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Joshua
Joshua, Lawyer
Category: Law
Satisfied Customers: 25470
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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Our flat is one of 10 in a converted chapel some 12 years ago

Customer Question

Our flat is one of 10 in a converted chapel some 12 years ago and we all own a tenth of the freehold and lease each property on about an 82 lease.
The freehold is a company that has an agreement with companies house to lie dormant and the 10 shareholders have an AGM each year to rubber stamp any business.
The leaseholders run the property and have a residents association that has an AGM as well as regular minuted meetings. Equal funds are paid by each lease holder which is used to maintain such issues as communal areas,gardens and essential maintenance. Part of the funds are kept for any major issues and amounts to about £50000.
It has been suggested by one of the leaseholders that as there is no formal legal agreement between freeholders and leaseholders the freeholders have no legal rights to collect and administer funds and may withdraw future monthly payments.
I request any guidance as how to proceed with this potentially difficult situation.
Submitted: 3 years ago.
Category: Law
Expert:  Joshua replied 3 years ago.

Joshua :

Hello and thank you for your question. I will be very pleased to assist you. I'm a practicing lawyer in England with over 10 years experience.

Joshua :

May I kindly clarify with you who precisely it has been suggested may withdraw future monthly payments - do they mean leaseholders may stop making monthly repayments or withdraw funds from the company account?

Customer: It is leaseholders not paying full monthly subs as saying leaseholders have no legal rights as there is no formal agreement between the freeloaders and the leaseholder ( who in reality are the same people ) in so much as one person in each flat has a legal share in the freehold. This situation has been in existence since the properties were initially occupied and so solicitor has at any time suggested any abnormality during the conveyancing of properties.
Joshua :

Thanks

Joshua :

The leaseholders who believe there is no legal agreement between the freeholder and leaseholders (which although they are the same people are different entities - a question of "hats") are almost certainly mistaken...

Joshua :

There are typically provision in almost any residential lease which provides that the leaseholders must pay 1) ground rent - this may be a peppercorn and 2) monies to the frerehold for insurance and 3) monies to the freeholder to cover the freeholders maintenance obligations for the structure of the building.

Joshua :

Where the residents own a share of the freehold as is the case here is is of course for the residents wearing their hats as having an interest in the freehold to decide between them what maintenance will be carried out and therefore what this will cost. Consideration will need to be given to the fact that any one leaseholder can take action in their own right as leaseholder against the "freeholder" for any failure to maintain the structure of the building as required by the lease so regard will need to be had for minimum amounts of maintenance that must be carried out.

Joshua :

Sinking funds can be established if the residents wish as freehold but such sinking funds can only be charged to the leaseholders individually if a) there is provision for the same in the leases (not entirely common) or b) all of the leaseholders agree to this. Unless one of these situations exist then any individual leaseholder can refuse to pay towards a sinking fund though they cannot refuse to pay towards maintenance requirements on the basis that these will almost certainly be provided for in their individual leases.

Joshua :

Is there anything above I can clarify for you?

Joshua :

Does the above answer all your questions or is there anything I can clarify or help you with any further?

Customer: Thanks for that.
Customer: How do the leaseholders formally show that they agree if required or can it be assumed that after 12 years that that can be assumed?
Joshua :

It is not possible to force continuing obligations which are not provided for under the lease based on past conduct. Obviously informal arrangements work perfectly well so long as everyone agrees but they are vunerable to one or persons changing their mind. How to create a binding agreement depends upon the terms of your lease...

Joshua :

If the leases provide for a sinking fund then nothing further needs to be done though it is comparatively unusual for sinking fund provisions to be included in leases but there are many that do. Otherwise the leaseholders would need to sign a simple deed of variation to the lease to include a provision for sinking funds. This could be prepared by a solicitor and would be the same for every lease.

Joshua :

Once signed by each leaseholder it would be binding upon that leaseholder and on any future owner.

Joshua :

Is there anything else I can help you with?

Customer: Thanks that covers it for the moment .
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