NOTB November online edition - Editor's letter and readers questions

Also in this issue Mira Bar-Hillel tackles head on the issue of insurance commissions, and asks those tough questions. And Jane Barry, another respected property writer, argues if you want good block management the answer, ultimately, is in your hands. She says that it’s possible to choose a reputable managing agent you think you can work with – but he or she will only be as good as the instructions you give. Also Kerry Glanville, partner at Pemberton Greenish, analyses the Court of Appeal’s decision on Sportelli, and how it will affect landlords and leaseholders.

We are delighted to bring you Volume II of our directory, The Little Red Book - who’s who in property management. This publication lists more than 130 managing agents, and has tips and advice for RMC directors. We hope you find this publication useful.

Your questions answered
We are here to help you with your questions about your flat.
Have a question? Then contact us at one of the following: editor@newsontheblock.com with Question in the subject line, or by telephone at 08700 600 663, or by post at News on the Block,
One Great Cumberland Place, London W1H 7AL.

Q Dear News on the Block,
I am one of four company directors of a freehold block of flats with four blocks of six flats in open-plan land belonging to us. We own the property as a limited company with 24 shareholders. A large developer has approached us informally and only verbally, and the question is: Would we need 100 per cent of the shareholders to agree to sell the property? Many residents have shown an interest. We have fairly large grounds overlooking the cliffs and sea on the south coast.
Name and address withheld

A Dear Sir/ Madam,
The answer should lie in the Memorandum and Articles of the company; a properly drafted Mem & Arts should provide details of the support required from members for disposal of the land or other assets.
However, if the Mem & Arts are silent on the matter then the general principles of company law would apply. It is the Board that manages the company and it would be for them to convene an Extraordinary General Meeting (according to the requirements of the Mem & Arts) and to put the proposal to the meeting. Normally a EGM resolution would be carried by a vote of 75 per cent of the shareholders present at the meeting. I assume that the proposed sale is limited to the freehold, in which case the individual flat owners, whatever their vote in the matter, would retain their leasehold interests in their flats, which would not be affected by the sale of the freehold.
However, there is a serious secondary issue that must not be ignored. The company proposing the disposal is legally the landlord and is therefore bound by the Landlord and Tenant Act 1987 to offer the Right of First Refusal to the leaseholders before proceeding. It is immaterial that the leaseholders are also the shareholders of the company, as leaseholders they have the statutory right to the offer of first refusal and may be in a position to disrupt the sale if the company fails to comply with its statutory obligations.
Peter Haler, LEASE

Q Dear News on the Block,
I am a leaseholder of a 1st floor maisonette. I last paid the ground rent on my property 10 years ago, as I’ve had no contact with the freeholder. I’ve been told that if the ground rent hasn’t been pursued for 12 years, the freehold on the property can be obtained by the leaseholder without any charge, is this true?
Name and address withheld

A Dear Sir/Madam,
Section 26 and 27 of the Leasehold Reform and Urban Development Act 1993 deals with situations where a landlord cannot be found.
An application to the Court will always be required and providing the Court is satisfied that the tenants claim, if made, is valid, the Court can make a vesting order. In other words, the Court will direct that the tenants are entitled to exercise the right to enfranchise and grant a vesting order for the purchase of the freehold in the nominee purchaser.
Where one landlord is absent but there are others, the Court has power to dispense with service of the initial notice on the landlord that is missing. If, however, the missing landlord is in fact the freeholder, then the court can appoint another landlord as the reversioner. The claim will then proceed as normal.
Before any Court grants a vesting order however, it will invariably need to see evidence that efforts have been made to trace any missing landlord, for example, placing adverts in local newspapers and in the London Gazette, etc. The Court may even may further directions for further steps to be taken to trace the landlord.
Once a vesting order has been granted, the Court will then refer the matter to the Leasehold Valuation Tribunal who effectively will stand in the shoes of the absentee landlord and determine the terms on which the purchase should proceed.
Brethertons LLP

Q Dear News on the Block,
A property developer purchased a ground floor flat in a block of six flats. The developer is requesting under the terms of the lease that the other five residents proportionately pay for the damp repairs required in his property. What will all this mean to the residents?
Name and address withheld

A Dear Sir/ Madam,
Most of the answers will lie in the lease. Normally the lease will set out the repairing obligations for the landlord and the payment obligations of the flat-owners. If the dampness arises from structural defect then usually, it would be the landlord’s obligation to complete the repairs and to levy charges against all contributing leaseholders according to the provisions of the lease. However, without sight of the lease the question can’t be resolved fully.
Peter Haler, LEASE