Flats' management- insurance arrangements

[Rallysally]

In the past, under previous management, no service charge was collected for the block of flats I live in (well, only enough to cover the insurance). I have taken over as director of the management company, and as such I have started collecting a pot of money to pay for insurance and the maintenance etc. Importantly however, as this process has only just started, there is currently a very limited pot of money.

Our Building Insurance has just come up for re-new on our block of flats. Put simply,
I would like a very comprehensive building insurance policy that would cover us if things went wrong. We do not mind paying a reasonable amount in premiums for this – we just want to limit the chances of having to find a large amount of money quickly (in case of a burst pipe for example).

Could someone suggest some types of cover / items that I should consider, that may be useful?

Lowering the ‘excess’ is the first obvious thing I intend to do.

[Poppy]

When was your building last valued by a surveyor for rebuilding costs?

Read the lease. Does it permit the freeholder to reclaim the cost of professional fees (such as a surveyor) from the lessees?

Pot of money? What does the lease say about collecting money in advance of expenditure?

[jeffrey]

I have found using Residentsline a good experience. They were very efficient in arranging emergency insurance, when a previous L suddenly cancelled withour forewarning the leaseholders, and much cheaper than the previous insurer too.

[Gordon999]

In the past, under previous management, no service charge was collected for the block of flats I live in (well, only enough to cover the insurance). I have taken over as director of the management company, and as such I have started collecting a pot of money to pay for insurance .

Our Building Insurance has just come up for re-new on our block of flats. Put simply, I would like a very comprehensive building insurance policy.

Could someone suggest some types of cover / items that I should consider, that may be useful?

Lowering the ‘excess’ is the first obvious thing I intend to do.

Get quotes for " Block of flats" insurance from www.residentsline.co.uk and www.flatprotect.co.uk and compare to your existing policy .

Lowering the excess may depends on your block's past claims record.

[Rallysally]

PS, apologies for the extra long post!

[Rallysally]

Can you insure against rising damp?

My policy doesn’t cover this, and I want to know if I should have asked for this to be included, or if it should have been offered to me….. of course it is a bit late now!

[ashburnham]

Rising damp is a gradually operating cause and for this reason no insurer will provide cover for it. I may be wrong but certainly have never heard of this cover in my experience.

[paulb67]

Hi Rallysally

Rising damp insurance is available, but not a commonly available insurance. I’ve never seen it as an extension of a household, landlord, block of flats or commercial policy. It has to be bought separately.

Try this link as an example:-

www.rentokil.co.uk/residential-customers/rentokil-insurance/new-customers/rising-damp/index.html

It may be possible for rising damp damage to be covered under a latent defects type insurance or building guarantee (for example an NHBC certificate). You’ll need to check the wording to be sure.

[ashburnham]

Rising damp insurance is available...

Good find Paul! Looks like their policy not only covers Rising Damp but can also cover Woodboring Insects, Wood-rotting Fungi and Wall Tie Corrosion.

Certainly handy for people looking for such cover.

[jeffrey]

It covers Rising Damp. Does it also cover The Fall and Rise of Reginald Perrin?

[mind the gap]

Good find Paul! Looks like their policy not only covers Rising Damp but can also cover Woodboring Insects, Wood-rotting Fungi and Wall Tie Corrosion.


Sounds like a barrel of fun.

I bet they find some way of not paying up! One of those clauses which says the damage from fungal spores is not insured if the fungus has a Latin name, or something like that. Or the woodboring insects must have bored at least 3m in one go.

How do you measure how bored a bit of wood is anyhow?:D

[Rallysally]

Hi Guys

3 flats, 1 flat has just been sold, and the new owner has recently informed me that they (we) have a major problem with rising damp. This came as a shock.

The new owner of said flat has had a survey done by a company who specialises in resolving damp issues (i.e. they could be considered bias). The costs have come in a lot higher than I had thought (circa 15K) – although I do not proclaim to be an expert in this field.

I have inspected the flat, and it is clear that there is a problem, although I am not sure that the problem is as bad enough to warrant the amount of work prescribed.

It is clear that:

- The problem must be resolved, and is the responsibility of the management company – I am the sole director.
- Formal consultation will be required.
- Further quotes are needed.
- There is no money to talk of in the sinking fund

What should be my next step?

- Do I start S20 consultation now?
- or do I appoint a separate surveyor so we know the exact problem first?

As you can imagine, the owners would like this problem resolved asap (as they want to rent there flat out – and cannot do this until it is refurbished).

Any help would be appreciated.

[James 2009]

Damp itself is clearly more of a buildng pathology issue than a long leasehold issue, but I will deal with that side of things.

