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F E Smith
F E Smith, Advocate
Category: Law
Satisfied Customers: 11253
Experience:  I have been practising for 30 years.
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We are a letting agent. We are starting to manage 8 number

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We are a letting agent. We are starting to manage 8 number apartments in 2 blocks. We act for the management Company who is also the freeholder .We intend writing to each leaseholder request £100 per month to go into a sinking fund to manage repairs. It appears 6 of the 8 are okay with this but 2 are not. How do we manage this? For the 2 that don't pay do they settle their arrears when they sell the property?

Hello for clarification - has the freeholder/management company requested this fee?

Customer: replied 6 months ago.

I’m afraid to say that if there is no provision in the lease for any money in advance/on account/to go in the sinking fund, then there is no way that you can collect the money from them. It just makes it more difficult for them and rather shortsighted because in the event that there is a big spend, they are going to have to find a big chunk of money as well as the other owners will have already contributed to the pot on the drip.

The difficulty comes if ever they come to sell the property and anyone who has contributed to the sinking fund would be entitled to get that proportion back.

On a practical basis, if there is no mention of a sinking fund in the lease, and they will not all agree, then you cannot impose one.

Can I clarify anything else for you?

I’m happy to answer any specific points arising from this.

Please take a moment to look at the top right hand corner of the page and rate my service by clicking one of the stars at the top of the screen. It’s important you use the rating service because that gives me credit. It doesn’t just give me a pat on the head! (Although there is an incentive scheme where the more five-star ratings I get, I do actually get a pat on the head! :-)) All you need to do is press Submit. Thank you.

If you still need any point clarifying, I will still reply because the thread does not close.

Best wishes.

FES.

Customer: replied 6 months ago.
If there is provision in the lease for a sinking fund what if 2 of the 8 did not contribute how would that work?
Customer: replied 6 months ago.
Or if emergency works have had to be carried and 2 of the 8 haven't paid would they have to pay before they can sell?

If there is a provision in the lease for the sinking fund and two out of the eight don’t contribute, you take them to court for the arrears and you threaten to foreclose on the lease.

If they come to sell or remortgage the property, you refuse to answer any enquiries or confirm that the service charges are up-to-date and you tell the Enquirer that they are in arrears. No one will buy a property generally when the service charge is in arrears.

F E Smith and 2 other Law Specialists are ready to help you
Customer: replied 6 months ago.
Thanks