Category Archives: Residential Tenancies

Housing: Corresponding date rule validated Right to Manage Claim Notice

An application may be made for the appointment of a manager of leasehold housing under the Commonhold and Leasehold Reform Act 2002 (“2002 Act”).

Section 80 of the 2002 Act prescribes that the claim notice:

– must specify a date, at least one month after “the relevant date”, by which each person who was given the notice under section 79(6) may respond to it by giving a counter-notice under section 84 (Section 80(6)) and

– must specify a date, at least three months after that specified as above, on which the Right To Manage company (“RTM company”) intends to acquire the right to manage the premises (Section 80(7)).

In the Upper Tribunal Lands Chamber) case of Windermere Court Kenley RTM Company Ltd v Sinclair Gardens Investments (Kensington) Ltd [2014] “the relevant date” was the 29th August 2013, when the claim notice was given, and the 30th September 2013 was the date specified under section 80(6) and the 31st December 2013 was the date specified under section 80(7).

Issue: whether a specified date of 31st December 2013 satisfied the requirements of section 80(7) or whether the earliest date it could have been was 1st January 2014.

The Tribunal said:

– The corresponding date in the following month or months was to be used as the date of calculation particularly where, as here, there was one.

– The application of the corresponding date rule in this case required that the start time specified for the RTM company must be a date ‘after’ midnight on 30th-31st December 2013.

– The start-time the claim notice specified for the RTM company was 31st December 2013.

– 31st December was the day ‘after’ midnight on 30th-31st.

Accordingly specifying 31st December 2013 as being the first day three months “after” the 30th September 2013 satisfied the requirements of section 80(7). So the claim notice complied with the provisions of section 80 of the 2002 Act.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Scope of Tribunal’s Housing Management Order exceeded powers

Part II of the Landlord and Tenant Act 1987 provides for the appointment of managers by tribunals.

Subject to exceptions in subsection (3), section 21(2) provides that Part II of the Act applies to premises consisting of the whole or part of a building if the building or part contains two or more flats.

Section 21(7) says in Part II of the Act “tenant” does not include a tenant under a tenancy subject to Part II of the Landlord and Tenant Act 1954 so, tenants who occupy premises for the purposes of a business cannot make an application for an order for the appointment of a manager.

By section 21(1) the tenant of a flat in any premises to which Part II of the 1987 Act applies may apply to the tribunal for an order under section 24 appointing a manager in relation to those premises.

In the Upper Tribunal (Lands Chamber) case of Sennadine Properties Ltd v Heelis [2015] the building was configured so that the flats on the upper floors had their own communal entrance and did not share common parts with the commercial let premises on the ground floor.

The lessee of flat 2 made an application under section 24 of the 1987 Act. The application could have been limited to the upper floors on which the flats were situated, but the applicant chose to include the whole of the building. The Local Valuation Tribunal (“LVT”) could have made a more restricted order, under section 24(3), but it appointed a manager of the whole of the building.

A liquidator of a company or a trustee in bankruptcy in the course of a winding up or bankruptcy has power to disclaim leases under the Insolvency Act 1986. The Crown also has power to disclaim after the dissolution of a limited company where a lease has vested in the Crown as bona vacantia. The LVT had no power to confer the right to disclaim a lease on the manager because disclaimer was not a procedure otherwise available.

In fact it was unclear what the LVT had in mind by “disclaimer”. It may have intended the manager to end the lease of the commercial ground floor premises because the lessee had stopped paying rent. The LVT clearly wanted an income to be generated from the commercial premises so the manager could fund repairs. If it intended the manager to forfeit the existing lease to re-let it did not express itself properly.

The LVT could not confer on the manager a power to “disclaim” a commercial lease vested in a third party. So by directing the manager to “disclaim” the lease of the commercial unit on the ground floor, to market the commercial unit, to let it on commercial terms and to demand and receive rent and service charges under any new lease, the LVT had exceeded its jurisdiction.

More generally it was disproportionate in the circumstances for the LVT to have made an order directly intervening in the relationship between the freeholder landlord and a third party (the existing ground floor tenant). The circumstances in which it might be appropriate to make such an order were likely to be exceptional.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Landlord’s surveyor could not unilaterally apportion residential service charges

A service charge clause may say the Landlord’s surveyor will decide how the Landlord’s service costs are to be divided between residential tenants and that that decision will be “final and binding.”

