Share of Freehold, tennents share equal shares in management company

**nicole** · 08-04-2012 10:04 AM

There are 5 flats, we all have a share of the freehold and it is managed by our own management company which was set up 12 years ago before we bought a flat. The guy who set up the company lives in the top flat and he has been there the longest.

Each flat owns an equal share of the management company. We all pay a quarterly amount, which is not alot, no sinking fund.
The directors are:
1. the guy in the flat upstairs
2. A lady who just moved in to the 1st flat (she is quite old). before she moved in the previous owner of the downstairs flat (who was old and vulnerable).
The 1st director (1D) just appointed the new lady without any consultation with any of us.
we currently let out our flat and the 1D was against this and tried to fight it and we pointed out in our lease that we are entitled to do so.

1D is a very aggressive confrontational bully often demanding things of the other flat owners, like they take down newspaper from her windows when she moved in. He does not allow anyone to put any thing in the hallway and once he nearly tried to start a fight with my husband as we had a bin bag out side our door for 3 hrs.

My tennant left his bicycle in the downstairs lobby, which is a huge area, not obstructing any thing and 1D chucked his bike out on to the sreet, and its an area where its quite likely to be stolen v quickly. when I have challenged this he shouted abuse at me saying that he will not only throw it outside but chuck it down the road if anything is left in the hallway.

someone who lives in Flat 2 does not use his front entrance and has said they can leave their bike and buggy (as my tennant is expecting a baby)out side his front entrance. this is down the side of the stairs and is not in the way of anyone using the hallway. the man in Flat 2 has a 2nd entrance to his flat which he uses so it is a dead space and has said they can put the buggy there in the front entrance.

we are going to call a meeting, on neutral grounds, and invite all the flat owners, some are a bit intimidated by him and others are quite apathetic, We are the only assertive owners, as others fear his aggressive nature, we have never had an AGM, he sends accounts some years, and charges £250 which he pays himself to do the book keeping and accounts. He acts like he owns the block, and said as he is the director of the company he has a right to do whatever work he feels he wants to do and bill us. he has even said that he will now instruct a solicitor and charge us all for this! for what I do not know as the lease clearly states we can rent out our property. Our tennants are good quiet people and I fear his aggressive nature will make our tennants leave.

so my questions are:
1. was he wrong just to allocate company director to someone who just bought the flat from the previous director without conssulting us

2. Does he have the right to get work done / use our money in the management company without consulting us, and without allowing us to get quotes, as he only provides hand written receipts when asked? I doubt his honesty

3.can he just instruct a solicitor and charge all the flats for this>?

4. can he use the money in our management company as he likes without our consultation and agreement?

5. there is nothing in the lease about keeping hallways clear. He has a plant in the corner, a folded up buggy would probably take up the same amount of room in the lobby

6.can we vote in the meeting to allow my tenant to keep her buggy downstairs in the lobby? as long as it does not cause any obstruction, as he has a plant and a table for the post to go on to?

7. Even if we vote it in, he has said he will still throw anything out on the street, is this a criminal offence?

what should we do? surely if a flat owner has a guest they should be allowed to put the bike in the lobby, clear of any exits without fear of him throwing it out on the street, this has happened 3 times to 2 different tenants.

Thanks for reading

**leaseholdanswers** · 08-04-2012 11:36 AM

Let me offer a different perspective to you, before answering the questions, as your post almost screams the following:

" I don't like him, I don't like what he does, or how he does it"
" What he ever he does do, how dare he charge £250?!"

Setting aside room for improvement,if he were replaced, would you take on what he does, voluntarily, and for no, or a small amount of, money?

Powers To Do As long as the service or work is permitted under the lease and the cost and solution is fair and reasonable, they are not required to consult, expect for qualifying works where any flat pays £250+. Directors are of course accountable to shareholders

Directors and AGM You will have to look at the Articles of Association to see how and when directors are appointed. If not on your file Companies House sell them on line.

Items in the Hall Bluntly refuse should never be left in the hallways it's extremely rude to neighbours to expect them to come home to see your rubbish lying in the hall 'Your bin or the common bin'. Your tenant was wrong to assume they could put their bike in the hall - it's not a right in their tenancy. The lease need not say no to items, your rights to the area are set out in your lease and would have to be expressly granted, and in most cases are restricted to allowing you to pass through the common area.

If it is safe to leave items in the hallway and it is not to the detriment to the block as a whole you might unanimously, not as a majority, might agree to place for a buggy and a bicycle or plant. This is because each owner is entitled to the benefit under the lease not to have items in these areas. No bike , no buggy...

