it - you should contact your Directors & Officers Insurance company immediately. Do not reply to the leaseholders' solicitors and instruct your managing agents likewise.  The D&O insurers will appoint solicitors to act for your company to defend the claim.

And whilst writing - it is incorrect for your managing agents to say that the section 20 process cannot be fast-tracked. They could use section 20ZA for emergency/urgent works. Consequently, they may have made an error and may be negligent. Again, advise your D&O insurers asap and send copies of ALL communications.

This subject is covered by the Resident Directors Training course being run by ARMA at the end of this month (along with loads more). See here > arma.org.uk /training-events /training-courses /tc101-resident-directors-training 

locky25

ok thank you all,  some good points there, As directors we have acted in a timely manner 24 / 48 hour before agreeing any work, when the management company has notified us of the leak and  we have agreed the quotes and work, but to how and when it'   has been done is beyond our control as its  the management company who arrange the work, Also the communication between  tenant letting agent and management company that we were not included   so we have not been able to control or comment. we have bet quoted £1800 for independent legal advice , that will mean coming out the directors pocket and this is a voluntary role , but can anyone recommend any online free services  or cheaper than £1800.. We do have DO  insurance but it does not include  solicitors costs   

 thank you
kind regards

eddddy

LeaseExpert said:

This subject is covered by the Resident Directors Training course being run by ARMA at the end of this month (along with loads more). 

Are you connected with ARMA?

It comes across a bit like you have joined the forum in order to promote a paid training course - that would be against forum rules.

You're clearly very knowledgeable, which is a great benefit to the forum. But promotion and advertising isn't allowed.