The block management experts at Brady Solicitors clarify a quick overview of the key information that managing agents are legally required to give to leaseholders.
Leaseholders want to see that their service charge contribution is being well managed. Supplying information on how the service charge is spent is not just good block management practise, it is also a legal requirement. Failure to adhere to the legal obligations can lead to service charge disputes and difficulty in recovering the unpaid service charge.
Freeholder’s name and address in England and Wales
On every service charge demand or administration charge demand sent to leaseholders, the address of the freeholder needs to be included. The address must be based in England and Wales and can’t be a ‘care of’ address, such as a managing agent or solicitors.
If the address of the freeholder is not included, the demands will be treated as not due until the correct information is supplied. Failure to do this could lead to service charge arrears which may impact the running of the whole block.
If the freeholder’s company is registered abroad, an address within England and Wales must still be supplied.
Include a summary of Rights and Obligations with every demand
With every service charge or administration demand sent there must be a summary of Rights and Obligations included. So leaseholders will need to receive two summaries.
S.21B of the Landlord and Tenant Act 1985 also specifies the document must presented with a minimum size 10 font to ensure the document is easy to read.
Failure to include a Summary of Rights and Obligations means the leaseholder can withhold payment until a correct demand is reissued.
Provide an address for complaints and notices
Leaseholders will need to be provided with an address within England and Wales to where they can serve notices or complaints. This address can be the address of whoever looks after the day to day running of the block, such as the managing agent, RMC or RTM company.
To recap, the leaseholders need to be provided with two addresses, one must be the actual freeholder’s address to be included on demands and the second address can be a ‘care of’ address for notices and complaints.
Responding to requests for information
Under section S.22 of Landlord and Tenant Act 1985 leaseholders have the right to request to see supporting information on the service charge spend. The freeholder, or those acting on behalf of the freeholder such as a managing agent, have to respond to the written request within 21 days.
The leaseholder will need to be sent a summary of the service charge spend, and once they have received the summary, they have up to 6 months to request to examine the service charge accounts in more detail.
If the freeholder or managing agent fail to respond to a request for information from a leaseholder it is treated as a criminal offence. This may result in a fine for the non provider.
Is the freehold being sold?
In the event of the freehold being sold, the leaseholders need to be informed in writing of the address of the new freeholder.
This needs to be done within two months of the handover date or before the next service charge/rent demand is due, whichever of the two is sooner.
Failure to fulfil obligations could lead to disputes
Failure to adhere to the terms of the lease and the law may result in increased service charge disputes and, in rare cases, a fine. It is important for managing agents and freeholders to understand their legal obligations to provide information on the service charge to ensure effective management of the block.
If you want to know if your service charge demands have the correct information on them or need an expert to look at any service charge disputes, our property law specialists are on hand to advise, call us on 0115 985 3450 or drop us an email.