A meeting focusing on the problems is an idea, not recrimination, but be prepared to accept that before you have him sacked and arrested as your post implies, if he isn't going to do the paperwork books annual filing arranging for jobs to be done and paying the bills, are you?

**nicole** · 08-04-2012 11:55 AM

Thanks for your reply,
There has not been any refuse left in the hallway since! especially as he threatened to punch my husband!

Under Powers to Do
you put as long as the work is reasonable they are not required to consult, are you talking about the lessor? as I understood we all own a share of the free hold, and an equal share in the management co. so as a director can he do work, like hiring a solicitor and send us all the bill without consulting all of us 1st?
I wanted to arrange an EGM to discuss the issues but if any changes have to be made through unanimously passing then there is no point, I was also going to thank him for all the hard work and mention how time consuming and thankless it is.

But he is not a reasonable man, he threats, shouts and swears at people regularly.

It states he is a perminant director in the AAs but we can have many ditectors. I was not planning to sack him. I just think its unreasonable to throw someones property outside.

thanks

**leaseholdanswers** · 08-04-2012 12:25 PM

It's a matter of perspective,how does a tenant assume they can leave their bicycle in the hall? It's not what you think is reasonable or presume, it's what your leases permit or exclude.

Without seeing your lease, the lessor is the freeholder and either your company owns that freehold or by whatever means the company is now responsible for discharging the lessors duties.

Directors are appointed by shareholders to discharge the companies obligations, and then yes they can then do as you suggest, as posted earlier. They are only required to consult if the shareholders place restrictions on the powers, there are statutory obligations ( as the lessor, a party to the lease, or on it's behalf as it's Agent) or to avoid the ultimate accountability, removal.

If the AoA appoint someone permanently then, subject to the wording it might be possible to alter the articles and remove them, or find that his actions and behaviour are inconsistent with the discharge of the duties.

The unanimous point was one in relation to the items in the hall- all have benefit of the leases' restrictions, therefore all must agree if that is to be changed. If you can't leave bikes then he cannot have a pot plant or buggy...so it's a negotiation.. Other ordinary business is conducted on a majority.

Refuse and bikes aside what else does he have to shout and swear about?

**nicole** · 08-04-2012 20:30 PM

I understand we own the lease if we own a share of the Freehold?

It does not say in the lease that we cant put bikes or pushchairs in the hall way, so does this mean that we are allowed to? or at least call an EGM to ask for a vote which can be passed by majority?

he shouts and swears about things in the hall (which are not his, i.e he has plants and a table), threatened to punch my husband after a rubbish bag was out side (fair enough it should not have been there but threats) physical attack is completely unreasonable, and shouts and swears that we let out our flat, called me a stupid f$**king bi@*h because I got legal advice (out of my own pocket) and was told I was allowed to let out my Flat, (our sale fell through and we really did not want to lose the house we found, I did not want to become a landlord!). He threatened to physically chuck out any tenant I got in! but thats all resolved since he got informed by my solicitor that the lease states I am allowed to ket the flat out.

We all own an equal share in the LTD management Co. we have never had an AGM. He never produces receipts, evidence or invoices when we get billed and I would like to be involved in the quotation process as I believe he is splitting costs 4 ways and not 5. not getting the cheapest person. everyone else in the flats are quite passive and think he is in charge. We are the only ones who have dared to challenge him as he is a bully and no one else would dare.

How can it be fair that he can spend our money for himself we pay quarterly as he sees fit without an agreement?

especially as he is talking about instructing a solicitor (not quite sure what for? ) to fight us?!!! and said he was going to do some major work now because we have challenged him and we would pay heavily for this,

how can this be right?

so is there any point in calling an EGM? can we have a majority vote on issues of allowing a pushchair in hallway?.

I was thinking of writing a letter to all the shareholders of our Co. inviting them to a meeting, and acknowledge and thank him for the hard and thankless task of Co director. The AAs say there is a permanant director, but that page is missing, Im assuming its him. and then says the others get voted in as many as we want, I believe not inherited from last flat. I assumed he served us as a director, not the other way round.

Its not really the bikes that my tenant want down stairs its the pushchair

I assumed we all have same rights as equal shareholders

I also wanted to ask when the last jobs were put out for tender, i.e gardener and cleaner as we seem to pay more than I know we can get cleaners and gardeners for. and the insurance, surely you can shop around, not just renew year in year out with same insurer. I would happliy assist to ease the burden of his load. I am never agressive or provoke him, I am polite.
But as far as he is concerned he is in charge.

