ARMA surgery

ARMA

A SK T HE P RO FE S S IO N A L S

A RM A SURGERY

Bruce MAunder TAylor, a chartered surveyor and member of ARMA’s council provides answers to readers ’ questions

CLAIM FOR WATER DAMAGE

QUESTION I live on the second floor of our block of flats and my washing machine overflowed while I was at work causing damage to the flat below. An insurance claim has been made by the managing agent but I have been told that there is a £1,000 excess and I will have to pay the lessee of the flat below that amount as it is only the sum over and above that which will be paid by the insurance company. I don’t have that sort of money and it’s going to cause me great hardship. What can I do?

ANSWER The buildings insurance policy on a block of flats normally covers water damage subject to the insured party (usually the landlord or the management company) paying the first amount of any claim, called the excess, and the insurance company paying only for the amount of damage which is more than the excess. Water damage claims are probably the most persistent claims from which insurance companies suffer when insuring blocks of flats (see also page 23).

I have not seen a copy of your lease but, assuming it has relatively standard terms, then it is the obligation of your landlord or management company to insure the building. It is unlikely that the lease has any clause about that obligation being subject to an excess, or who pays the excess when one arises. There is probably a landlord or management company obligation to reinstate the damage with the money received from the insurance company. If that money received is less than the cost of the works there will be a deficiency, and it is likely to be about £1,000.

The question is who pays? The landlord’s repairing obligation is probably limited to the structure, exterior and common parts/common services. It is therefore unlikely that remedy of the damage falls to them. The repairing obligation of each lessee is probably to repair their own plasterwork, flooring, decorative finishes etc. Your downstairs flat therefore has the repairing obligation for the damage within their flat. There is unlikely to be a clause which obliges you to pay towards the cost of repairing the downstairs flat. It is unlikely that the managing agent or the landlord (or RMC/ RTMCo) can oblige you to compensate the downstairs flat unless you have some unusual clause in your lease to that effect.

The downstairs flat might try to claim the money from you in a Small Claims Court, or might try to use what is called the mutual enforcement clause to insist that the landlord (or RMCo) takes action against you. If there is persistent leakage then action can certainly be taken against you under the normal nuisance clause, but if this is a one off event and you properly remedy whatever fault occurred with your washing machine then there is no continuing nuisance over which action can be taken.

For most leases this is a very difficult problem for which few modern leases make adequate provision. Old leases generally make no provision at all for such problems. When you have two owner occupiers who recognise that they have

Water damage claims are probably the most persistent claims from which insurance companies suffer when insuring blocks of flats

The Association of Residential Managing Agents (ARMA) is a trade association for firms that manage private residential leasehold blocks of flats in England & Wales. ARMA promotes high standards of leasehold management by providing advice, training and guidance to its member firms of managing agents. ARMA also produces guidance materials for leaseholders and Residents Management Companies. With over 270 firms in membership, ARMA also campaigns for improvements in the legislation governing the leasehold sector.

Ifyou havea query, emailitto info@flat-living.co.uk All namesand addresses are withheld

to continue living together in the same building, the problem usually gets resolved by some form of agreement.

When water damage comes from a rented flat owned by somebody who does not live in the building, then some unpleasant disputes can occur. As to your question: regularly check your washing machine and all your water fittings to make sure that they are well maintained and will not give rise to water damage in the future.

With regard to the present claim, my advice is that you go to see your neighbour and see what agreement can be reached. Most people would take the view that it was your washing machine at fault, therefore you pay. Do you have a contents insurance policy which would cover the matter? You will either make an agreed payment or become an unpopular person in the block.

Surgery 36 Guidance 38 Directory 40 Find an agent 42

If the lease requires consent to sub-let, you have a problem

References required?

QUESTION Our agency has been instructed to let a property in a block of 15 and on doing the final checks yesterday we were accosted by a member of the residents association who said they wanted to see the references of the tenants and they would check those references out and interview the tenants before they moved in. I have never come across anything like this before and I don’t think it’s right. He said that it was written in the lease and that if we moved these people in without their approval that they would evict them. They had done it before apparently. I asked to see the lease but they said it was too big for us to see. Our Landlord is abroad so I have emailed her and await her response. On what grounds would they be able to evict our tenants? ANSWER This problem of sub-tenants in leasehold flats can lead to extreme problems if the sub-tenants behave in a manner which constitutes a nuisance or the landlord/management company is unreasonable or aggressive. An immediate threat of “comply or we will litigate” is a most unfortunate aspect of modern practice in flat living and management, one which the Courts regularly speak out against and which I frequently advise against.

Both parties must (mandatory word) read the lease and know the proper procedures. For you not to have a copy of the lease and know the relevant parts is as unfortunate as the residents association declining to help you by providing a copy to you and explaining their established procedures, in accordance with the terms of the lease.

A residents association is unlikely to have any legal position in this matter but may well have influence with the landlord or management company about how and when they enforce the terms of the lease. Only the leaseholder of the flat can evict the sub- tenant, the landlord (and possibly the management company) can only seek to enforce the lease terms against the lessee. If the lease requires consent to sublet you have a problem: if not, then you do not have a problem.

Before we leave the law, let us remember that the early stages of litigation are rarely about the law, and are more frequently about litigation tactics and money.

Few residents associations have any money to litigate, most management companies have to use service charge money to litigate, and most landlords have already found that litigation, even if they “win” leaves a very nasty taste in the mouth and a big hole in the pocket.

Now let us turn to the Uncle Arthur advice. Read the lease and be sure of both your sub-letting rights and responsibilities as well as the landlord’s/ management company’s rights and responsibilities. At all times conduct your communications with the relevant person from a position of being well informed and courteous. Be ready to provide copy documents if asked.

For your own benefit, as well as theirs, take reasonable steps to ensure that your proposed tenant is suitable for this flat and lease terms. If you need consent, comply with their reasonable terms for considering your application. If they are unreasonable, make sure you have all your paperwork in order for the forthcoming bust-up.

Be well informed on the rules about landlords waiving breaches of lease for the reason that many ill informed landlords/management companies are very quick to claim a breach, threaten forfeiture but continue to demand and collect ground rent or service charges, thereby, often, waiving the breach.

Occasionally, once they realise the difficult position they’ve started, they stop demanding and collecting service charges to avoid the risk of compromising their claim of a breach. If the law takes a long time to turn its wheels (as it often does) the landlord/management company might find that it has been more than 18 months since it last notified you of service charge costs and liabilities, thereby giving it a huge recovery problem because of s.20B of the Landlord and Tenant Act 1985. Like I say: it’s all about tactics and money! Try to resolve your issues by discussion. Fee earning professional advisers love people who naively believe that law is about justice. ●