Property service charge dispute.

[Treeman1963]

Hi,

 

I am a leaseholder in a community of 11 properties. The 11 properties have paid c. £130k total service charges over the past 12 years. We've studied all financial records/invoices and it appears that c.£60k is unaccounted for. As a leaseholder, and contributor to the fund, am I legally entitled to view full bank statements for the past twelve years?

 

Thanks in advance.

[king12345]

Yes, of course.

Not bank statement, but full accounts and if you want all receipts and invoices.

The management company manages the estate on your behalf, practically they're employed by you.

In fact if the majority of leaseholders agree, they can sack the management company and get another one

[Treeman1963]

Unfortunately, the freeholder is in cohorts with the managing agents. We've viewed all available documents including invoices, summary accounts (no full accounts exist), expenses etc but the vast majority of the bank statements were missing. Only £60k spend of the £130k collected is referenced in the archives.

 

How can I view the complete bank statements? The FH and MA sure both being very obstructive.

[AndyOrch]

Thread moved the appropriate forum.

 

Regards

 

Andy

[king12345]

You have to send a recorded delivery letter asking for the full accounts which they must exist.

The best thing to do would be to form a residents' association and nominate a person to deal with this matter on behalf of all of you.

They can be as obstructive as they want, once you start threatening to inform HMRC and contact the police regarding the seemingly missing £60k, they'll have to wake up and smell the coffee.

I know of some management companies who offer 12 months free service charges when questioned, don't be tempted to accept this: We're talking £60k here.

[Treeman1963]

You have to send a recorded delivery letter asking for the full accounts which they must exist.

The best thing to do would be to form a residents' association and nominate a person to deal with this matter on behalf of all of you.

They can be as obstructive as they want, once you start threatening to inform HMRC and contact the police regarding the seemingly missing £60k, they'll have to wake up and smell the coffee.

I know of some management companies who offer 12 months free service charges when questioned, don't be tempted to accept this: We're talking £60k here.

 

Thank you. Unfortunately, the freeholders ARE the residents association. Eleven properties and only we are leaseholders.

[king12345]

So in other words they use your money for the upkeep of the estate and the freeholders get a free ride.

Don't dispair, they still must provide full accounts to you.

Send a recorded delivery letter with your request and ask for full accounts, receipts and invoices.

If they don't provide them, send another letter explaining that you will inform HMRC and the police because of the £60k shortfall.

The police won't be interested, but action fraud will give you a reference number that you can use as leverage.

[stu007]

Have a look at these links from Lease:

 

http://www.lease-advice.org/advice-guide/living-in-leasehold-flats-a-guide-to-how-it-works/

 

http://www.lease-advice.org/faq/i-am-a-leaseholder-and-there-are-issues-with-the-management-my-building-i-would-like-to-contact-a-body-that-regulates-property-managers/

 

http://www.lease-advice.org/advice-guide/service-charges-and-other-issues/

[Treeman1963]

Thanks all. We've tried all avenues suggested to no avail. No idea how to get the bank statements.

[andydd]

Im not sure you have a right to see bank statements as such.

 

http://www.legislation.gov.uk/ukpga/1985/70

 

Section 21 gives you a right to have an audited account.

 

Section 22 a right to physical see the documents.

 

Was the account audited ?, it nornmally would be for 11 properties and sums that size, if so, then perhaps the accountant would be involved in some way, after all, it is he who is signing off the accounts and effectively saying, Ive checked and everything is ok.

 

Im not sure whether S22 allows you to see bank statements.

 

Do the accounts simply not add up ?, it sounds like something fraudulent or criminal is going on.

 

Also you could start a claim at FTT, they would have more leverage to request to see docs etc

[Treeman1963]

Thanks for that. Tried all orgs etc. Looks like a solicitor is my only hope.

[andydd]

I'm sure we could help but you havnt given us much info.

[king12345]

As said, send their head office a recorded delivery letter asking to see full accounts, invoices and receipts and give them a month.

If they don't come back to you, report them to HMRC fraud dpt.