Firstly, what is the problem with rising damp? It can cause health problems, it can damage finishes, and it can spread and cause problems when timbers rot.

Secondly, who is responsible for what? Without seeing the lease it is hard to say, but it does seem possible if not likely that there is a structural issue that is dealt by the management company, but that some of the works might be the responsibility of the leaseholder (eg finishes).

Thirdly, what do you do and how much should you pay? And how deeply are you prepared to go into the issue? There is a school of thought that rising damp is rarely caused by a failure of the damp proof course, and that therefore damp proof injections (which damp and timber specialists tend to recommend) do not resolve the problem. However a D and T specialist may have a role to play in terms of offering guarantees (this is especially beneficial to people who are selling!)

The key thing is to resolve every possible cause of damp, strip the defective plaster and let the wall dry out (this may take months). I suggest that what is being called a DPC failure (I am assuming here) is actually a combination of the wall not being able to breath due to a render being applied that should never have been applied, high ground levels bridging the DPC, a plinth bridging the DPC, penetrating damp from a defective downpipe, etc etc.

There is an argument that you should pay Chartered Surveyor who is a genuine damp specialist to look into all the possible causes, maybe even take samples of plaster to confirm salt levels to confirm that it is actually water from the soil. When this is done he can make full recommendations, of which an injected DPC might be part.

£15,000 sounds a very high price, but then I don't know the extent of the damp, or value of the flat, or quality of the finish (assuming that this is included in the £15k)

Finallly, if you do get an injected DPC please make damn sure that they inject below the level of decorated finishes and floor levels, otherwise there really is no point (it is common to see injected DPCs at levels 6" or more above the level that would be required to be effective)!!! Also check the small print as almost certainly they will only guarantee the work assuming other works are done (eg reducing the ground level to below the level of the DPC.

[Rallysally]

James – many thanks for your answer. This is very useful – I have not had to deal with this particular issue before.

In addition to this however, I would be very grateful if anyone could give me any pointers on the following:

1) There is no money in the pot at the moment. The end of the service charge year is in June, and I have to wait until this date before I can raise any short fall between the amount needed and the amount requested at the start of the year.

Hence, unless the flat owner that is directly affect by the damp, pays a loan to the company until the money is collected, then we will have to wait until this date before the work is commissioned.

My worry however is that because of the cost, the other flat owners will say that this will need to be collected over a couple of years. Would they be allowed to do this?

2) Should I start section 20 consultation off now, or should I employ a qualified surveyor to assess the problem then start the consultation process off? I feel sorry for the new owners, and want to resolve this as fast as possible.

[James 2009]

Someone else needs to help on this one!

Damp in a wall can become wet rot or even dry rot, and cause more damage and expense if not treated. If the roof was leaking seriously you would not worry about the money in the pot would you - you'd have to get it done ASAP?

Personally I would start by finding a Chartered Surveyor WHO SPECIALISES IN DAMP to report, then start th S20 consultation process (I assume this is correct - you seem confident, this is just not my area of speciality).

As for the new owners, I presume they took advice from surveyors and solicitors when they bought, and surely they must have satisfied themselves that there was a way of getting the work done in a manner that was satisfactory to themselves in terms of time and cost before they committed to buying! Don't feel sorry for them!

[Rallysally]

Hello all

3 flats – all owner occupied. I am the director of the management company.

The management company has not been run correctly in recent years. For this reason, there is currently no ‘money in the kitty’. In addition to this, none of the tenants get on – not at all!!! The tenants will not attend meetings together, and all communications are via letter.

Water is leaking in from split lead work on the roof. Unfortunately, scaffolding is required to reach the roof to resolve the situation. The cost of this alone is going to trigger section 20 consultation.

My question is: If all tennets agree that the work is urgent, is this enough to dispense with formal consultation – or do I have to apply to the LVT as well?

If it is, and I do, what should I be mindful of? I imagine that this matter will go to court (as at least one owner cannot pay) – and I want to make sure that I do everything correctly. The only reason I don’t want to wait for the full consultation period to end is because I think the problem is urgent (they are apparently living with a bucket under the leak).

Note: I have read my lease, and understand who pays for what, and when this can be requested.

Many thanks!!

[sgclacy]

I would serve the Section 20 Notice and start down that route but at the same time make an application to the LVT for dispensation.

Unless ALL agree to dispense with it in writing - don’t take the risk, once the problem is solved then they may go back to their quarrelling ways and you will end up in the thick of it!

[Gordon999]

Send a letter with reply consent form to all 3 flats to sign and return to you asap .

