Section 20 issues?

Section 20 issues?

0:03 AM, 14th July 2023, About 10 months ago 6

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Hello, together with a majority of leaseholders we went through freehold enfranchisement. There is a total of ten flats. We also created the RTM company which has operated for about 10 years. The RTM prepares an annual budget and notifies leaseholders of works and schedules of payment.

All the leaseholders share this and have made payment. In the recent budget cycle, the usual notification was sent, but there was a leaseholder request that this should operate through Section 20. The RTM has complied with this and is undertaking Section 20. Does the issuing of the notification beforehand invalidate the current Section 20 process, as we get noise a leaseholder may use this to refuse payment.

Thanks,

Arthur


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Comments

Judith Wordsworth

10:42 AM, 14th July 2023, About 10 months ago

All works that cost more than £250 per flat should be dealt with by a s20 OR by the RTM company using a s20 Opt-Out agreement.

I think you can send private messages via this platform. Send me a PM with your email address and I am happy to send you a copy of our S20 Opt-Out that we drafted and use. We follow usual 3 quotes, choose via a majority decision then issue the Opt-Out agreement. All monies have to be paid to RTM account before any work commences

David Smith

12:20 PM, 14th July 2023, About 10 months ago

Consider having a Sink Fund (Reserve Fund) that would eliminate the need for the S20 process ahead of planned works.

Crossed_Swords

12:49 PM, 14th July 2023, About 10 months ago

@Judith - it's my understanding that you cannot rely on circumventing S20 using a self-drafted agreement. In what capacity are you acting when you use this, please would you clarify? I am open to being corrected but only S20ZA (I) can be used by application to the tribunal and then only for emergencies, although I don't know how quickly one would get a hearing making that a bit of a nonsense. Thus limiting your recovery to the £250 per flat. Even if that were not the case presumably everyone must sign as if one leaseholder did not, they could not be bound by it and would be within their rights to rely on lack of consultation to avoid payment.
@David - you still have to do S20 even if you already hold the funds, as you hold them on trust for the leaseholders and must consult as to how they are spent
@Arthur - if you gave prior notice and then started the S20 process there should be no problem as long as you follow the procedure. It's given below or on many legal and block management sites
https://www.lease-advice.org/advice-guide/section-20-consultation-private-landlords-resident-management-companies-agents/

Robert

13:37 PM, 14th July 2023, About 10 months ago

Reply to the comment left by Crossed_Swords at 14/07/2023 - 12:49
Thanks Crossed_Swords.

Judith Wordsworth

11:08 AM, 15th July 2023, About 10 months ago

Reply to the comment left by Crossed_Swords at 14/07/2023 - 12:49
No works commence until all flats have signed the Opt-Out and the monies are in.

Crossed_Swords

8:35 AM, 17th July 2023, About 10 months ago

Reply to the comment left by Judith Wordsworth at 15/07/2023 - 11:08
Hi Judith, unfortunately that's not in compliance with S20. From Lease.org:-

"WHAT IS THE PENALTY FOR NON-COMPLIANCE?
While the principal purpose of the consultation process is to seek the leaseholders’ views on the landlord’s proposals, the effect of the provisions is to limit the landlord’s ability to recover if he does not comply.

If the landlord fails to carry out the full consultation procedures in the correct manner, he may not able to collect or recover service charges above the level of the statutory minimum amounts – £100 per leaseholder per year in respect of a long-term contract, or £250 per leaseholder for works to the building. The landlord will have to cover the loss himself; in the case of an RMC or RTM company, the consequences could be disastrous, potentially rendering the company insolvent and unable to continue to fulfil its obligations to leaseholders."

The only way you can dispense is by application to the FTT. Which would probably take longer than issuing the s20 notices. The procedure is quite simple and if everyone is in agreement should not be particularly onerous. The procedure and requirements are given here:

https://www.lease-advice.org/advice-guide/section-20-consultation-private-landlords-resident-management-companies-agents/#

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