Help with leasehold dilemma!

Help with leasehold dilemma!

9:55 AM, 9th May 2024, About 8 months ago 22

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Hi, all our twenty private management company shareholders are owners of their flats, and hold them on Leasehold Title Absolute. Collectively (as our company) we own our entire property on Freehold Title Absolute. The twenty shareholders are of equal status, each of us holding 200 shares in our property.

Our governing legislation is the Companies Act 2006 and we are registered at Companies House. We have a Lease that binds all of us it is held by HM Land Registry. On paper, this setup should provide a sense of security and stability. However, despite these legal safeguards, our collective situation is far from comfortable.

We have five directors all but one are totally inactive. The one gets no support from the inactives. None of them has read our Lease, nor has even a remote acquaintance with the Companies Act 2006.

A manager was foisted on our company by two outgoing directors. The manager assigned to us seems to lack any understanding of our lease terms.

Under his management (now 11 years long), the flats in our seafront Grade II listed terrace of four Victorian houses fetch the lowest prices in our modest town.

As if that were not enough to get up my nose, this manager has locked me out of the loft above my flat, to which our Lease privileges me (as it privileges the three other flat owners who have a loft) as the person with the sole right of entry to it.

I am almost finished preparing my plea to the FTT(Prop) to dismiss this manager, and appoint a qualified one to our company. However, I am worried that I might harm my company by creating problems at Companies House with my FTT(Prop) appeal.

Will that happen? Please, however, do not advise me to seek a solicitor’s help. Only the company law specialists among them know this ground. I have already burnt my fingers twice on solicitors who purport to know it, but haven’t a clue.

Thanks,

Sophie


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Kizzie

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15:36 PM, 11th May 2024, About 7 months ago

No Sophie you must do all you can to prevent striking off which means the flats become unsaleable and you have to have it reinstated which costs.
The RMC shareholders the leaseholders are governed by the M&A, separately leaseholders individual leases hold the valuable legal protections under LTA and Commonhold and Leasehold reform act 2002.
Two different hats.
Is there a deed of trust with each lease which sets out how leaseholders manage the company and the lease?
The landlord is whoever your lease states is to receive the service charges to be spent according to what it says in your leases.
SC is not company money. It’s held in a statutory s.42 trust for the landlord.

Sophie Johnson

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21:33 PM, 11th May 2024, About 7 months ago

Reply to the comment left by Kizzie at 11/05/2024 - 15:36
Kizzi, I did not make myself clear. But I agree fully with this:
'...you must do all you can to prevent striking off which means the flats become unsaleable and you have to have it reinstated which costs.'
That is why I am scared.
But to make myself clear:
We are not leaseholders; we do not have a landlord. So we do not have individual leases. We exist only as a registered company. We all hold our flats on Leasehold Titles Absolute. We have a statutory document called a lease. It is held by HM Land Registry. It binds all our shareholders/flat owners. The role of our Lease is the management of our block of flats, not the management of our company.
I am not taking our company, nor any member of it, to the FTT. I am taking only our manager to the FTT. He is not a shareholder, Nothing of the Land Lord and Tenant Act applies to our company. We are not RMC shareholders.

Sophie Johnson

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21:59 PM, 11th May 2024, About 7 months ago

Reply to the comment left by Andy at 09/05/2024 - 11:20
Andy, thank you. I nodded vigorously to this: '..that tells you you’re on your own if you want to change the status quo and whether trying to do so is worth your energy.'
But I am expending a heck of a lot on energy trying to bring our bent manager into line. I am on my own: nobody else has even read our Lease, which exist specifically for the purpose of managing our block. Even my friends among them do not know what I am talking about. My one hope is that people are muttering about the high maintenance charges and the poor condition of our property. I want decisive action. But I do not want I do to misfire.

Sophie Johnson

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22:43 PM, 11th May 2024, About 7 months ago

Reply to the comment left by havens havens at 10/05/2024 - 14:05
Yours is, of course, excellent advice, haven haven. And thank you also for your encouragement. I have almost finished composing my application to the FTT. I am fully concentrated there on objections to our manager's total disregard of our lease, which organises every aspect of management, including the financing of our property's maintenance. But I did make one remark about our directors' having foisted this manager on us quite unlawfully. I shall simply remove that remark now.

