If other leaseholders stop paying service charge what happens

F37A

Hi

Just buying a leasehold property. Just curious but if there are delays in others paying up am I liable for their share or does freeholder take us all to court. How does it work?

Thanks

MorningcoffeeIV

It's very unlikely that the contract says you're jointly and severally liable, but you can check that yourself.

GDB2222

There’s definitely a problem if significant numbers of leaseholders don’t pay. The freeholder won’t want to fund the work themselves, and enforcement action against leaseholders will delay work and add to the cost.

F37A

Ok had a look only looks like where lessee is more than 2 people then joint and severally liable. 

aussie_in_wales

I'd check that they are also paying the insurance if you're worried about the other owners paying the leasehold. Quite a few years ago I was going to buy a flat in a development with three other flats within it. The building insurance had not been paid for more than 12 months by one of the occupants. 

propertyrental

Who is the Freeholder?
* one of the flat owners?
* an external third party, either individual or company?
* the leaseholders themselves, usually described as 'share of freehold' - could be all the flat owners, or a sub-set?

Are you talking about annual service charge (to cover regular maintenance, common areas electricity, insurance etc) or one off charges for a major repair?

Ultimately if a leaseholder doesn't pay, the freeholder can/should take them to court, and the extra legal and court fees, plus interest could be substantial, so most leaseholders will pay up to avoid this.

If however the freeholder is the leaseholders themselves, and its a significant number of them not paying, they (the freeholder) may not want to enforce. In that case, presumably the freeholder will be failing in their obligation to pay for the electricity, maintenance etc, as there'll be no money in the freeholder's kitty. If that happens you (or any leaseholder who IS paying, can take the freeholder to court/tribunal for failing to insure, maintain etc as required by the lease.

Another scenario could be where there is an absentee freeholder eg an overseas investor/individual, a sefunct company, or maybe just not known/not traceable. No service charges demanded/collected, and no services provided. In such a case there are 3 options:
* find the freeholder and take them to tribunal
* take over management of the building (as a group) under the 'Right To Manage' process
* Take over the freehold under the 'Roght To Buy'

There's tons of information from this government funded organisation:

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

F37A

aussie_in_wales said:

I'd check that they are also paying the insurance if you're worried about the other owners paying the leasehold. Quite a few years ago I was going to buy a flat in a development with three other flats within it. The building insurance had not been paid for more than 12 months by one of the occupants. 

thanks. Will look at that as well. Other thing on my mind is if its asbestos then will any disturbance be covered under insurance.

F37A

propertyrental said:

Who is the Freeholder?
* one of the flat owners?
* an external third party, either individual or company?
* the leaseholders themselves, usually described as 'share of freehold' - could be all the flat owners, or a sub-set?

Are you talking about annual service charge (to cover regular maintenance, common areas electricity, insurance etc) or one off charges for a major repair?

Ultimately if a leaseholder doesn't pay, the freeholder can/should take them to court, and the extra legal and court fees, plus interest could be substantial, so most leaseholders will pay up to avoid this.

If however the freeholder is the leaseholders themselves, and its a significant number of them not paying, they (the freeholder) may not want to enforce. In that case, presumably the freeholder will be failing in their obligation to pay for the electricity, maintenance etc, as there'll be no money in the freeholder's kitty. If that happens you (or any leaseholder who IS paying, can take the freeholder to court/tribunal for failing to insure, maintain etc as required by the lease.

Another scenario could be where there is an absentee freeholder eg an overseas investor/individual, a sefunct company, or maybe just not known/not traceable. No service charges demanded/collected, and no services provided. In such a case there are 3 options:
* find the freeholder and take them to tribunal
* take over management of the building (as a group) under the 'Right To Manage' process
* Take over the freehold under the 'Roght To Buy'

There's tons of information from this government funded organisation:

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

Either to be honest, the annual charge or one off. 

its not share of freehold, the freeholder is a company but might check if directors is actually an owner of a flat. I'd want to ensure that RTM is doable in the block at day 1 ideally. There's 9 in the block.

Yeah seems an important point the history of non payment by other leaseholders.

propertyrental

F37A said:

aussie_in_wales said:

I'd check that they are also paying the insurance if you're worried about the other owners paying the leasehold. Quite a few years ago I was going to buy a flat in a development with three other flats within it. The building insurance had not been paid for more than 12 months by one of the occupants. 

thanks. Will look at that as well. Other thing on my mind is if its asbestos then will any disturbance be covered under insurance.

No. Where are you concerned there may be asbestos?

To be honest, most of your queries will be answered during the conveyancing process. The freeholder will be sent a comprehensive list of questions by your solicitor, as will the seller - including "are you aware of any asbestos?"

F37A

propertyrental said:

F37A said:

aussie_in_wales said:

I'd check that they are also paying the insurance if you're worried about the other owners paying the leasehold. Quite a few years ago I was going to buy a flat in a development with three other flats within it. The building insurance had not been paid for more than 12 months by one of the occupants. 

thanks. Will look at that as well. Other thing on my mind is if its asbestos then will any disturbance be covered under insurance.

No. Where are you concerned there may be asbestos?

To be honest, most of your queries will be answered during the conveyancing process. The freeholder will be sent a comprehensive list of questions by your solicitor, as will the seller - including "are you aware of any asbestos?"

I'm expecting in the ceiling. Will have to do a lot of surveys on this one. Have to check the roof of the block as well. Time consuming queries on lease and then managing agent / LL / solicitor don't even answer questions properly. 

eddddy

F37A said:

Other thing on my mind is if its asbestos then will any disturbance be covered under insurance.

It might be easier to start by explaining what buildings insurance (and contents insurance) covers.

Typically, it covers the cost of damage caused by specific unforeseeable risks like:

• fire, explosion, storms, floods, earthquakes
• theft, attempted theft and vandalism
• frozen and burst pipes
• fallen trees, lampposts, aerials or satellite dishes
• subsidence
• vehicle or aircraft collisions

So if asbestos is disturbed by one of those risks (e.g. fire or explosion), the resulting issues should be covered by the insurance.


It's possible to add accidental damage cover to a buildings insurance policy - but it's very unlikely that your freeholder would have that cover.

For example, accidental damage cover would typically cover the damage caused if you accidentally drilled into a water pipe, so I guess it might cover damage caused if you accidentally drilled into asbestos. That would be something to ask a specific insurer.

(It wouldn't cover removal of the asbestos from the wall, at best it would cover removal of the asbestos dust you had released by drilling. But given the excess you'd need to pay, and future increased premiums, it probably wouldn't be worth claiming.)




Edit to add...

Obviously, if you know or suspect there is asbestos in the ceiling, and you drill into it...

... asbestos dust would be a predictable result. So it's not really accidental damage.


But as I say, it's academic anyway, as the freeholder is very unlikely to have accidental damage cover.