RTM - Legal fees problem with other leaseholders

richdeniro · 10 June 2019 at 11:06PM

Hi All,

Just looking for some advice having taken over our block which now has RTM.

All seemed to be going well up until today when I received a final demand from the freeholder for their legal fees which amounted to just over 1k - I realise that we are liable for this and have been happy to pay my share as we all agreed.

There are 3 flats in the block and we all agreed to go RTM last year which all seemed to go smoothly. It was mostly handled by another leaseholder who took the lead with solicitors, etc.

The invoice was sent to him last October and he forwarded it to myself and the other leaseholder of the other flat (they both rent their flats out so aren't physically in the block). He suggested we pay the final invoice by each paying just over £300 each to cover our third which I had no hesitation in doing.

In February he forwarded a statement from the freeholder stating that the final costs were just over £700 remaining and to get everything finalised we should pay a little over £200 each to settle that statement and then everything would be settled. I again paid this and having not heard anything thought that would be it.

He recently sold his flat in April and passed all the RTM documentation onto me so that I could set up the bank account, companies house details, etc and get everything going which I have been doing.

However I have now seen that on this latest demand from the freeholder and having exchanged a few emails with their finance team that the only two payments they have received (or at least allocated) for the original legal fees invoice was from me - the payments I made in October and February.

So there is still around £500 remaining on the invoice for their legal fees which they are chasing hard for and I have overpaid my portion of that demand by paying the £200 in February.

I have emailed the leaseholders of the other flats explaining the situation and that the freeholder appears to have only received my payments including the overpayment and am hoping that it is just a mistake on their parts and that their payments may have been misallocated so to provide me with dates/amounts of any payments they have made.

However neither has responded yet and I am now worried that neither has paid anything.

If my worst fears are realised I just wondered what could be my next steps? The guy who sold his flat in April has resigned as a director of the RTM company but the other leaseholder is still listed.

I am in the process of setting up the bank account for the RTM company. Could I in theory invoice them both from the RTM company in order to pay the remaining balance and then pay myself back for my overpayment? I am also thinking I may just have to pay the freeholder this week with them having made a final demand thus would have paid the entire £1k+ balance myself.

Thanks for any advice in advance.

anselld · 11 June 2019 at 7:48AM

You need to have serious words with the other Leaseholders about funding the RTM Co because it will be a disaster if you try to pay every bill on a piecemeal shared basis.

It is bad enough that they are letting you do all the admin work but refusing to fund is totally unacceptable. What did they think they were doing when they voted in favour of RTM?

They need to get this bill paid immediately but then someone needs to create a budget for service charges for the year and possibly some sinking fund and then send out proper demands to all Leaseholders for payment in advance.

What is the balance of service charge/sinking funds with the previous Freeholder? Any funds held on account should be repaid to the RTM Company on completion. Could these not be used to offset the legal fees?

NeilCr · 11 June 2019 at 8:46AM

You are going to be doing all the work when the RTM goes through, too!

Doozergirl · 11 June 2019 at 9:06AM

You realise it will continue like this?

Yes, I would invoice from the RTM company and pay yourself back when they pay. I'm not sure I'd pay the whole bill myself - having done that before ourselves and been badly burned. I'd be more inclined to pass any penalties into them directly, if that's allowed.

Don't even go down the route of flattering them by suggesting the payments have gone astray. They need to behave in the manner of people that want to save money by going RTM and actually paying what is due, when it is due, rather than taking you for granted.

I'd really consider whether self-managing is a good idea. You may end up employing your own agent if this continues.

eddddy · 11 June 2019 at 10:04AM

Setting-up an RTM company won't be within the scope of the lease - so this doesn't sound like a service charge that you can recover through the lease.

Instead it sounds like an agreement between 3 individuals / leasholders to set up an RTM company.

You say that the 3 of you agreed to split the costs - do you have that in a written agreement?

If the other 2 agreed to pay a third each, but are now refusing to, it would be a breach of the agreement - so ultimately a case for the small claims court.

(It it were service charges for maintaining / repairing the building, they would be handled very differently.)

richdeniro · 11 June 2019 at 12:02PM

Thanks all for the advice and replies.

As I suspected the freeholders finance department have come back to me and said that they have scoured their bank account and said that there are no other payments except for mine.

I am completely in shock to be honest as the reason we went RTM was due to the previous management company charging extortionate management fees for such a small communal area and constantly being hit for charges we weren't expecting.

I was happy to do the admin and look after the management company/bank account, etc as the only leaseholder who lived in the block felt it would make sense.

I have checked the invoice from the freeholder and it is made out to the management company - would this give me grounds to invoice from the management company for those legal fees?

Or perhaps could I email them and tell them that they will take us to court if they don't pay as our names are listed on the companies house website as the directors of the company?

Would this still be the case with the former leaseholder who has now sold his property? I presume he didn't mention this fee to the new owners and the last thing I want to do is invoice them for it as the invoice is dated October 18 (when he was still listed as a director of the company) whereas they purchased in March 19.

NeilCr · 11 June 2019 at 1:17PM

You might want to take advantage of the free telephone appointments at lease advice

https://clients.lease-advice.org/Appointment/Appointment?isFireSafety=False

To be honest, I agree with Doozergirl. Not sure RTM is gong to work for you. If the others are taking a step back now it isn't going to get any better.

In my experience people can be pretty good at making the right noises but when it comes to doing things themselves or putting their hands in their pockets it changes. I hope you have the agreement in writing.

richdeniro · 11 June 2019 at 2:45PM

I have the agreement in an email from both of them. Do you think this will suffice?

richdeniro · 13 June 2019 at 4:09PM

NeilCr wrote: »

You might want to take advantage of the free telephone appointments at lease advice

https://clients.lease-advice.org/Appointment/Appointment?isFireSafety=False

To be honest, I agree with Doozergirl. Not sure RTM is gong to work for you. If the others are taking a step back now it isn't going to get any better.

In my experience people can be pretty good at making the right noises but when it comes to doing things themselves or putting their hands in their pockets it changes. I hope you have the agreement in writing.

I have booked an appointment with the lease advice service but it won't be until the end of next week.

The freeholder has informed me that they plan to take legal action if the payment has not been made by tomorrow. Both the current leaseholder of one of the flats and the previous one who sold his flat without paying are obviously ignoring me.

I also spoke to the girl who rents her flat from the guy who is still the registered owner of the flat below me and she is moving out as he is looking to put his flat up for sale so I presume his lack of response is due to hoping he can sell up and do the same thing that the guy who sold his flat has done. I am also unable to set up the RTM bank account without his signature as he is listed on companies house as a director of the RTM company - he is ignoring me on this issue too most likely so I don't get any service charge invoices out.

I'm guessing my next port of call will be a solicitor?

NeilCr · 13 June 2019 at 4:27PM

richdeniro wrote: »

I'm guessing my next port of call will be a solicitor?

Think I would. You need to know exactly where you stand with the other leaseholders.

Much as I hate saying it it might be better (if you can afford it) to pay the outstanding amount and then go after the other leaseholders.

But, yes, seek legal advice

G_M · 13 June 2019 at 6:20PM

If one leaseholder is planning to sell, that might help. His buyer will want confirmation, presumably from you as Director of the RTM company, that all management fees and costs are up to date. You will obviously inform the buyer of the outstanding debt.

Your errant leaeholder will have the choice of paying you, or seeing his sale fall through.........

Hopefully whoever purchases will be more cooperative. RTM relies on cooperation, especially in a block as smll as yours.

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RTM - Legal fees problem with other leaseholders

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