Q&A - Outstanding Major Works and S20 procedures 

The first is a block of four flats  which needs major roof works and decorations. A condition survey has been carried out revealing many breaches of lease in the top flat in particular such as poor quality windows fitted without consent and holes punched in the brickwork to prevent condensation. We have served the first stage consultation letters to the lessees with demands for their proportion of the estimated cost of the works and the standard service charge items. The lease provides for payment on account of future works. The freeholder is also the owner of one of the flats and wishes the property to be brought up to standard, he has paid to us his proportion of the cost of the works.

The response to the demands is that we should not carry out any works and no major works payments will be made as the lessees are intending to enfranchise, they have asked for the solicitors details for the freeholder.

The second is a similar situation with a block of 9 properties that are putting together a right to manage and are on the point of forming the RTM companies – 2 freehold parcels – again major works are required and are now being rushed through by one of the freeholders. The freeholder and current Managing Agents have common directors. The lessees wish us to specify and supervise the works on behalf of the RTM company.

What is the position with outstanding works and S20 procedures where an enfranchisement or RTM is requested. Can the lessees stop all works by starting a process, or at what stage in the process would the works or S20 process have to stop. What effect would this have on the collection of service charges in contemplation of the works.

RESPONSE 

My understanding is until the management transfers to the RTM - which is a minimum of 15 weeks after they start the legal process – you continue to manage and are able to demand the costs and let the contract.  However, The Landlord (through you) would need to serve a Contractor Notice advising contractors of the prospective change and a Contract Notice advising the RTM company of contracts in existence.

If the works were not complete by the transfer date then it appears as though the RTM company could potentially choose to terminate any contract in place. 

However rushing the works through - with or without the legal right - is not without risk.  An approach with the first block would be to make it clear if they exercise RTM  they have a responsibility to maintain the property. This includes the specified works. If they don’t, the landlord can apply through the First Tier Tribunal for Right to Appoint a Manager. In the second case, once the management transfers, you (as Managing Agent) are able to manage the existing contracts.

You should seek legal advice on the individual cases from a solicitor.

Michael Cleaver, Director of Home Ownership at Amicus Horizon