Managing agents allowing non-payment of service charge and withholding services

[leaseholdanswers]

Thanks for all your comments. I have just spoken to the administrator. She confirmed that the block has been in administration since 2009 and that they expect to complete on a sale of the parcel of freeholds in the next couple of months. She said the administrator cannot authorise the managing agents to take legal action against leaseholders unless it is financially viable as they are accountable for the money they spend. Are administrators allowed to make that decision not to take legal action and recover service charge arrears? If that is the case should they not pay the debt themselves?

Regarding sale of freehold, the administrator said as the freehold is being sold as part of a parcel of blocks that they do not have to offer the freehold to leaseholders (not that I particularly want it). I just want the block maintained properly.

Everybody seems to be passing the buck!

The administrators duties are to manage the affairs of the company and can exercise a degree of discretion in applying good after bad.

As for the parcel of disposals thats just - unless they are selling the company itself, administration does not simply exempt them from offering the freehold of blocks to the block leaseholders, no matter how many blocks there are.

Direct her to the 1987 Act, right of first refusal and that in doing so they are committing a act with criminal penalties unless they consider that they are exempt under this
http://www.legislation.gov.uk/ukpga/1987/31/section/4 section 2 (b) might apply.

As you you dont want it, so I would urgently start the process of LVT application and gathering your information as they have to disclose that to the buyers. Insisting on section 5 rights *& Act above, might delay that process- they need to take advice.

[badbobby]

Thanks for all your comments. I have just spoken to the administrator. She confirmed that the block has been in administration since 2009 and that they expect to complete on a sale of the parcel of freeholds in the next couple of months. She said the administrator cannot authorise the managing agents to take legal action against leaseholders unless it is financially viable as they are accountable for the money they spend. Are administrators allowed to make that decision not to take legal action and recover service charge arrears? If that is the case should they not pay the debt themselves?

Regarding sale of freehold, the administrator said as the freehold is being sold as part of a parcel of blocks that they do not have to offer the freehold to leaseholders (not that I particularly want it). I just want the block maintained properly.

Everybody seems to be passing the buck!

I'm an insolvency practitioner and I'm afraid that they will never take legal action unless the costs < returns. The costs include their own time, which is considerable plus their solicitors who are likely not to be leasehold experts. Mainly though, the internal risk departments used to always advise not taking legal action unless you were pretty certain of winning due to the slim risk of costs against. I used to teach it internally. Typically we'd farm it out to debt collectors on a commission basis.

The money should be in trust though, so as LHA says, you should be able to get some of your money back if it's not been spent.

Going back to the sale, it's likely that the holding company is in admin but the subsidiary companies (which own the freeholds) are not. So it's likely that the shares of these companies are being sold, which I presume negates the need for "right of first refusal".

[leaseholdanswers]

I think the issue is that while the money is held in trust, that her money and anyone else in the minority has paid, have had their funds used to pay bills in full.

That means that there are likely no monies held to return.

The lease would set out how estimated and actual expenses are reconciled ( usually) and therefore that is a matter for determination which is binding on the freeholder and their successor in title.

By establishing actual expenses and enforcing the terms of the lease the next freeholder will be paying out money.

In the case of the administrator as I have told many over the years write to the mortgagee and they generally pay up.

[Beth Dawson]

Thanks again. What actually will the LVT application do for me?

[Beth Dawson]

I presume that I cannot force the administrators or Salter Rex do chase the debt without incurring legal costs myself. Is that the case?

Regards

Beth

[leaseholdanswers]

Thanks again. What actually will the LVT application do for me?

As explained earlier if the LL and agents have not yet certified actual expenditure then determining how much was actually expended will mean that any surplus, where actual expenses exceed estimated ( not what was paid in) income, you can reclaim that difference. LVT determination would settle the amount.

[leaseholdanswers]

I presume that I cannot force the administrators or Salter Rex do chase the debt without incurring legal costs myself. Is that the case?

Regards

Beth

Yes there is little you can do and where the lease allows you to force a landlord to act where another leaseholder is in breach it normally requires at best you indemnify them for their costs.

[Gordon999]

I presume that I cannot force the administrators or Salter Rex do chase the debt without incurring legal costs myself. Is that the case?

Regards

Beth

1. There is nothing to stop you from contacting the property manager at the RICS MA and giving him/her the contact details of the solicitor firm which can chase and recover the service charge arrears.

My friend has a flat in a block of 48 units on south side of London and when under the previous MA, approx 30% of flats were in 2-3 years arrears. A new MA came in and instructed the specialist solicitor to chase the delinquent leaseholders and sorted the problem very quickly. So I know the arrears in your block can be collected by a solicitor firm and the solicitor's fees will probably be charged to those flats in arrears.

2. The name of the company owning the freehold title for your block can be obtained from the Land Registry Online and should be the same name as stated on the annual ground rent demands.
The status of the freehold company can be checked by doing a search at Companies House website. If the company is under administration, it will show the registered company address as c/o Administrators address.
So if the freehold titles are sold to another company, the Aministrators are legally bound to offer Right of First Refusal.

[Beth Dawson]

Thank you. The managing agents have provided accounts but the expenditure listed does not correlate with the negligible work I see happening at the block. Of course, that is difficult to prove without expending a lot of time and money and I certainly don't want to incur legal costs.

I have decided to investigate the right to manage route now if 50% of the leaseholders are interested as that might be the best solution.

Thank you for all your advice.

Regards

Beth

[Beth Dawson]

Thank you. I am going to look into the right to manage if enough leaseholders are interested. At least then I can get the block into a decent condition.