Section 20 Refund?

Section 20 Refund?

14:25 PM, 4th May 2019, About 3 years ago 2

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The management company at one of our properties in a block raised funds via section 20 process for a new roof. They have now decided to carry out repairs and defer the new roof for hopefully 5 or more years. They plan to ring fence the remaining funds for when the new roof is needed.

Do they not have to refund the balance as it has not been used for the purpose for which it was collected. I don’t object to building a sinking fund, but I don’t agree with how this has been done.

Can anyone advise on the position. Many thanks.




Neil Patterson View Profile

14:33 PM, 4th May 2019, About 3 years ago

For full Section 20 regulations see The Leasehold Advisorey service >>

"The role of the Tribunal and dispensation

The Tribunal has powers to determine Section 20 matters. This includes the power under S20ZA (I) to dispense with the consultation requirements in a particular case ‘if satisfied that it is reasonable to dispense with the requirements’.

The Supreme Court in a case in 2013 set out its views on how Tribunals should deal with applications for dispensation from landlords (Daejan v Benson).

The purpose of the Regulations is to ensure that lessees are protected from (a) paying for inappropriate works, or (b) paying more than would be appropriate. In considering dispensation requests, the Tribunal should focus on whether the lessees were prejudiced in either respect by the failure of the landlord to comply with the Regulations (relevant prejudice).

Where a landlord has failed to comply with the Regulations, there may often be a dispute as to whether the lessees would suffer relevant prejudice if an unconditional dispensation was granted. While the legal burden is on the landlord throughout, the factual burden of identifying some relevant prejudice is on the lessees. They have an obligation to identify what they would have said, given that their complaint is that they have been deprived of the opportunity to say it. Once the lessees have shown a credible case for prejudice, the Tribunal should look to the landlord to rebut it and should be sympathetic to the lessees’ case.

Insofar as the lessees will suffer relevant prejudice, the Tribunal should, in the absence of some good reason to the contrary, effectively require the landlord to reduce the amount claimed to compensate the lessees fully for that prejudice.

The power to grant dispensation is not ‘all or nothing’. The Tribunal has power to grant dispensation on appropriate terms and can impose conditions on the grant of dispensation including a condition as to costs that the landlord pays the lessees’ reasonable costs incurred in connection with the dispensation application."


19:19 PM, 8th May 2019, About 3 years ago

The starting point is the lease. Leaseholders are only obliged to pay that provided for in the lease.
Should funds be collected for one purpose and used for another then that might well amount to an unlawful unenforceable levy.

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