However Section 27A(6) of the Landlord and Tenant Act 1985 renders void any parts of any agreement that, in effect, provide for any question to be determined in any particular way, if that question could be referred to the appropriate tribunal under s.27A(1).

A clause that provides for determination of proportions by the landlord’s surveyor is such a provision, whether it is said to be “final and binding” or not. So Section 27A(6) deprives the landlord’s surveyor of his role in determining the apportionment.

Any service charge provision which purports to give the landlord’s surveyor that role is to be read as if that method of ascertaining a fair apportionment was omitted from the clause altogether.

That being the case in the recent Upper Tribunal (Lands Chamber) case of Gater & Ors v Wellington Real Estates Ltd & Anor [2014] where similar facts applied, the tribunal ruled that:

1. Where the provision for determining an apportionment was void under section 27A(6), then, unless the parties could agree what was fair, the fair apportionment fell to be determined by the appropriate tribunal.

2. Here it had been for the Leasehold Valuation Tribunal to decide what fair proportion of the cost of communal services was payable by the respondents.

3. The appropriate tribunal would consider what valid parts of the parties’ agreement remained.

4. In that particular case, what the tribunal thought had survived was the parties’ agreement that the tenant’s share would be:

4.1 a due and fair proportion of the service costs

4.2 to be divided having regard to “the relevant floor areas within the Building or other reasonable factors”.

5. As the tribunal thought the provisions at 4 above did not in their effect provide for a determination “in a particular manner”, they did not offend section 27A(6). We might disagree and think they had precisely that effect. But the key factor may be that the clause wording claiming to RELEGATE the tribunal’s discretion to apportion the service costs under those provisions TO “the landlord’s discretion” had been declared void by the tribunal and cut out of the lease.

This blog has been posted out of general interest. It does not remove the need to get bespoke legal advice individual cases.

Unprotected Non Refunded Pre Regulation Tenancy Deposit invalidated repossession notice

Statutory regulation of tenancy deposits was introduced from 6 April 2007 by sections 212 to 215 of the Housing Act 2004. They were designed to end complaints that residential tenants’ deposits had been unreasonably withheld or purloined by landlords at the end of tenancies.

The sections have been amended by the Localism Act 2011.

In the Court of Appeal case of Charalambous & Anor v Maureen Rosairie NG & Anor [2014] Mr Charalambous and Ms Karali took a succession of short tenancies of 14 Sapphire Court in Spitalfields starting on 20 August 2002.

They paid a deposit of £1,560. On each renewal the same deposit was required to be paid. No further deposit was paid or money actually changed hands. Instead the original deposit was carried over and credited against each renewed tenancy.

The contractual term of the last of the written tenancies expired in 2005 and so by the time when the tenancy deposit protection provisions became effective, the tenancy had already become a statutory periodic tenancy.

The landlord continued to hold the deposit.

On 17 October 2012 the landlord served notice under section 21 of the Housing Act 1988 requiring possession of the property to be given after 17 December 2012.

The deposit paid by Mr Charalambous and Ms Karali was never held under a statutory scheme. Was the section 21 notice valid?

The Court of Appeal said Section 215 (1) (a) itself is unclear but the terms of Article 16 of the Commencement No. 4 and Transitional, Transitory and Saving Provisions) Order 2012 (“the Order”) plainly envisaged that as from the coming into force of the amendments made by section 184 of the Localism Act 2011 the code would apply to existing tenancies.

What was relevant was not the date at which the deposit was received, but the date on which the tenancy was in effect.

Article 16 (1) of the Order was clear that the 2011 Act amendments would apply to tenancies in existence on 6 April 2012.

Since the amendments made by section 184 included amendments to section 215 (1) itself, it must have been envisaged that section 215 in its amended form would apply to all such tenancies.

That on its own was enough to lead to the conclusion that the section 21 notice was invalid.

The case contained a number of interesting side views in the lead judgement.

Under the original version of section 215, the landlord could comply with the requirement to have the deposit held in accordance with an authorised scheme, even if this was not done within the 14 days then stipulated.