Sophie Johnson

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23:01 PM, 11th May 2024, About 7 months ago

Reply to the comment left by Hamish McLay at 09/05/2024 - 11:00
Thank you, Hamish. But we are a freehold-owning company. We do not have a landlord. So a leasehold specialist is no use to us. In fact, my problem with solicitors was that they wanted to treat my company's manager problem with leasehold remedies. That seemed silly to me: They were giving our manager, who is not a member of our company but its employee, the role of the landlord .Or do I not understand something here?

Kizzie

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10:26 AM, 12th May 2024, About 7 months ago

Reply to the comment left by Sophie Johnson at 11/05/2024 - 23:01
Sophie
The freehold interest is held by the limited liability resident owned management company and your individual leases are tripartite meaning the man co as a company has M&A that directors must own a flat and be a member ie shareholder (check the M&A).
AND separately the man co object in the M&A is to maintain and repair the land and estate (the common parts) for the FH man co which each LH holds a share.
SEPARATELY individual LEASEHOLDERS’ tripartite leases the man co acts on behalf of the lessor and also on behalf of the individual lessee sets out the conditions of your ownership of your leases.
Service charge must be paid to the party named in each lease as either LESSOR or LANDLORD and only used for the maintenance costs listed in your leases.
You’re getting confused with the term ‘landlord’ in the rental sector. It is not the same.
The lessor/Landlord legislation protects lessees service charge from man.co.insolvency, gives lessees legal protection and is tax exempt. Call an EGM to vote to appoint a managing agent.

Sophie Johnson

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12:45 PM, 12th May 2024, About 7 months ago

Reply to the comment left by Kizzie at 12/05/2024 - 10:26
Sorry, Kizzi, but you are citing instruments that have nothing to do with my company's setup. You must take it from me on trust that we do not have a landlord/lessor: we hold our individual flats on Leasehold Title Absolute. And collectively, we hold our entire property on Freehold Title Absolute. We do not have individual leases.
AGM: Most of our shareholders/members do not live in our property. I do not even know them., and I have never seen one at an AGM. Typically, renters are interested only in their rental incomes, and in getting repairs to their flats done at company expense. So our manager is popular with them. No scope in AGM, I'm afraid.

Kizzie

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14:43 PM, 12th May 2024, About 7 months ago

Wherever there’s a block of flats there are leases
and a Lessor/Landlord.I am also title holder with Absolute guarantee to a tripartite lease to a flat AND one equal share of the FH interest held by the Man Co.a limited liability company. The man. Co. Is a separate legal entity in company law and directors have a legal duty to run the company according to its M&A objective which is to maintain the property by performing the obligations in the leases and CA 2006.
If a LH does not perform their obligations in their lease then the man co acting obo the Lessor/Landlord can apply for the lease to be forfeit under section 146 law of property act 1925.

Sophie Johnson

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17:22 PM, 13th May 2024, About 7 months ago

Kizzi,
'Wherever there’s a block of flats there are leases
and a Lessor/Landlord.'

Not so when the share holders collectively own the freehold of
their building and the ground it stands on.

Kizzie

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18:07 PM, 13th May 2024, About 7 months ago

The man co holds the freehold to common areas as a separate legal entity and grants a lease to each flat in a block. Your set up and mine is that the developer set up the limited liability private amenities company as a trust and each leaseholder is a member of the company with obligations to its M&A.You’re right there’s no external landlord. Your man co acts on behalf of the Landlord aka Lessor.ALSO in
order that the common parts lift fire regs cleaning of your block is maintained there are conditions in a lease for which you all contribute service charge to the cost of maintenance
The lease holds the value and that is on what a mortgage is secured. No lease no mortgage. A lease has valuable legal protection for the leaseholder and mortgage lender and these legal protections fall under the Landlord & Tenant Act etc.
The freehold shared by all leaseholders has no value and obviously as it’s jointly owned a lender won’t lend on it.
Contact Land Registry for a copy of the lease to your flat and for info on the freehold interest. Download from companies house the M&A to the Man Co. LEASE website also helpful

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