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F E Smith
F E Smith, Advocate
Category: Law
Satisfied Customers: 9436
Experience:  I have been practising for 30 years.
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We own a share of the freehold flat and have circulated

Customer Question

We own a share of the freehold for a flat and have circulated accounts to the leaseholders. One of the leaseholders (formerly themselves the sole freeholder) has asked some questions. One of which is requesting the following:
"Freeholder is required keep both Service charge and Reserve fund credits in Trust. Could I have the name of the financial institution in which the funds are held and confirmation that the bank has been provided with the notice required under section 42a of the Land lord and tenant act 1985 ."
Is this correct please? Should any finds be he'd in trust rather than our management company bank account? Does this apply to our freehold management account or solely to deposits between landlords and tenants?
Thanks
Matt
Submitted: 1 year ago.
Category: Law
Expert:  Nicola-mod replied 1 year ago.
Hello,
I've been working hard to find a Professional to assist you with your question, but sometimes finding the right Professional can take a little longer than expected.
I wonder whether you're ok with continuing to wait for an answer. If you are, please let me know and I will continue my search. If not, feel free to let me know and I will cancel this question for you.
Thank you!
Nicola
Customer: replied 1 year ago.
Happy to wait. Thanks. Matt
Expert:  Nicola-mod replied 1 year ago.
Hello,
We will continue to look for a Professional to assist you.
Thank you for your patience,
Nicola
Expert:  F E Smith replied 1 year ago.
There is no problem having the money in the Management Company bank account provided it is noted as a Trust account and there is no other money in there from anywhere else.If there is money in that account for other things, it then becomes mixed money and it’s not possible to keep the same money on trust. The amount of money may be the same but it is not the same physical money. I know it might be difficult to understand.To avoid the argument it should be in a dedicated deposit account with nothing else in. However there is no section 42 in the 1985 act, it ends at section 40.http://www.legislation.gov.uk/ukpga/1985/70what he is concerned about is that if the management company goes bust, the creditors would grab all the money in the account because there has been no notice that these funds are on trust.It really needs to be put in a separate bank account dedicated for the purpose. There is no problem in having it in the management company account provided no other money ever goes into that account and provided it is noted as being a trust account.Can I clarify anything for you?