QUESTION
My wife and I recently downsized and moved to a lovely old mansion which had a modest 7 leasehold apartments. Each apartment has 1 share and a place on the board but the chairman of this organisation is at complete loggerheads with the company secretary because the Company Secretary has some legal training and the Chairman, none.
Currently things have progressed to a new low in relation to the fact that although we (3 newbies in 3 separate apartments) have called for a meeting, the Co.Sec is on her high horse about approving 'assignments of lease' from previous owners until we agree to pay for certain elements which were not done from funds.
The Co.Sec is in total disagreement about how things are to be done and when, and has not even paid maintenance for 3 or 4 years due to the fact that she wanted the outside of the property painted, (the chairman did not so the Co.Sec painted her part and refuses to pay maintenance until she has settled the outstanding bill with the decorator.)
Is any of this legal? Is there some sort of arbitration panel we can go to that will not cost us an arm and a leg (there are only 7 tenants paying £100/month (currently minus at least one...)
Not the peaceful retirement I was hoping for!
ANSWER
Unfortunately, the nature of your query is quite a common scenario found in smaller developments that are self-managed.
Ultimately, however the Co.Sec cannot act on a frolic of their own. The starting point about what is “legal” or permitted will often be set out within your lease in your capacity as a leaseholder or in the companies memorandum and articles of association in your capacity as a shareholder. The issues below appear to overlap and both documents need to be reviewed.
In particular in this case with regards to assignments/consents. It is essential to know the requirements within the covenants of your lease. The Co.Sec can not normally act outside of this.
Following this, there should be further guidance about how your particular set up should be run contained within the memorandum and articles of the Management Company. It is unlikely that the Co Sec can make decisions on their own. As a member of the company you will likely be able to demand a meeting subject to there being enough support from other members.
Finally, the Co.Sec should not be able to withhold service charge for works that have not been agreed and instructed properly. Ordinarily the Chairman and other Directors are the decision makers.
There are several considerations to be had in this regard and further advice on the specific details of this would be required.
Instructing a Solicitor for a written advice on this scenario is an option. Costs of course can vary between solicitors. You definitely need a specialist in property management law so that the lease and Memorandum and Articles can be deciphered properly. By taking this route – at least you will have the correct legal position set out in writing following which you could suggest that all parties abide by it.
Instructing a mediator to attend a meeting with you all is also possible but again can be costly. The benefit of a mediator would be that all parties can be involved. However, they will not necessarily have the legal expertise required and their job would be to mediate rather than advise.
Individual solicitors or mediators should be approached for specific quotes.
Alternatively, it may be worthwhile looking at instructing a managing agent/property manager to help with management of your development so that individuals do not have to be personally involved. The third party being involved may bring peace of mind.
Laura Severn, Director at LMP Law
