We are a small shared-freehold company, registered with Companies House as a residential community. There are four leaseholders, each of which has a share of the freehold. We don't use an outside management company but are running it ourselves.
When one of the flats was sold in 2010, the buyer's solicitor told his client that he would not need to pay any roof repair bills. This was based on a poorly worded clause in a Draft Lease made in 1987, later adopted without being revised and re-typed. The other three leases have clearer wording.
The Clause 2 in the Draft Lease for Flat 2 (a ground floor flat) which has raised this dispute is this:
"It is intended that the maintenance and repair of one half of the foundations of the said building shall be the responsibility of the Lessee whilst the maintenance and repair of the other half of the foundations and the roof of the said building shall be the responsibility respectively of the lessee of the other ground floor flat, No. 1 in the building and Flat No. 4, and the cost of such maintenance and repair shall be borne by the Lessee and the lessees of the adjacent premises who shall each pay one-fourth of the cost thereof and this Lease and the leases of the adjacent premises shall so provide and the maintenance of any common parts there may be shall be the responsibility if all the lessees as to 25% of it each lessee."
The other three leases have different wording, making it quite clear (according to my own solicitor) that the word 'responsibility' means the lessees named have a duty to identify a) when the roof needs repair (Flat 3 in this case, which is in the attic, not Flat 4 - an uncorrected error in the Draft Lease) and b) the ground floor flats have a duty to identify when cracks, etc, appear in the foundations, but that ALL FOUR of us must pay one-fourth of the costs to repair any faults in the common areas of the building, which include the roof.
The house roof needed repairs in Feb 2014. The owner of Flat 2 is still refusing to pay 25% of the costs. Our accountant warned us last year that if the directors of the company do not resolve this dispute and receive the payment due, the company may be fined by HM Government for not doing so.
My questions are:
Do you agree with our personal solicitors that the final wording of Clause 2 above means we each pay 25% if the roof repairs?
Do you agree that if we don't resolve this, the company may be fined?
We are now about to take this matter to court, but if you could offer your opinion it may help to avoid this unpleasant necessity.
Thank you for your email. It is a little difficult to advise on the issues without sight of the actual leases that are in dispute. The wording of the lease below is very confused and not clear at all. If however there is doubt as to what a clause permits recover for, the landlord may need to consider lodging an application to the First Tier Tribunal for a determination on whether or not the Tribunal determine the said costs can be put through the service charge account under the provisions of the existing wording of the lease(s).
In terms of delay in recovering the outstanding sums, I have not heard of a provisions involving fines from the Government.
There would of course be statute limitation issues involved depending on whether the costs have been defined as service charges under the terms of the lease and perhaps issues concerning the 18 month rule for demanding service charge etc. Perhaps however the landlord needs to go back to the accountants to ask them for further clarification on the suggested fines?
Hope that helps.
Yashmin Mistry, Partner at JPC Law