One share of freeholder refuses to pay her full share of building insurance

goodversusevil

We live in a property converted into 3 flats. The lease states that we each pay 1/3 off the building insurance, communal repairs etc.
In 2017 we in the ground floor flat (GFF) added a basement extension. We spent a lot of money on legal fees to ensure we went through the correct judicial process particularly as the first floor flat  (FFF) was and is pretty toxic.
We offered to pay more building insurance (lease is unchanged). We initially , informally offered to pay 46% and other two flats 27% each which we did in 2017. However, in 2018 water poured from a bath overflow pipe in first floor into our flat causing a ceiling to collapse and a claim for £2000. The premium increased substantially.
In 2019 we held a directors meeting. The FFF sent a lawyer to act as her proxy. He asked what the lease said! It was resolved at the meeting, with the top floor flat agreement  that the GFF pay 40% and other two flats pay 30% each of the building insurance. The minutes were circulated following the meeting. The FFF refused to pay 30% and paid 27%. The GFF covered the shortfall. in 2020 we recouped the money from the FFF and she paid 30%. Last year there were two further claims and FFF claimed £14 K for repairs to her flat. There was also further damage to the GFF and the ceiling again collapsed and we had to claim £3 K to repair it. The FFF only paid 26% of the building insurance 2022. The freehold covered the shortfall. This year she again refuses to pay any more than 26%. 
We are having an AGM tonight. 
What advice do you have - she has narcissistic traits and it is very difficult to reason with her as she believes she is right and it is her entitlement to pay less

DullGreyGuy

What's your corporate governance on passing decisions? 

The lease is what matters, depending on your governance you could pursue the debt but this may just add more cost that she refuses to pay or look at forfeiture of the lease. Certainly with the second you'd be wise to take legal advice before setting down that path. 

MattMattMattUK

The directors of the freehold take legal action against the person in breach of their lease to recover the funds due under their lease. 

DullGreyGuy

MattMattMattUK said:

The directors of the freehold take legal action against the person in breach of their lease to recover the funds due under their lease. 

Assuming corporate governance doesn't require a unanimous decision in which case the turkey aint voting for Christmas. 

eddddy

goodversusevil said:

In 2017 we in the ground floor flat (GFF) added a basement extension. We spent a lot of money on legal fees to ensure we went through the correct judicial process particularly as the first floor flat  (FFF) was and is pretty toxic.
We offered to pay more building insurance (lease is unchanged). 

What do you mean by "the correct judicial process"?

Did you vary (change) all 3 leases in 2017? If so, what changes did you make?

So according to the leases who is responsible for maintenance, repairs and insurance of the basement extension?

1. Has the freeholder taken over responsibility for maintenance, repairs and insurance of the basement extension - and all 3 leases were varied (changed) accordingly?
   
   
2. Or is the GFF leaseholder solely responsible for maintenance, repairs and insurance of the basement extension?

If you haven't varied the lease of the FFF (and 2FF), perhaps the best way forward would be to:

• Get a buildings insurance quote for the building - as though it doesn't have a basement extension

• Request that the FFF leaseholder (and 2FF leaseholder) each pay 1/3rd of that quote

• Then arrange buildings insurance for the entire building including the basement extension - and the GFF leaseholder (you) pay the difference

The payments from the FFF and 2FF leaseholders would then be aligned with what their leases say.

Decisions taken at an Freeholder's AGM cannot override a leaseholder's rights in their lease.

Based on what you say in your post, it's not at all clear that the 26% or 30% of the insurance premium is a legally enforceable debt.

jlfrs01

I don't think this is up for discussion if all 3 flats signed contracts with the Leaseholder - all 3 are committed to paying a third each and that's the line I'd be taking. It matters not what FFF argues or says, presumably it's her name on the contract and therefore her obligation to settle accordingly. I'd fall back on the contract, state you'll be recording in the Meeting Minutes that you're confirming you'll pay the third and then ask for the other 2 flat's position. If either of them want to argue the toss say that's something they need to take up with the Leaseholder directly and nothing to do with you. I think taking the legal/3rd party stance will help to make it less of an emotive subject because at the end of the day it's not your problem. If you pay your third then the Leaseholder can't very well come after you for any shortfall because of FFF's refusal to pay her whack - you're meeting your contractual obligations, not her. 

eddddy

jlfrs01 said:

I don't think this is up for discussion if all 3 flats signed contracts with the Leaseholder - all 3 are committed to paying a third each and that's the line I'd be taking. It matters not what FFF argues or says, presumably it's her name on the contract and therefore her obligation to settle accordingly. I'd fall back on the contract, state you'll be recording in the Meeting Minutes that you're confirming you'll pay the third and then ask for the other 2 flat's position. If either of them want to argue the toss say that's something they need to take up with the Leaseholder directly and nothing to do with you. I think taking the legal/3rd party stance will help to make it less of an emotive subject because at the end of the day it's not your problem. If you pay your third then the Leaseholder can't very well come after you for any shortfall because of FFF's refusal to pay her whack - you're meeting your contractual obligations, not her. 

You've missed a vital point.

It sounds like when the leases were granted it was a smaller 3 storey building. It's now a 4 storey building (or at least the building is now bigger)

So, as I explain above, the leaseholders have only committed to pay 1/3rd of the insurance of the original building - not a 1/3rd of the extended bigger building..

... unless their leases have been varied to take account of the basement extension.

Olinda99

seems rather a lot of claims to me - is the insurance company still prepared to cover you?

jlfrs01

Ah yes, my bad @eddddy, the Basement forms the 4th floor. Your suggestion of getting a 2 insurance quotes and the OP pays the delta seems fair and reasonable.