You can get their accounts from the companies house website for £1 but they will be limited (just a summary) and maybe won't be related to your estate only.

But you will be able to see their assets including money in the bank that they have declared.

I wouldn't stop calling and give them pressure, especially because it's £60k.

IMO they'll be able to balance their books, nobody is so stupid to leave £60k shortfall running an estate, most likely there are charges and work that you don't know about.

This doesn't mean they are clean, fattening up invoices and receipts is very easy and happens everyday.

[andydd]

As said, send their head office a recorded delivery letter asking to see full accounts, invoices and receipts and give them a month.

If they don't come back to you, report them to HMRC fraud dpt.

You can get their accounts from the companies house website for £1 but they will be limited (just a summary) and maybe won't be related to your estate only.

But you will be able to see their assets including money in the bank that they have declared.

I wouldn't stop calling and give them pressure, especially because it's £60k.

IMO they'll be able to balance their books, nobody is so stupid to leave £60k shortfall running an estate, most likely there are charges and work that you don't know about.

This doesn't mean they are clean, fattening up invoices and receipts is very easy and happens everyday.

 

You dont have an automatic right to see such docs.

 

You need to quote S21 of landlord & tenant act 1985 that allows you to see a summary and then you can use s22 to visit and inspect invoices and take copies etc, the freeholder is under to obligation to send you copies of all the invoices etc

[king12345]

You dont have an automatic right to see such docs.

 

You need to quote S21 of landlord & tenant act 1985 that allows you to see a summary and then you can use s22 to visit and inspect invoices and take copies etc, the freeholder is under to obligation to send you copies of all the invoices etc

 

Getting a copy or book an appointment to see them...

Little details...

The op needs confirmation that they're not nicking money or otherwise, one way or another they'll have to produce proof of how they spent the £60k.

It's not important in what format and in what location.

[andydd]

Getting a copy or book an appointment to see them...

Little details...

The op needs confirmation that they're not nicking money or otherwise, one way or another they'll have to produce proof of how they spent the £60k.

It's not important in what format and in what location.

 

I disagree its not little details, its best to specifically mention the parts of law you are relying upon as opposed just demanding to see something.

 

As it stands there is no general right to see documentation.

 

The rights for leaseholders were introduced in S21/S22, these dont give you an overriding right to view everything..just a summary and invoices, I suspect it doesn't include a right to see bank statements.

 

But the OP hasnt returned to answer the question about whether the service charge account was actually audited by an accountant or not, which might throw more light on this as its his job to notice if £60k is missing.

[CTRL-H]

If the OP has time they should read ss18-30 Landlord and Tenant Act 1985, if the service charges as 'variable.' So check on lease if they are fixed.

 

This will the allow them to go to the various parts of Lease-Advice.org. Sounds like s19 comes into play - reasonableness with a little S18 liability to pay. Don't forget S20C application - can't add cost of tribunal to service charges.

 

If agents cannot account for the monies it is possible that the 1st-tier tribunal will expect monies to be paid back - or into special fund.

 

If its £60K fee for Tribunal is apparently £100, but check this as it was more a few months ago. Hearing fee £200, so ask for paper determination.

 

The following link is a must read for an overview.

 

http://www.lease-advice.org/advice-guide/application-to-the-first-tier-tribunal-property-chamber-2/

 

I am already in Tribunal and representing myself. LL thinks to spend £15k on defence for £few000. It is supposed to be informal and low cost.

 

If agent has not kept receipts, it is still the agent who has to prove income and expenditure. No need for you to see bank statements and no use.

 

Ask for refund and mention tribunal. The tribunal will expect you to make reasonable afforts to get agreement from agent without need for tribunal's input. Good luck.

 

As an after thought, it is worth searching the tribunal decisions and noting the cases to quote them in your case. This may give you the confidence needed to represent yourself.

 

I also found the barristers blog in http://lawandlease.co.uk/ very informative. It's £60k and good experience.

Edited October 7, 2016 by CTRL-H
added can read tribunal findings