Advice

An admission by the leaseholder is sufficient. In all cases of unpaid service charge, the RMC should consider whether there is a dispute as to liability, as opposed to an inability to pay. Further, if there is a genuine dispute as to some elements of the service charge (e.g. the costs of major works), there may be no dispute as to other unpaid elements (e.g. the insurance and the porter’s wages may not be in dispute) and the leaseholder may be prepared to admit these undisputed items. The strategy should always be to identify at an early stage whether there is a genuine dispute and, if so, to limit the scope of any proceedings accordingly.

The next point to seek to obtain an admission/ further admissions is once the claim has been issued in the County Court. Experience shows that many claims commenced in the County Court are either admitted or result in a default judgment. The County Court procedure will require the leaseholder to issue a notice of intention to defend (if not judgement will be entered for the landlord in default). If the claim is defended, it is likely, though not inevitable, that it will be transferred to the Leasehold Valuation Tribunal.

A determination by the LVT may be enforced as if a judgement of the County Court with the permission of the County Court. It is necessary therefore to apply to the County Court if it is intended to enforce the LVT decision as if a judgement of the County Court. Once granted the usual options for enforcement of a County Court money judgment are open to the landlord, for example by a statutory demand (as a precursor to bankruptcy proceedings), or by obtaining a charge on the leasehold flat. Broadly, serving a statutory demand is likely to be highly effective if the leaseholder is solvent, but unlikely to be effective if the leaseholder has little equity in the flat or other assets (in which case the mortgagee as a secured creditor will rank above the landlord in a distribution).

CAuTion is required

For variety of reasons, not least in terms of recovering costs, once a judgement has been obtained, the best means of enforcement may prove to be the section 146 and forfeiture route. However, caution is required. It is unusual to get as far as forfeiting a long residential lease and doing so may be regarded by the Courts as an extreme step. Further, depending on the circumstances, there may be of potential complications, including, circumventing an debarring order that may have been made under section 20C of the L & T Act 1985. The upshot is that specific legal advice should be obtained before bringing forfeiture proceedings.

The managing agent says….

The solicitor says…

If you face a problem with arrears of service charges then seek advice at an early stage. The longer you leave the problem the more the arrears build up. They won’t reduce by you doing nothing. Communicate with the lessee and address any concerns raised by the lessee.

If the problem persists, • Obtain advice from a solicitor; • Choose a solicitor with the right expertise.

Telephone initially – few solicitors charge for that first conversation especially if they think there will be a job in it; • Agree the next step and the costs of any work

done by the solicitor such as limited instructions to review the lease and write to the defaulting lessee and their mortgagee; • Agree any action to follow and put in place the legal team; • Work as a team:

Managing Agent –

Solicitor – Barrister (in some cases).

The economic climate has caused an increase in service charge arrears but it has not made recovering the arrears any more difficult. Arrears can be recovered cost effectively and successfully.

Andrew Raby, partner at Thackray Williams LLP For any block where service charges are payable but particularly for RMCs the management of arrears is at the heart of good administration. Most RMCs do not have company assets to lend to the service charge when funds are short, yet the responsibility remains with the RMC to continue to provide services and undertake works. Remember, an agent or their client many be committing a fraud if they instruct a contractor to do works knowing there are insufficient funds to pay for it.

The agents’ ability to promptly issue budgets and accounts, issue demands (and statements of rights and obligations) and chase arrears ensures the cash flow to the RMC to undertake works and also lays the foundation for any legal action. If the paperwork is wrong from the outset the ability to recover the sums demanded (and costs) may be seriously prejudiced.

Andrew McKeer MRICS FIRPM, Director, Prior Estates Ltd

Asbestos:

are you liable?

A new campaign launched by the Health & Safety Executive in November highlights the dangers of working with asbestos. RMC directors should be aware of the issues surrounding this dangerous material and make sure they understand their obligation to protect fellow residents, visitors and contractors, should asbestos be present in their building.

sbestos was used extensively as a building material

Ain the UK from the 1950s to the mid-1980s and any pre-2000 building could contain this potentially hazardous substance, which was most commonly used for fireproofing and insulation. Although building materials containing asbestos aren’t dangerous in themselves, if they are damaged or disturbed any airborne asbestos fibres become extremely dangerous, with the potential to cause fatal respiratory disease. So if repair and maintenance work is being carried out on a building, it is vital to know whether asbestos is likely to be encountered.

An estimated 4000 people a year die from asbestos-related diseases and this figure is increasing (source: HSE). The Control of Asbestos Regulations were introduced in 2006 to reduce exposure to asbestos containing materials (ACMs) by placing a legal obligation on anyone responsible for managing buildings to ensure that asbestos is dealt with safely.

Because the regulations apply to non-domestic premises, RMC directors may wrongly assume they don’t apply to them. However, although individual dwellings do not fall within the compass of the legislation, the common parts of domestic premises - which are the responsibility of the RMC - do. The HSE lists these as areas such as entrance lobbies, corridors, walkways, lifts and lift shafts, staircases, boiler houses, risers, gardens, yards and outhouses. The tenanted parts of a building are excepted but this delineation may not always be as simple as it at first appears and you may need to take professional advice to determine which parts of your building really are ‘common’ areas.

how do i CoMpLY wiTh The reguLATions?