Just point out the value of their property is going down the drain if the roof is not repaired . and tell them they will end up with an "unsellable" property as all dispute with neighbours have to be declared in a sale.

[Rallysally]

3 flats.

I am the director of the management company that is the freeholder. I am a 50% shareholder in said company.

About 4 months ago I was at home and I heard water dripping in my kitchen. I put a bucket under it, and notified the person living in the flat above me. We do not get on, so this was done via a polite letter.

No reply.

I post another letter spelling out my concern, and asking for access for workmen to remedy the problem. I wrote this letter ‘from the management company’ – as there is a provision in the lease to allow access.

No reply.

Then, about 2 months on from the first leak there is a leak again. Same spot, same amount of water. Again, I was in at the time, and put a bucket under the leak and wrote a letter from the management company.

After about a week, I had a letter saying from the person living above me saying they had hired a builder (not plumber), and he had looked 3 times but had not found a fault. Consequently no repair work was undertaken.

As the problem had not been rectified I was obviously concerned that the problem would reoccur. I wrote a letter once again asking for access – which was once again ignored.

Then, about a month ago I came home to find that a large amount of water had entered my flat. There was no obvious damage done – but the electrical light fitting was buzzing as water was still running through it.

I had had enough, and called my home insurance company. This has an emergency call out as part of it, and a plumber came round to fix the problem. Access was not available to the flat above. To resolve the issue a plate size hole was cut in the ceiling.

Work could not be completed from within my flat, so the plumber had to leave it until access was granted to the flat above.

I informed the flat owner of this, and they called out their builder to fix the problem. This was a number of weeks ago, and it appears that he has managed to fix the problem this time. I have formally requested that access be granted to check this work. This was denied.

So now, I am left with a damaged ceiling, and unsure how I should proceed. It will only take about £150 to put the ceiling right – but my contents insurer will not pay so I would have to make a claim on my home insurance policy, or put my hand in my pocket.

Should I just get the work done then go through the small claims process?

Advice welcome

[jeffrey]

It will only take about £150 to put the ceiling right – but my contents insurer will not pay so I would have to make a claim on my home insurance policy, or put my hand in my pocket.
What about the policy excess? I suspect that you could not claim £150 even if you wanted to do so.

[Rallysally]

Hi all.

I am the sole director, and 50% shareholder, of a management company that is the freeholder to a small block of 4 flats. I live in one of these. The building has been seriously neglected in the past. Unfortunately, because of this it is in a poor state of repair, however there is no sinking fund to speak of. In addition, there is one urgent item of maintenance that will cost many thousands of pounds to fix.

Another leaseholder owns the other 50% in the company. This leaseholder has, and continues to breech his lease by: not paying ground rent / only paying a percentage of the service charge (on grounds of it being unreasonable) / does not allow access to his flat for workmen etc..

I have informed his mortgage company. They say that they need a judgment via court or a tribunal, or to have the amount admitted by the leaseholder in question before they will pay.

Relationships are very stained. Unfortunately, there is no chance that this matter could be resolved outside court.

I have initiated court action (hearing late Feb) to seek to recover the service charge. My questions are:

1) The breeches of the lease are serious. What is the best way to deal with them – is it to apply to the LVT or court (also see below)?

2) There is absolutely no question from any of the leaseholders that the major item of maintenance needs to be resolved urgently – we are all agreed. As to was a charter surveyor (appointed on behalf of the management company to dispense with the Section 20 consultation). However, the leaseholder in question has stated that they do not have any money to pay for the repair.

The only option I can see is to pay for the repair myself, and claim it in the form of a service charge which I can do at the end of March. I know that this will not be paid by the leaseholder. Consequently what should my action be?

Should I loan the money to the company, and when this is not paid in March move straight for forfeiture? Or should I just not do the work until all the money is paid? This cause of action would undoubtedly cause further damage to the property.

Advice would be very welcomed!

[animal]

If there is an obligation in the lease and the statutory requirements have been fulfilled, and the lessee still refuses to pay, then I see little choice. It is unfair on other lessees if they are subsidising an individual. Being unable to pay is not a valid defence... And as he has a mortgage, the mortgage company will pay and probably repossess thus avoiding the need for forfeiture...

I think you will create issues if you pay for the repair yourself and claim it back. You have to be fairly careful as a director in mixing your personal funds with those of the company. The other lessees should shoulder this burden along with the costs of legal action.

[andydd]

Any court action would be passed to an LVT so it would be wise to wait for the LVT decision, it maybe the case that the non-payer has a point and that some or all of the charges are unreasonable.

I'm assuming the ground rent has been properally demanded in accordance with the terms of the lease and the new(ish) changes in law ?

