Question 1

No Service Charge for Three Years!

Accepted Answer

Q: Our agent has been struggling to get the relevant information, for him to manage the block, from the landlord’s solicitor. So far, in spite of regular chasing, he has received nothing other than the excuse that ‘it is in the hands of the accountant’. We have been in our flat for just over three years now and we have never received a service charge! Some maintenance activities are still taking place but we are not happy with the quality of them. Cleaning has been stopped no warning given) and the managing agent is now providing a cleaning contractor. We are aware that building insurance is in place and we believe that a lift maintenance contract is still running. I would be very grateful if you could advise us on options open to us going forwards. FPRA Hon Consultant Yashmin Mistry replies: Unfortunately this is a common issue for RTMs generally. Where the RTM company applies to acquire the right to manage and there is a pre-existing contract between the current manager and another person, in respect of a matter which will become a function of the RTM company once it acquires the right to manager, the current manager must give notice to the contractor and the RTM company. The form of notice is different in each case and has a prescribed form. From the information contained in your email it is not clear whether any such notices have been served or whether they need to be served. Generally, however, far from ideal, but practically, most new managing agents will usually work on the basis no management information will be handed over on the acquisition date. In respect of your comment regarding the service charges, again, we are not too sure why the RTM company has not started to demand these since the acquisition date? In respect of service charges generally, not only is the RTM entitled to collect the service charge going forward, it is also entitled to receive all “uncommitted” and accrued service charges. So where a landlord has collected service charges in advance, but not yet spent them all, they are under an obligation to hand these sums over to the RTM company. This does not require a notice from the RTM company – the legislation places the duty firmly on the landlord, although it would be wise for the RTM company to remind the landlord of this. The sums must be paid on the acquisition date or soon after as is reasonably practicable. The total sum paid is calculated by taking any monies paid by the leaseholders as service charges plus any interest or investment income generated by such money less the landlord’s outgoings on the provision of services up to the acquisition date. The intention is that the outgoing manager is obliged to hand over the RTM company whatever monies are held in the bank or accounts relating to the property. This does not include an obligation to pay over monies that should be in the bank account but are not. In the event the landlord and the RTM company cannot agree a figure, either party may apply to the Tribunal to determine the amount to be paid. The tribunal has no power to award interest on any disputed sums. On a general note the county court also has powers to make an order requiring a person who has failed to comply with a requirement imposed on him by under or by virtue of the right to manage provisions, to make good his default within a specified time. No application can be made for such an order unless notice has been given to the person in question requiring the person to make good the default and more than 14 days must have passed since the notice was given. [Submitted December 2016]

Question 2

No Service Charge for Three Years!

Accepted Answer

Q: Our agent has been struggling to get the relevant information, for him to manage the block, from the landlord’s solicitor. So far, in spite of regular chasing, he has received nothing other than the excuse that ‘it is in the hands of the accountant’. We have been in our flat for just over three years now and we have never received a service charge! Some maintenance activities are still taking place but we are not happy with the quality of them. Cleaning has been stopped no warning given) and the managing agent is now providing a cleaning contractor. We are aware that building insurance is in place and we believe that a lift maintenance contract is still running. I would be very grateful if you could advise us on options open to us going forwards. FPRA Hon Consultant Yashmin Mistry replies: Unfortunately this is a common issue for RTMs generally. Where the RTM company applies to acquire the right to manage and there is a pre-existing contract between the current manager and another person, in respect of a matter which will become a function of the RTM company once it acquires the right to manager, the current manager must give notice to the contractor and the RTM company. The form of notice is different in each case and has a prescribed form. From the information contained in your email it is not clear whether any such notices have been served or whether they need to be served. Generally, however, far from ideal, but practically, most new managing agents will usually work on the basis no management information will be handed over on the acquisition date. In respect of your comment regarding the service charges, again, we are not too sure why the RTM company has not started to demand these since the acquisition date? In respect of service charges generally, not only is the RTM entitled to collect the service charge going forward, it is also entitled to receive all “uncommitted” and accrued service charges. So where a landlord has collected service charges in advance, but not yet spent them all, they are under an obligation to hand these sums over to the RTM company. This does not require a notice from the RTM company – the legislation places the duty firmly on the landlord, although it would be wise for the RTM company to remind the landlord of this. The sums must be paid on the acquisition date or soon after as is reasonably practicable. The total sum paid is calculated by taking any monies paid by the leaseholders as service charges plus any interest or investment income generated by such money less the landlord’s outgoings on the provision of services up to the acquisition date. The intention is that the outgoing manager is obliged to hand over the RTM company whatever monies are held in the bank or accounts relating to the property. This does not include an obligation to pay over monies that should be in the bank account but are not. In the event the landlord and the RTM company cannot agree a figure, either party may apply to the Tribunal to determine the amount to be paid. The tribunal has no power to award interest on any disputed sums. On a general note the county court also has powers to make an order requiring a person who has failed to comply with a requirement imposed on him by under or by virtue of the right to manage provisions, to make good his default within a specified time. No application can be made for such an order unless notice has been given to the person in question requiring the person to make good the default and more than 14 days must have passed since the notice was given. [Submitted December 2016]

No Service Charge for Three Years!

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