Hoping someone on here can answer this question, I have no idea and I am struggling to get an answer.
My son bought a flat in a house that is over 120 years old, there are 7 flats in total. Over the past few years, it has become apparent that the building requires a new roof, 5 quotes have been requested with the cheapest currently £58k which will leave the owners facing a bill just over 8k each.
My son has already been told by two other owners that they will not be stumping up the money.
My question is, what happens legally if that happens and say two or three owners out of the 7 refuse to pay?
The work needs to be done because leaks/damp are becoming a big problem.
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Firstly check your liability in your lease, secondly get the balance sheet of the management company and get an idea of the floating fund. Thirdly,if they bugger you about, 4 of the 7 can sack the agent and bring in a more ameniable one that will inherit the existing floating fund.
Many managing agents (mostly thicko bullies) do not realise that service charges are not their money, but they are funds held in trust on behalf of flat owners.
Hence my only advice being to seek legal advice!
Agree with Gisappointed too in that you should be able to read the lease to at least get the gist of the key terms and relationships it covers, then also how to sharpen what ever questions you need to ask from an advisor. Most leases in England are the very similar in structure. If you have a managing agent, then they are in effect working for the Freeholder. They collect and administer service charges and maintenance works for which they bill periodically.
The section 20 process requires that for works over a threshold (where each flat would incur costs of £250 or more each i think, as here), then they need to invite quotes, and follow the set down process. The management agency will also be responsible for following up collection of all costs from each leaseholder )this is done on an account basis, and not all will run a sink fund or surplus Your son should have had accounts from the last service charge period to see if there is a fund.
The Managing agent can also advise what they can do about a leaseholder who won't or can't pay. Ultimately those individuals may need to be told by the management agency that 'this is the process and that's the amount due', or they will maybe carry out interim work, pausing the main works and work out payment plans, or maybe those that can't pay could borrow or have to sell up (not your son's problem directly). If he has an AGM coming up attend it and get involved in the discussion, or ask for an extra-ordinary meeting to be called as those sums are significant, and questions/ issues can then be aired at the meeting.
Myself, i'd have a quiet word with the managing agent in the first instance, if possible, just to ask directly what they'd do to get the works moving when there are some who can't or won't be able to pay.
His flat is leasehold, he has just sent me a copy but I am struggling to see anything regarding owners refusing to pay for repairs.
Fortunately, my son is in a position where he can pay his share. His concerns at the moment are what happens if one or more owners refuse to pay because firstly, the roof is in need of being replaced ASAP and secondly, without 100% of the money, would the repair actually take place or if it does go ahead, who covers the financial shortfall?
From my understanding, the management company appear to be doing everything correctly, there has been letters in advance explaining what work is required, an AGM was held (which is where my son first heard about the two threatening to not pay) and surveys along with the quotes have been forwarded to the owners.
Regarding a floating fund, my son said this has never amounted to much, the maintenance charge was only £45pm but has recently gone up to nearer £90. Last year a significant amount was spent on repairs, decorating of the communal areas and work to the grounds/parking area so its a depleted pot.
I think for the moment we will wait and see what happens, it may be that the two owners are just mouthing off and when push comes to shove, they will pay up. If not, my son has a friend that works in the solicitors he used for the conveyancing so hopefully she will come in handy!
Thanks again for all the tips.
If they are not doing what they should in line with the lease, i.e. producing annual accounts and administering maintenance, you can complain about them but I'd consider that a separate topic for now. Dispute resolution will be covered by the lease, but as said, we are not there yet.
I think your son need not worry too much as it seems a simple question to the managing company directly should allay his concern, - worded as you have "without 100% of the money, would the repair actually take place or if it does go ahead, who covers the financial shortfall?", or i'd put it perhaps a little more directly- 'what will you do to make sure the others pay their share?'
Refusniks could lose their property.
Also £45 pa doesn't sound feasible as a service charge. This would generate £300-£400 for management company which wouldn't cover their costs. I suspect this is ground rent, and repairs are shared by the seven.
Read the lease or take Bob's advise and get a property lawyer involved