That may no longer apply given the amendment to section 215(1)(b) made in 2012. As regards failure to provide the necessary information, under section 213(6), the sanction preventing service of a section 21 notice applies until the prescribed deposit information notice is given to the tenant, even if that is done late (section 215(2)) and it’s saying: “until such time as section 213(6)(a) is complied with” was also significant, though the time stipulation is in section 213(6)(b). So, a distinction had been made, the landlord can retrieve the position, as regards the failure to serve the prescribed information notice, by complying late.

The same did not appear to apply to a failure to protect the deposit by an authorised scheme at all. Though the court made no decision on the point it may be that the only way in which the landlord can now escape from the provisions of section 215(1) is by returning the deposit to the tenant.

So the landlord here and any landlord in a similar position may well be precluded from serving a section 21 notice unless she repaid the deposit to the tenants.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Lenders had priority over Vendors in “sale and lease back” deals

Homeowners have agreed sale-and-leasebacks deals with investors to overcome debts.

In Scott-v-Southern Pacific Mortgages Ltd (2014), properties were sold to buy to let investors on the understanding the homeowners could remain as the tenants after the sales were completed.

However the sale contracts made no reference to the lease-backs to the sellers.

Some of those landlords had mortgages and failed to maintain mortgage payments.

The lenders were not told about the lease-backs to the sellers. They were informed that the properties were being bought with vacant possession. So they had not consented to the lease-backs.

Did those mortgages take priority over the agreements between the buyers and sellers or were the lenders bound by the agreed lease-back arrangements?

The sellers said they had overriding interests in the houses based on the promised lease-backs which were protected by them being in actual occupation when the sales were completed.

The Supreme Court said the rule that a buyer becomes the equitable owner of the property sold on exchange of contracts “applies only as between the parties to the contract and cannot be extended so as to affect the interests of others” i.e the lenders.

Accordingly the court were unanimous that exchange of contracts had not prior to completion empowered the buyers to confer equitable proprietary rights on the sellers capable of taking priority over the lenders.

So all the sellers had were personal claims against the buyers.

The acquisition of the houses may have been a vital precursor to a mortgage but where a property buyer needs a loan to finance a purchase, the purchase and mortgage form a seamless whole because the buyer would never have got the property without the loan.

The sellers’ claims against the buyers changed from being purely personal claims to being proprietary claims against the properties, capable of binding third parties, when the buyers completed their purchases from them and acquired the legal estates in the houses, but by then it was too late for the sellers to get priority over the mortgages taken by the lenders as an integral part of the house purchase completions.

The decision has important implications for other property transactions where the priority of derivative interests depends on the person granting them already having the legal estate in the property at the key time. The transactions potentially affected include commercial sales and lease-backs.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Information omitted from Collective Enfranchisement notice was fatal to it

Where a notice is served under section 13 of the Leasehold Reform, Housing and Urban Development Act 1993 (“the 1993 Act”), claiming the right to acquire the freehold of a residential block, using the collective enfranchisement provisions of the 1993 Act, the information on the Section 13 notice is intended to include and disclose:

– the number of qualifying tenants in the premises (section 3(1)(b)),
– whether the total number of flats held by the qualifying tenants is not less than two-thirds of the total number of flats in the premises (section 3(1)(c)) and:
– whether the section 13 notice has been given by qualifying tenants of not less than half of the number of flats contained in the premises (section 13(2)(b)).

In the Court of Appeal case of Natt & Anor v Osman & Anor [2014] the Section 13 notice failed to comply with section 13(3)(e) of the 1993 Act because it did not give:

– the names of one of the qualifying tenants in the building,
– the address of the flat of that qualifying tenant, and,
– the particulars of that qualifying tenant’s lease as specified in section 13(3)(e)(i).

The Court of Appeal said that for the reasons in the preamble to this blog the omitted information was fundamental to the collective enfrancisement process.

Furthermore:

1. Paragraph 15 of schedule 3 to the 1993 Act had specifically said which inaccuracies in Section 13 notices would not invalidate them and the circumstances in which they could be amended, and,

2. Since the Landlord challenged the validity of the original Section 13 notice, there would have been nothing to prevent the immediate service of a fresh Section 13 notice “without prejudice” to the tenants’ contention that the original notice was valid. Section 13(9)’s restriction on the service of a new Section 13 notice within 12 months after the withdrawal or deemed withdrawal of a Section 13 notice only applies if the original notice was valid.

