Question 1

Lack of Bank Statements

Accepted Answer

Lack of Bank Statements Q: We have held a second meeting with the managing agent accountant and the property manager for our retirement development. Further concerns regarding the management of our three reserve funds have arisen. On request we have been provided with the full 2018 bank statements for the service charge account. No reserve fund bank statements have been provided, although we have requested them repeatedly since last December. We raised our request to director level and they replied that they will not provide any reserve fund bank statements or any further service charge statements. The reason given is that this would take up too much of their administration time. We wish to see bank statements because they are the only independent evidence of how our monies are actually being moved between accounts and what expenditure they are being used for. The information provided to us in management reports has often been inaccurate or misleading. We would be grateful for your answers to each of the following. 1. Are we entitled to receive bank statements for each of our Trust fund accounts? 2. Do bank statements qualify as supporting documents for the accounts under the 1985 Landlord and Tenant Act Section 22? 3. Should entries in quarterly expenditure spreadsheets record transactions and movements out of/into reserve funds, which have actually taken place? It has become apparent that some entries are what should have happened but have not actually taken place. Sometimes not until over a year later, if at all. Gordon Charlton replies: Section 22 Landlord and Tenant Act 1985 states that where a tenant has obtained a summary of relevant costs then they may request in writing that within six months of receiving the summary that the Landlord provides facilities for inspecting the “accounts, records and other documents supporting the summary”. The landlord must provide the facilities within one month of the request and they must be made available to the lessee for a period of two months. Failure to allow access without a reasonable excuse is a summary offence and liable to a maximum fine of £2,500. In my view, bank statements come within the definition of “other documents” and so you should make a request in writing to the managing agent to inspect your records under section 22. A letter template can be found on the LEASE advisory website for this purpose. The reason given to you for not permitting access to your records is completely unacceptable. I would need to look at the accounting records to fully advise on what should be included in the records. However, one point to bear in mind is that it is a requirement under the RICS Service Charge Code for client bank accounts to be reconciled within one month of each month end. To do this, the accounting records have to accurately reflect the transactions in the bank accounts and it is also a requirement that the accounting records are maintained up to date. I also suggest that prior to your next meeting you ask your managing agents for a copy of their complaints procedure! [Submitted May 2019]

Question 2

Lack of Bank Statements

Accepted Answer

Lack of Bank Statements Q: We have held a second meeting with the managing agent accountant and the property manager for our retirement development. Further concerns regarding the management of our three reserve funds have arisen. On request we have been provided with the full 2018 bank statements for the service charge account. No reserve fund bank statements have been provided, although we have requested them repeatedly since last December. We raised our request to director level and they replied that they will not provide any reserve fund bank statements or any further service charge statements. The reason given is that this would take up too much of their administration time. We wish to see bank statements because they are the only independent evidence of how our monies are actually being moved between accounts and what expenditure they are being used for. The information provided to us in management reports has often been inaccurate or misleading. We would be grateful for your answers to each of the following. 1. Are we entitled to receive bank statements for each of our Trust fund accounts? 2. Do bank statements qualify as supporting documents for the accounts under the 1985 Landlord and Tenant Act Section 22? 3. Should entries in quarterly expenditure spreadsheets record transactions and movements out of/into reserve funds, which have actually taken place? It has become apparent that some entries are what should have happened but have not actually taken place. Sometimes not until over a year later, if at all. Gordon Charlton replies: Section 22 Landlord and Tenant Act 1985 states that where a tenant has obtained a summary of relevant costs then they may request in writing that within six months of receiving the summary that the Landlord provides facilities for inspecting the “accounts, records and other documents supporting the summary”. The landlord must provide the facilities within one month of the request and they must be made available to the lessee for a period of two months. Failure to allow access without a reasonable excuse is a summary offence and liable to a maximum fine of £2,500. In my view, bank statements come within the definition of “other documents” and so you should make a request in writing to the managing agent to inspect your records under section 22. A letter template can be found on the LEASE advisory website for this purpose. The reason given to you for not permitting access to your records is completely unacceptable. I would need to look at the accounting records to fully advise on what should be included in the records. However, one point to bear in mind is that it is a requirement under the RICS Service Charge Code for client bank accounts to be reconciled within one month of each month end. To do this, the accounting records have to accurately reflect the transactions in the bank accounts and it is also a requirement that the accounting records are maintained up to date. I also suggest that prior to your next meeting you ask your managing agents for a copy of their complaints procedure! [Submitted May 2019]

Lack of Bank Statements

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