So as it does not say in the lease about anything in the hallways I assume we are allowed to put a pushchair as long as it is not blocking an exit. If he throws it on the street surely he is committing a criminal offence, as he threatened to chuck it out regardless of any vote.
he is not a reasonable person

**animal** · 09-04-2012 06:15 AM

You need to understand that you have two hats in this situation, one as lessee and one as shareholder.

As a lessee you, and all other lessees are bound by the lease. By default you would not be allowed to do anything in the common areas, as the area is not demised to you. The lease might define things you are allowed, but by default you have no rights in this area other than to pass through to access your flat.

In addition, there would be a health and safety issue with items left in hallway, maybe invalidating your block insurance.

As a shareholder you have the right to vote at an AGM. The Articles will state if an AGM is necessary and how it should be convened. You almost certainly have the right to be a Director, though you probably need 10% support to be nominated. The Board usually does have the right to appoint other Directors.

The Directors must comply with the lease or they would be in breach of contract with the shareholders and thus personally liable for any losses incurred by such breach. Hence why LH says you need 100% vote - in effect this would be modifying everyone's lease.

The procedure for getting rid of a Director will be defined in the Articles. Usually you need to call an EGM and the Director concerned given notice. From memory, you need 75% to agree to dismiss him.

One Director cannot decide upon items of expenditure unless the Board has specifically delegated that duty. Even then, it would need to be compliant with the Lease and the Statutes.

There may also be a liability, as a Shareholder for Company expenditure, under the Articles, but if this expenditure is in relation to the maintenance of the property, then the Statutes would still apply - i.e. requirement for consultation if costs exceed £250 for any one lessee.

Also under the Statutes, any service charge must be reasonable. The SC fund is not the personal funds of the Director to do with what he wishes. It must be spent in a reasonable manner in accordance with the lease.

It is not clear for what purpose he would be consulting a solicitor, but you would only be liable if it was for a Company purpose in relation to managing the property.

It is also not clear if the SC has ever been properly demanded. Do the invoices contain the name and address of the landlord? Have you received a copy of rights and obligations? If not, then you have no liability whatsoever and having paid previous SC, is not an admission of liability. Note however, that an insolvent freehold company is likely to devalue the property more than any benefit you might get from making a claim. This could be leverage though, considering any loss to the Company by the Directors failure to comply with the Statutory requirements means the Directors may become personally liable for that loss.

As for the behaviour described, shouting and swearing at people would be considered harassment and possibly assault and should be reported to the Police. Though given your description of the area and the nature of this man, this may make things worse.

He has no right to throw possessions of other people out on the street. The correct procedure would be to give reasonable written notice that if the items are not removed, then they will be removed at a cost to the lessee. And not by dumping them on the street. I suspect he could be charged with theft and littering...

I would suggest taking a look through the lease advisory service website, which has a lot of information on lessee rights and obligations. These apply whether you own a share of the freehold or not.

**leaseholdanswers** · 09-04-2012 08:18 AM

Items in the hallway Ok let me try and explain this for the 3rd time

The presumption is not for but against items. Your leases do not have to say "NO". As the owner of a flat any rights over common area have to be granted, if you like you have no rights, even to go home, unless the lease says so.

If as a joint freeholder in name, rather than a shareholder/member of a freehold owing company , you do have largely unfettered access and use over the common areas, except where any rights or contracts limit those.
A lease is such as contract, and if, as it usually is, no right to store anything has been granted, one leaseholder can claim the benefit of that and prevent anyone from putting things in the hall.

His approach is entirely unacceptable but I understand the concern over items cluttering up the outside, safe or not, when as a personal possession, they should be cluttering up that person's flat.

**leaseholdanswers** · 09-04-2012 08:30 AM

You will need a copy of the Articles and The Lease ( online at Companies House and HMLR), and might be better off arguing your joint concerns about what we the company are doing, than his shortcomings.

1: End of Year Accounts; The company should file accounts each year unless filed as dormant- see Companies House. The lease normally requires a statement of actual costs for each year end.

You can say that if anyone sells a new buyer will want to see these, and if someone does not pay we need these to recover the money. A "owner" ie you, and the veiled threat, also has a legal right to a statement ( see sticky on the forum )

2: Budget: The lease will often ask that a budget be prepared for the years expenses and ask that this be produced and discussed, and in due course who gets the work, why, and when are quotes obtained/reviewed.

3: Remuneration: You might even find a way to formally recognise a payment and expenses to him in return for their hard work.

4: EGM then you need the articles, but if you intend to replace him, then there are special rules for that. http://www.companylawclub.co.uk/topi...m_office.shtml
Perhaps you ought just discuss the other issues and deal with removal if you have to later on.