The invalidity of the notice was upheld and the applicant’s appeal was dismissed.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Registered Social Landlord enjoyed same status as Local Authority on eviction

Registered Social Landlords (“RSLs”) are important in helping local authorities to carry out their statutory housing policies, including the allocation of houses in certain priorities.

The law requires local authorities to make an allocation scheme, and RSLs are the only body that statute requires them to consult before adopting a scheme.

Section 170 of the Housing Act 1996 says, if requested, RSLs must co-operate with local authorities “to such extent as is reasonable in the circumstances” by offering accommodation to people with priority under the local authority’s allocation scheme.

That co-operation is usually implemented by the local authority and the RSL entering into nomination agreements.

In the Court of Appeal case of Lawal & Anor v Circle 33 Housing Trust [2014] the issue arose whether making a possession order against Mr Lawal had been proportionate under Article 8 of the European Convention on Human Rights incorporated into English Law by the Human Rights Act 1998.

The leading Supreme Court case of Manchester City Council v Pinnock [2010], stated that where the person seeking possession is a local authority, the proportionality of making an order for possession will be supported by:

1. the fact that it would serve to vindicate the authority’s ownership rights; and,

2. (normally) by the fact that it would enable the local authority to comply with its duties in relation to the distribution and management of its housing stock including, for example, the fair allocation of its housing, the re-development of the site, the refurbishing of substandard housing stock, the need to move people who are in accommodation that is more than they need, and the requirement to get vulnerable people into sheltered or warden monitored housing.

Where a local authority is entitled to possession it should be assumed to be acting in accordance with its duties, unless there is cogent evidence to the contrary. The fact that it’s a local authority that is entitled to possession will also strongly support the proportionality of making an order for possession.

So, in most cases involving a local authority landlord and any residential occupier who has no contractual or statutory protection, the onus will be on that occupier to bridge the high threshold involved in satisfying the court that an order evicting the occupier is not a proportionate means of achieving a legitimate aim.

In this case Mr Lawal contended that Circle 33 was not a local authority and so could not benefit from those principles. So Circle 33 bore the burden of establishing the proportionality of evicting Mr Lawal from the house in question.

Rejecting this the court said Circle 33 was a social landlord and a non-profit organisation whose aim was to provide low cost housing for people who might not be able to afford private sector rents.

As such it was a public authority for the purposes of the Human Rights Act 1998 (“HRA 1998”).

In Pinnock, the Supreme Court stated that the foregoing principles applied equally to other social landlords to the extent that they were public authorities under the HRA 1998.

Having found that Mr Lawal faced the high threshold of proving that Circle 33 had acted disproportionately in having him evicted, the court found that he had failed to discharge that evidential burden.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Flats Manager could be appointed over land outside complex

Part II of the Landlord and Tenant Act 1987 (“the Act”) applies to “premises consisting of the whole or part of a building if the building or part contains two or more flats” (section 21(2)), i.e. the leaseholders of such premises can apply for the appointment of a manager (section 21(1)).

Such a manager may be appointed “to carry out in relation to any premises to which this Part applies… functions in connection with the management of the premises…” (section 24(1)).

That requires “a causal link or nexus between the functions to be carried out by the manager and the premises defined in section 21(1)”.

In Cawsand Fort Management Company Ltd, R (on the Application of) v Kane & Ors [2014] the High Court pointed out that this does not confine the manager’s functions to the buildings and curtilages that go to make up those premises.

Rights granted over the amenity land in that case, were also “in relation to” the premises consisting of the building which contained the lessees’ flats.

So the order section 24(1) empowered the tribunal to make appointing a manager to carry out functions “in relation to” the premises may extend to land over which such rights ran, even though outside the boundaries of “the premises buildings and curtilages” of the flats complex, e.g. the amenity land in this case.

Where, there is no such nexus – because a tribunal order gives the manager functions in respect of land over which the leaseholders have no rights, the aggrieved landowner should apply to the First-Tier Tribunal under section 24(9) to vary the management order to exclude that land from those functions.

In this case functions in respect of the underground chambers and insuring land in which the lessees had no interest fell into this category. Paragraph 19 of the management order expressly permitted such a variation application to be made.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Landlord not bound by Right to Manage Company’s Claim Notice

Where a company (a “RTM Company”) applies to a residential landlord to acquire the right to manage conferred by Part 2 of the Commonhold and Leasehold Reform Act 2002 (“the 2002 Act”), section 78(5)(b) of the 2002 Act requires the service of “a notice inviting participation” to inform non-participating tenants that the RTM company’s articles of association are available for inspection on 3 days – at least one of which must be a Saturday or Sunday.

