Can I dispute service charges where I have a small share of the freehold?
Q: I own a leasehold flat but also have a small (1/36th) share of the freehold of the building. I am not happy with the service charges for the building. Can I dispute these, and am I entitled to the usual leaseholder rights, even though I have a share in the freehold?
The short answer is ‘yes’ – a leaseholder can dispute a service charge levied by a freehold company of which they are a shareholder. They can also issue Tribunal proceedings against the company in their capacity as an individual leaseholder.
Of course, costs will need to be taken into account as they are a member of the company and may or may not be responsible for 1/36th of the costs incurred in defending any such action.
They also may be responsible for contributing to the company’s costs of any items of expenditure which the Tribunal decides cannot properly be recovered under the service charge – that would depend on what the company’s constitutional documents require. So, that aspect would need to be considered before deciding whether or not it is actually financially worthwhile taking action.
All freeholders are obliged to comply with section 20 consultation requirements (for larger works), regardless of whether the freeholder company is made up of the leaseholders. The reason for this is that the company can act on the authority of the directors alone, or may have delegated works relating to ‘services’ at the property to an outside company so the individual leaseholders probably don’t have a say in day to day decisions.
Answered by Bollanack & Bishop Solicitors
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