If he won't cooperate or agree to appraoch others in a civil manner then you are best to replace him, even if that means a managing agent.

BUT you must must do your homework first.
http://www.lease-advice.org/publicat...nt.asp?item=14

http://www.landlordzone.co.uk/forums...de-of-Practice

**nicole** · 09-04-2012 09:20 AM

Originally Posted by animal

You need to understand that you have two hats in this situation, one as lessee and one as shareholder.

As a lessee you, and all other lessees are bound by the lease. By default you would not be allowed to do anything in the common areas, as the area is not demised to you. The lease might define things you are allowed, but by default you have no rights in this area other than to pass through to access your flat.

In addition, there would be a health and safety issue with items left in hallway, maybe invalidating your block insurance.

As a shareholder you have the right to vote at an AGM. The Articles will state if an AGM is necessary and how it should be convened. You almost certainly have the right to be a Director, though you probably need 10% support to be nominated. The Board usually does have the right to appoint other Directors.

The Directors must comply with the lease or they would be in breach of contract with the shareholders and thus personally liable for any losses incurred by such breach. Hence why LH says you need 100% vote - in effect this would be modifying everyone's lease.

The procedure for getting rid of a Director will be defined in the Articles. Usually you need to call an EGM and the Director concerned given notice. From memory, you need 75% to agree to dismiss him.

One Director cannot decide upon items of expenditure unless the Board has specifically delegated that duty. Even then, it would need to be compliant with the Lease and the Statutes.

There may also be a liability, as a Shareholder for Company expenditure, under the Articles, but if this expenditure is in relation to the maintenance of the property, then the Statutes would still apply - i.e. requirement for consultation if costs exceed £250 for any one lessee.

Also under the Statutes, any service charge must be reasonable. The SC fund is not the personal funds of the Director to do with what he wishes. It must be spent in a reasonable manner in accordance with the lease.

It is not clear for what purpose he would be consulting a solicitor, but you would only be liable if it was for a Company purpose in relation to managing the property.

It is also not clear if the SC has ever been properly demanded. Do the invoices contain the name and address of the landlord? Have you received a copy of rights and obligations? If not, then you have no liability whatsoever and having paid previous SC, is not an admission of liability. Note however, that an insolvent freehold company is likely to devalue the property more than any benefit you might get from making a claim. This could be leverage though, considering any loss to the Company by the Directors failure to comply with the Statutory requirements means the Directors may become personally liable for that loss.

As for the behaviour described, shouting and swearing at people would be considered harassment and possibly assault and should be reported to the Police. Though given your description of the area and the nature of this man, this may make things worse.

He has no right to throw possessions of other people out on the street. The correct procedure would be to give reasonable written notice that if the items are not removed, then they will be removed at a cost to the lessee. And not by dumping them on the street. I suspect he could be charged with theft and littering...

I would suggest taking a look through the lease advisory service website, which has a lot of information on lessee rights and obligations. These apply whether you own a share of the freehold or not.

he demands SC by text message, never get any written receipts. yes i think if we called the police it would make him even more angry.

I take it then a unanimous vote would be needed to put pushchair in lobby?, sorry I need things in simple terms!

I dont want sack him, but share the responsibility of being a director, be more involved in putting the services out to tender as we know cheaper cleaners and gardeners. quotation processses Also we have never had an AGM, there is no secretary no receipts provided ever. the accounts are provided in a brief way some years. I want it to be more like a company and not just a one man dictatorship. He may then feel less resentful / agressive as he is not doing all the work!

Think he is instructing a solicitor to either prevent us from letting out (The lease clearly states we can) or maybe to get an order to say nothing in the hallway. but then he would have to remove his items (plants, table)

It does not say in the AAs about getting rid of director. it states that the original director stays and is not subject to rotation, but the page is missing that states who that is? whether it was him or before his time

I have contacted the leasehold advisory service but he is the kind of person to say "F off do what you like Im not changing anything!"

**Tulula** · 09-04-2012 09:29 AM

I can't add to the excellant advice given above other than to say that if there a internal communal areas there is a statutory obligation to undertake a Fire Risk Assessment, and such an assessment will, almost invariably, require the communal areas to be kept clear of obstructions. You may not consider the buggy an obstruction under normal circumstances but now imagine you are a fireman attempting to find your way around an unfamiliar space in zero visibility due to smoke and the fact that the lights have gone out, all whilst wearing heavy equipment and breathing apparatus. His table and pot plant probably shouldn't be there either.

As to the issue with the dubious accounts etc, request a summary of costs under s21 of the LTA 1985, and then follow that up with a request to see supporting documents under s22.