Do I pay upfront for major works?

Do I pay upfront for major works?

9:50 AM, 19th May 2023, About A year ago 2

Text Size

Hello, I own two flats in a block of four, so there are 3 lessees. There is a managing agent for the freeholder who is less than efficient and very expensive but that’s another matter.
Major works are scheduled (and required) and we have agreed on the contractor after tenders went out.

The agent has assigned a surveyor to manage the project who is unknown to us.

The works will cost around £25,000 so not a small sum and I will be paying half.

The consultation period is almost over after a long process but now the agent is saying that we have to send them ALL the money upfront before the works start, in order for the contract to be signed.

This is ridiculous. I was expecting to pay a maximum of 50% upfront and then periodic payments as signed off by the surveyor with a 20% retention until all the snagging has been done.

Supposing the agent goes bankrupt, does a runner or is in cahoots with the surveyor?

In any case we need some protection here. I have known the chosen builder for many years and trust him and his contract will protect him along with his insurance, but what about us? We are paying after all.

We will be also be paying the surveyor for their project management.

Also, I assume the managing agent can’t charge us their usual percentage of annual costs for this project in their already high service charges, when they aren’t even managing it themselves and have just been intermediaries.

Thank you,

Helen


Share This Article


Comments

Graham Bowcock

11:35 AM, 19th May 2023, About A year ago

The agent will no doubt be unwilling to enter a contract without having the funds to ensure completion. If they did staged payments, one (or more) of the leasholders could stop paying. This could be a real problem.

Agents are obliged to hold money on a clients account. This should not be mixed with the agent's own money at all. Therefore there should be some protection if the agent goes bust. My firm is RICS Regulated, so if I disapeared with the client' money, the clients do ot lose out.

Check out the agent's money handling. Who's bank is the money in? What are the bonding arrangements?

As for extra charges, the agent should have advised how much they will charge for the extra work. It can be very time consuming these days (H&S, etc.) to run projects so they will no doubt need to charge.

Helen

16:04 PM, 19th May 2023, About A year ago

Reply to the comment left by Graham Bowcock at 19/05/2023 - 11:35
Thank you for the response. As far as I thought we are responsible for upholding our leaseholders' responsibilities so if we didn't pay the freeholder could rescind the lease.
The Project is being managed externally and we will be paying them quite a lot for their services so I wouldn't expect to have to pay the agent for the freeholder as well.

Leave Comments

In order to post comments you will need to Sign In or Sign Up for a FREE Membership

or

Don't have an account? Sign Up

Landlord Tax Planning Book Now