Dispute Over Section 20 Major Works Arrears / Stopping Sale Of Flat

My freeholder/managing agents served a Section 20 Notice on leaseholders in July 2013 with each leaseholder required to pay £4,800 approximately in addition to annual service charges. The major works have not taken place and there is no likelihood that the major works will take place because at least three out of eleven of the leaseholders have refused to accept the Section 20 Notice and pay any money at all. I was willing to pay for the major works but then disputed the request when the managing agents could not give me any indication of when/if major works would commence. I have now received verbal confirmation from the builder awarded with the contract almost three years ago that his quote is no longer valid after such a long time and that he will definitely not be carrying out the work as his relationship with the managing agents has broken down. I now have a sale agreed on my flat with exchange of contracts planned within the next fortnight. I believe that in light of the above circumstances, and particularly because the Section 20 selected builder will no longer carry out the works, that the managing agents will now have to reverse the current Section 20 notice, delete the request for funds from leaseholder accounts and, if necessary, start the process for a new Section 20 Notice. Is this correct? If so, how can I make sure that they reverse the Section 20 Notice request for £4,800 towards major works that they are demanding from me in order to complete the transfer of ownership? I have today emailed the managing agents and asked them to email me a letter by Tuesday, 23 February, from the selected builder confirming that he will be honouring his 2013 quote and carrying out the major works. I have added that if this letter is not provided that I require them by Wednesday, 24 February, to reverse the Section 20 Notice, delete the relevant arrears from our service charge accounts and refund money paid by any leaseholders to date for that Section 20 Notice that has not progressed. I am planning to exchange contracts, ideally by 29 February 2016, and to complete soon after so I do not have much time to achieve this. If I am forced to pay the £4,800 I will effectively be crediting the new purchasers' service charge account with this money because the major works will not take place. What would you advise? What options do I have? Thanks for your help. Regards Elizabeth

1 Answers

If you wanted to challenge the validity of the section 20 notice then you would really need to seek specialist advice from a solicitor who specialises in landlord and tenant litigation. I imagine that would be a lengthy process. Given that the work hasn't yet been done however my starting point wouldbe that the buyer should be responsible for the cost as it is the buyer who will get the benefit of it if and when it is done. Major works payment demands are part and parcel of owning a leasehold property and there will be more in future. The fact that a section 20 notice happens to have been issued should be immaterial, the debt isn't due until the work is done. If the buyer won't proceed unless you cover the cost / successfully can the demand reversed however then perhaps you could agree with the buyer that your solicitors will retain the £4800 until either the work is done and invoiced (in which case the funds are released to the buyer), the landlord confirms it has abandoned the works (in case the funds are released to you) or else an arbitrary pre-agreed longstop date is reached at which point the funds are returned to you. These types of retentions are fairly common in respect of service charge payments where the exact amounts or timescales are unknown. The longstop date is to ensure that the funds don't end up sat in your lawyer's account indefinitely. It needs to be realistic in that it needs to allow a reasonable time for the issue to be resolved but needs to be not too far in the future.

I hope this helps.