Flat-Living.co.uk Expert comment
When things go wrong with service charges…
John Mills, a technical consultant to ARMA, looks at some typical situations where things can go wrong for directors of resident management companies (hereafter RMCos) illustrated with cases that went to the Leasehold Valuation Tribunal.
lessees and landlord and tenant legislation. These two roles often cause confusion for directors and can lead to costly mistakes.
This article looks at some typical situations where things can go wrong illustrated with cases that went to the Leasehold Valuation Tribunal. When the lessees of a small block of seven flats in Huntingdon took
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on self-management of their small block in 1990 it was admitted at the tribunal that ”nobody looked at any leases which were mostly held by banks. Although nobody seems to recall precisely how this came about,
irectors of RMCos are in the position of having to wear two hats at the same time. They are directors of a lim- ited company and so responsible to the shareholders; and responsible for the management of a block of flats and so have to comply with the leases granted to the
the decision was taken to apportion charges equally between flats”. Things went well for many years; the lessees met at their AGM and decided the budget for service charges at their AGM. But when major expenditure was needed for repairs one of the lessees, who was not one of the lessees when the company was formed, got his solicitor to check his lease. He found that his lease only required him to pay a 9.5% share of service costs, not one seventh. He took his case to the tribunal.
PAYMENTS ADJUSTED
The tribunal decided that the RMCo had no right to go against the
leases and that the lessee was entitled to have his service charge payments adjusted to the correct percentage of costs; and that he
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