Andy

[Rallysally]

Many thanks for your response. Yes, there is an obligation in the lease, and the correct process has been strictly adhered to.

The problem I have is that it is an urgent problem that could easily cause much more damage if left (hence the dispensation from formal consultation route). However, unless I am mistaken, I can only claim money from the other leaseholders in a way as defined within the lease. This states at the beginning of a year estimates should be calculated, and these collected in June and December. At the end of the service charge year (March) the leaseholders have to pay on demand any shortfall.

I have explained the situation to all leaseholders, and 3 out of 4 (myself included) understand the problem and will pay their fair share in advance. As such, the other leaseholders will shoulder a certain amount of the cost, although they are not yet obliged to. The last leaseholder did not attend the meeting where this was discussed, and when asked in a letter said that they cannot pay.

I suppose that I could appeal once more to their mortgage company, but they will probably simply re-reiterate their position (i.e. court / tribunal etc. Judgment needed first).

If there is not sufficient funds to undertake the work, and with the above information, should I still not lend the company the shortfall until March. I don’t want to obviously!

In addition, I really need to understand the quickest way to resolve this situation (especially if I am part financing work on behalf of others). I do not want to start court action (which will take months) if that means that when I get there they will defer it to LVT (which will take more time).

Advice would be most welcome.

[Rallysally]

In addition, yes ground rent was requested in the prescribed format (I downloaded the template from the lease website).

I am 100% confident that the service charge requested is reasonable.

[Moderator1]

Several threads by same member have been merged here. Do not cause problems by starting continuation threads; use the same one.

[Gordon999]

In addition, yes ground rent was requested in the prescribed format (I downloaded the template from the lease website).

I am 100% confident that the service charge requested is reasonable.

Rallysally,

A friend of mine used this firm to sort out service charge delinquents. They can help you.

http://www.slcsolicitors.com/sca/index.php

[Rallysally]

I have a case pending with the LVT which is due to be heard in the next couple of weeks. As part of this, I (the Applicant) and my neighbour (the Respondent) were given instructions and dates when to (a) state our case and (b) respond to this statement highlighting which items are contested.

I complied with these directions; my neighbour did not file any information, evidence or reasons why they had not met the deadline.

I initially thought that this was a good thing, and that the Respondent had shot themselves in the foot as they now cannot table any evidence. However, giving it more though I really do not know what the Respondent are contesting and consequently have nothing to form an argument against. As such I feel disadvantaged.

Can anyone with any experience with LVT proceeding advice how such non compliance with the directions are handled?

[andydd]

I have a case pending with the LVT which is due to be heard in the next couple of weeks. As part of this, I (the Applicant) and my neighbour (the Respondent) were given instructions and dates when to (a) state our case and (b) respond to this statement highlighting which items are contested.

I complied with these directions; my neighbour did not file any information, evidence or reasons why they had not met the deadline.

I initially thought that this was a good thing, and that the Respondent had shot themselves in the foot as they now cannot table any evidence. However, giving it more though I really do not know what the Respondent are contesting and consequently have nothing to form an argument against. As such I feel disadvantaged.

Can anyone with any experience with LVT proceeding advice how such non compliance with the directions are handled?

Clearly the directions are given so that both sides have time to see each other statements of case and documents, the LVT may allow some extra time to provide documents but obviously the respondent cant just turn up on the day with reams of (unseen) documents, Im unsure as to oral evidence, but they would be rather foolish to rely upon that alone.

Andy

[Rallysally]

Thanks Andy.

The thing is, the Respondent has not requested more time to form their argument, and I do not think they will. My fear is that they will just make their case on the day.

While they will not have the benefit of evidence, their counter argument will only be known to me on the day.

As such I feel I could be at a disadvantage - do we know how such a situation is handled by the LVT?

[leaseholder001]

I've had experience at 2 LVT hearings and have not been happy how they have been conducted. They seem more than happy to accept new evidence/arguments at the hearing. At the second hearing I asked for an adjournment so I could consider the new evidence but the panel examined the evidence and never mentioned it in their decision or mentioned that I had asked for an adjournment. It is my belief that this evidence affected their decision.

If they try and submit evidence at the last minute you should ask for an adjournment if you think it is unfair. The panel should then either give you an adjournment or refuse to admit the evidence. If they then admit the evidence you should make sure that the chairman makes a note that you asked for an adjournment.

If they don't turn up or do turn up with new arguments/evidence or have totally ignored all directions then ask for your costs to be paid by the other party. They can award costs up to £500 if a parties behaviour is unreasonable. Take evidence of your costs and show this to the panel. This can include loss of earnings, travel, photocopying, postage.

