Question 1

Section 20

Accepted Answer

Q: Are we required to serve a Section 20 notice for works that will be paid for out of our reserves fund? In other words, if we are not asking the shareholders for additional funds to pay for the works, do we need to serve the s20? Is the requirement based on the spending of any service charge money above the per flat figure, or on the source of the payment for the works? People who buy flats in our large block have shares in the company that owns the freehold, and the company is managed by volunteer non-executive directors who are shareholders elected by the shareholders. We put aside money from the service charge every year to pay for major works, and have never asked the shareholders for additional payments. FPRA Committee Member Amanda Gourlay replies: Yes, you do need to consult for works paid for from the reserve fund. The money is collected and put into the reserve fund, but when it is paid out, it is the lessees’ money. Any expenditure of lessees’ money on qualifying works which results in a service charge demand in excess of £250 per lessee should be the subject of consultation. [Submitted August 2016]

Question 2

Section 20

Accepted Answer

Q: Are we required to serve a Section 20 notice for works that will be paid for out of our reserves fund? In other words, if we are not asking the shareholders for additional funds to pay for the works, do we need to serve the s20? Is the requirement based on the spending of any service charge money above the per flat figure, or on the source of the payment for the works? People who buy flats in our large block have shares in the company that owns the freehold, and the company is managed by volunteer non-executive directors who are shareholders elected by the shareholders. We put aside money from the service charge every year to pay for major works, and have never asked the shareholders for additional payments. FPRA Committee Member Amanda Gourlay replies: Yes, you do need to consult for works paid for from the reserve fund. The money is collected and put into the reserve fund, but when it is paid out, it is the lessees’ money. Any expenditure of lessees’ money on qualifying works which results in a service charge demand in excess of £250 per lessee should be the subject of consultation. [Submitted August 2016]

Section 20

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