Under the regulations, RMCs are designated ‘dutyholders’ and have a legal obligation to protect residents and others from exposure to asbestos. But if this sounds daunting, don’t worry. There is plenty of information available to help RMC directors understand and comply with the regulations.

THE HSE SETS oUT dUTYHoLdERS’ oBLIGATIoNS AS FoLLowS:

• Either find out if there is asbestos on the premises, its location and what condition it is in, or make a presumption that asbestos is present, unless you have strong evidence to the contrary; • Make and keep an up-to-date record of your findings; • Set out a plan that details how you will manage any risk; • Take any steps needed to put the plan into action; • Review the plan on a regular basis; and • Set up a system for providing information on the location and condition of ACMs for anyone who is likely to work on or disturb them.

It is important to keep a written record of any work carried out and ensure that the building is checked at least once a year to flag up any damage or deterioration to AMCs that needs attention. You must also ensure that anyone who may come into contact with ACMs, such as building contractors, are aware that they may be present so they can take the necessary precautions. Complying with the regulations does not mean removing all asbestos from your building. Your duty is to protect residents and others visiting or working on your building from risk.

One of the duties imposed on RMCs under company law, is to ensure that contractors who carry out work do so properly. Nowhere is this more important than where works involve asbestos. Anyone working on the building, for example telephone engineers, painters and decorators, roofers etc, must be alerted to the possibility of the presence of asbestos. Be aware that you need a trained contractor to work on materials such as asbestos cement, textured coatings or vinyl tiles. Only licensed contractors can work on high-risk materials such as pipe insulation, asbestos insulating panels or sprayed asbestos.

don’T ignore The risKs

It is important not to underestimate the importance of the asbestos regulations. If you ignore them you will be breaking the law and could be prosecuted. The maximum penalty for non-compliance is a £5,000 fine or imprisonment or both. Don’t forget that the responsibility for compliance with the regulations lies with the RMC – even if you appoint a specialist to assess your building and carry out any necessary work, you must be involved in the final assessment of potential risk.

There is no doubt that the numbers of personal injury claims being brought by people suffering from asbestos-related illnesses are increasing. However, the likelihood of RMC directors being sued for negligence is small, according to Steve Smith from liability insurance

Case Study: Bureau Veritas

Asbestos management consultant Bureau Veritas works with clients to ensure they are complying with the Control of Asbestos Regulations. First, the need for a register of asbestos containing materials (ACM) is assessed by the age, design and construction of the premises in question. A survey is then undertaken to verify, by sampling, whether ACM have been used in the areas of the building identified in the register. According to the company, the types of ACM most often found in common parts of multitenanted buildings, are cement roof sheets to outbuildings, insulation to pipework in boilerhouses, ceilings to walkways and backing panels to riser doors.

Anyone planning and coordinating building maintenance work is obliged to consult the register to see whether ACM are present in the areas needing work and, if necessary, arrange for their removal before maintenance work is carried out.

Bureau Veritas also recommends that the register is checked if premises are damaged by fire or flood, or following any other accidental or deliberate disturbance so that any necessary works can be carried out quickly and safely.

specialists Angel Underwriting. He explains that the majority of cases are brought against employers rather than individuals and that where works to premises are concerned, it is tradesmen who are more likely to be at risk than tenants and contracting companies who will be in the firing line should ill health be the source of a future claim. In the worst case scenario, he believes most Directors and Officers Liability Insurance policies should cover actions against the individual in such situations however no precedent has yet been set. Smith’s advice is to check the wording of your policy and stay within the law. “The burden of proof in a personal injury case lies with the claimant, who has to prove that a person or organisation has been negligent, so as long as you can prove that you have followed the law and have written evidence to show you have done everything you are required to do, there is little risk of a successful claim being brought against you”. • For general information on asbestos go to http://www.hse.gov.uk/asbestos/campaign/duty.htm

• Go to http://www.hse.gov.uk/pubns/manageasbestos.pdf for HSE’s simple eight-step guide to managing asbestos in buildings.

• The RICS guidance note ‘Asbestos and its implications for members and their clients’ gives advice and tips.

Tel 020 7222 7000 for more information or go to www.rics.org

• For further information on arranging an asbestos report, go to the Flat Living website at: www.flat-living.co.uk/products/asbestos_survey.htm

Case Study: Identifying your duty of care

RMC directors should be aware that, depending on the specific detail of their lease covenants, landlords are often responsible for the structure of their building and the tenant for the internal surface finishes. This is relatively straightforward in terms of normal repair and maintenance. However, where asbestos is concerned, complications may arise. A steel beam or column within an individual flat is obviously structural and so presumably is sprayed with asbestos fire protection but what if the fire protection is in the form of asbestos insulating board cladding? In this case, it would be considered an internal finish and therefore the responsibility of the tenant rather than the landlord. Communal services such as pipes in riser ducts may pose a similar problem.

Regardless of statutory responsibility the landlord may owe a duty of care to occupants and should ensure that asbestos-related information is passed onto them so that inadvertent disturbance of asbestos containing materials does not endanger occupants’ health, contaminate other tenants’ properties or the common areas of the building.

Paul Winstone, Director, Watts Group PLC and Chair of the RICS Asbestos Group

Leasehold property?

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