Landlords and Management Companies alike need to be very careful when it comes to commencing major works on a building or development. There are multiple aspects that a Landlord or Management Company needs to consider before electing to undertake works (particularly major works),  demanding the charges from the leaseholders and expending service charge monies towards such works, for example:

• Are the works necessary?

• Is it reasonable to carry out such works?

• Could the works be consider as improvements? (Please see here our legal update from August 2019 relating to when a Landlord can charge for improvements)

• Do the leases permit you to undertake such works. This is particularly pertinent to Right to Manage Companies and Resident Management Companies.

It is recommended that before starting any such works, advice is sought as to whether any proposed works fall within the obligations, rights and powers of the Landlord or Management Company. This is important due to the potential consequences that could arise should the works undertaken be beyond that which the Landlord or Management Company is required and authorised to do.

These consequences are evidenced in the recent case of Whale and Others v Maunder Taylor and Northwood Hall RTM Company Ltd. Before going into to a brief outline of the circumstances of this case, it is worth noting that this is an extreme example. However, this does not mean that the warnings to Landlords and Management Companies that this case illustrates should be ignored or taken lightly. The consequences and penalties imposed in this case are as a result of entirely avoidable circumstances, which, if advice had been sought from the outset, may not have occurred at all.

In this case, a manager was appointed by the First-tier Tribunal (FTT), in this instance it was Maunder Taylor, a firm of chartered surveyors, to manage this development due to failings of the Management Company, Northwood RTM Company Limited. Maunder Taylor sought to continue works that had already been commenced by Northwood RTM prior to their appointment. These works were to replace and upgrade the heating and hot water system to the development. Leaseholders sought an injunction against Maunder Taylor to stop the works after disputes arose about the reasonableness of such works and access in order to connect the properties to the new system. Maunder Taylor were threatening to drain and decommission the old heating system which would leave some of the properties without heating or hot water.

The result was that Maunder Taylor’s action amounted to a breach of the responsibilities of the Management Company.  Maunder Taylor were ordered to pay over 90% of the legal costs incurred by the leaseholders, which amounted to around £570,000 in addition to around £100,000 in damages.

What this case highlights is that it does not matter how practical or sensible it may appear for the Landlord or the Management Company to undertake a certain set of works to a development. If the works proposed fall outside of the scope of the responsibility of the Landlord or Management Company then, at best, it might prove difficult to recover the costs of those works and, at the most extreme, the client might find itself presented with an outcome not dissimilar to that of Maunder Taylor in the aforementioned case.

Accordingly, it is always essential to check the lease when proposing works or a solution to a problem at the block and, if it is still not entirely clear whether you should proceed, then seek advice.

We hope that this Legal Update has been informative and useful. Should you have any questions in relation to this Legal Update, please do not hesitate to contact us on 01435 897 297 or email Info@kdllaw.com.

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