Good neighbours

Also given insufficient attention is the distinction between a lessee’s contractual obligations under a lease and the same lessee’s duties as a director or trustee.

This duality becomes blurred, which leads to conflict – most frequently where there are equal numbers of lessees owning an equal share of the freehold and each having the same voting rights.

Informal management work is fine while harmony reigns – however, experience shows that conflict arises when there is a change in the status quo and the absence of a proper instrument dealing with the effective management of the block means the simplest issue can escalate and result in the breakdown of relations and management.

Disputes almost always involve an analysis of the management of the property.

Compliance with company law and the legislation governing the recoverability of service charges from a lessee, and non-compliance, allows the objecting lessee to avoid liability. Legal advice is often sought too late, and regrettably once relations have broken down it is always difficult to try to unravel the situation.

From an early stage, clear guidance on the freehold structure, its management functions and in particular the duties of the trustees, directors and shareholders – under both the lease or statute – is required.

It is also vital to get advice on the need for proper and regular meetings, to maintain meeting minutes and resolutions so that matters are dealt with transparently.

Legal advisors, accountants and a surveyor should be appointed to represent the freeholder in dealing with all matters arising under the lease, and it is sensible to have a set of regulations governing the use for the occupation of the flats.

Above all, communication is key.

Lara Nyman is partner for Real Estate Dispute Resolution at Howard Kennedy LLP