[leaseholder001]

Something else that may help in future in your situation may be an application (to the LVT) to vary the leases on the flats so that i) a sinking fund can be kept and ii) service charges can be collected in advance of expenditure.

Where there are less than 9 leaseholders then at least 8 must agree to this. Where there are 9 or more leaseholders then it must not be opposed by more than 10% and at least 75% must consent to the variation.

[jeffrey]

Yes. See Part IV of LTA 1987 here: http://www.statutelaw.gov.uk/content.aspx?LegType=All+Legislation&title=Landlord&Year=1987&searchEnacted=0&extentMatchOnly=0&confersPower=0&blanketAmendment=0&sortAlpha=0&TYPE=QS&PageNumber=1&NavFrom=0&parentActiveTextDocId=1688813&ActiveTextDocId=1688882&filesize=38616

[Rallysally]

Very good and helpful advice - many thanks!!!

The only thing that annoys me is that I have already paid for this work a number of month ago - and would like it back in my bank account asap! The thought of adjournment really annoys me as this case has already been passed from small claims track to the LVT, which took a number of months.

If they do turn up, they may not be able to table any evidence, but they will still be able to give their side of the storey. The whole point of the directions given by the LVT is that both sides go into the hearing knowing the other sides argument. It looks like this will not be the case.

[leaseholder001]

If they do turn up, they may not be able to table any evidence, but they will still be able to give their side of the storey. The whole point of the directions given by the LVT is that both sides go into the hearing knowing the other sides argument. It looks like this will not be the case.

Yes, it's very frustrating. Perhaps you should tell the panel that they have had a chance to state their case so it's only fair that you have a chance to take advice on anything new that comes up and ask for an adjournment.

It may even be worth writing to the LVT stating that you will be asking for an adjournment if the Respondent makes his case for the first time at the hearing. I know you don't want one but neither do the LVT.

One of the problems I had was that I didn't want to appear unreasonable, so I never even said anything about things I considered unfair at my first hearing. It's quite obvious that the panel just want to get it all over with.

I don't want to depress you any more, but even after the LVT give their decision the respondent can still ask for leave to appeal.

If you want to PM me with any questions feel free. I don't really want to go into details of my case on here.

[andydd]

Yes, it's very frustrating. Perhaps you should tell the panel that they have had a chance to state their case so it's only fair that you have a chance to take advice on anything new that comes up and ask for an adjournment.

It may even be worth writing to the LVT stating that you will be asking for an adjournment if the Respondent makes his case for the first time at the hearing. I know you don't want one but neither do the LVT.

One of the problems I had was that I didn't want to appear unreasonable, so I never even said anything about things I considered unfair at my first hearing. It's quite obvious that the panel just want to get it all over with.

I don't want to depress you any more, but even after the LVT give their decision the respondent can still ask for leave to appeal.

If you want to PM me with any questions feel free. I don't really want to go into details of my case on here.

In my LVT case the LVT asked the respondent to provide a very brief argument of their case as part of the directions, I'm sure if they havn't even complied with this, then you would be entitled to or some ask for some sort of adjournment, but as leaseholder001 the way that LVT's operate can be far from satisfactory, in my case I was concerned that the tribunal seemed influenced by the defendants undocumented and untrue allegations of arrears that I owed.

Andy

[Rallysally]

Thanks for the help.

While it appears that LVT proceedings don’t always go as planned, it seems like the best option for me is to turn up and see if the Respondents also come along. If they do then I will ask the Tribunal to establish what is agreed and not agreed by the Respondents.

If nothing scares me at this point then I will ask to push on with the tribunal. If there is a curve ball I have not foreseen I will ask that either the Tribunal is postponed, or the item that is contested is dealt with at another hearing (as long as it does not affect the other items being discussed – which in my case is probable).

If the tribunal allow the postponement then I will claim expenses etc.

This is the only way I can see that I will not be disadvantages. Does anyone have any views on this?

[andydd]

Thanks for the help.

While it appears that LVT proceedings don’t always go as planned, it seems like the best option for me is to turn up and see if the Respondents also come along. If they do then I will ask the Tribunal to establish what is agreed and not agreed by the Respondents.

If nothing scares me at this point then I will ask to push on with the tribunal. If there is a curve ball I have not foreseen I will ask that either the Tribunal is postponed, or the item that is contested is dealt with at another hearing (as long as it does not affect the other items being discussed – which in my case is probable).

If the tribunal allow the postponement then I will claim expenses etc.

This is the only way I can see that I will not be disadvantages. Does anyone have any views on this?

Tribunals are very limited as to their ability to award you costs & expenses.

Andy