The claim notice must also be served on any landlord of the property under section 79(6) of the 2002 Act.

Would non-compliance with these requirements be fatal to the whole right to manage procedure or might it be overlooked?

In the recent case of Elim Court RTM Co Ltd v Avon Freeholds Ltd [2014] the first requirement was not complied with and as to the second requirement it was served not on the intermediate landlord but on one of the flats and not passed on to the intermediate landlord.

The Upper Tribunal (Lands Chamber) decided that the requirements were mandatory and that non compliance was fatal on both counts.

That disposed of the case in favour of the landlord but the case did raise an interesting signature issue.

The landlord argued that the disputed claim notice purported to be signed on behalf of the RTM Company by the secretarial company which was the company secretary of the RTM Company and that, accordingly, there being just the one unwitnessed signature on the claim notice, it was ineffective for failing to comply with section 44 of the Companies Act 2006.

The statement after the signature mentioned the signatory’s name and the words “RTMF Secretarial” which was the trading name of Federation Limited, the RTM Company’s company secretary, which suggested that he was signing as a representative of “RTMF Secretarial”, and not as the immediate agent of the RTM Company.

Had the signature been the purported signature of the secretarial company it would indeed have been ineffective for failure to comply with section 44.

However the Tribunal said the claim notice contained no indication as to who or what “RTMF Secretarial” was or indeed that it was a limited company. The provision of the additional information below his signature did not derogate from the fact that the signatory actually had separate authority to sign and give the notice in his individual capacity as authorised member or officer acting on behalf of the RTM Company.

The signatory’s signature neither purported to be that of a company to the intent that it was being given by the secretarial company on behalf of the RTM company, nor would Section 44 have allowed it to be. Had the secretarial company been pursuing that option a second company officer’s signature or a witness to his signature would have indeed have been required under Section 44 and their omission here would have been fatal to the validity of the notice.

We might disagree with the Tribunal and think the fact that someone acting in a particular way as a secretarial company’s signatory would have been legally ineffective has little probative value as a pointer to them having intended to act in their individual capacity as agent of the RTM Company (effective) especially when their signature was accompanied by a trading name which suggests they were actually signing, not in their individual capacity, but instead as the secretarial company’s signatory (ineffective).

This blog has been posted out of general interest. It does not remove the need to get bespoke legal advice in individual cases.

Flat balcony works could be recharged as common parts’ cost

The Upper Tribunal (Lands Chamber) case of Castle Rock 2002 Management Ltd v Jeffery [2014] concerned an apartment block at Castle Rock, highly located and overlooking Woolacombe Bay with uninterrupted views.

The middle ground floor flat was constructed with a wooden-decked balcony with a balustrade.

The lease contained service charge provisions.

The Management Company had carried out the following works but it’s ability to recoup the costs through the service charge was challenged:

1. Works to the decked balcony.

The decking of the balcony and the material immediately below the decking was removed, and a paved patio was installed (“the patio works”).

The patio works were disallowed from service charge recovery by the Leasehold Valuation Tribunal (“LVT”) because the works were carried out in relation to parts of Castle Rock which were not common parts but were let to individual tenants

2. The removal of a fence and the installation instead of a low retaining wall (“the wall works”).

The costs of the wall works were similarly disallowed because the works were not needed or required to repair or maintain the building or its safety and had in fact been carried out to enhance and improve the views from the building.

The Upper Tribunal said only the surface of floors were let with the flats and there were excluded from the lets “all such parts of the Building as are below the floor surface.” Those words were not limited to excluding from the lets all such parts of the building as were below the floor surface inside the flats. They also excluded all such parts of the building as were below the floor surface of the balconies.

The works which were carried out to Flat 2’s balcony went below the surface of the decked area, and the Flat 3 balcony patio works went below the surface of it’s patio.

So the patio works for both Flat 2 and Flat 3, involved works to the common parts. So the LVT’s reason for disallowing the inclusion of the costs of those works within the service charge was wrong. The costs could be included.

There was nothing before the Upper Tribunal to enable it to conclude that the LVT was wrong in finding that the cost of the wall works was a cost not reasonably incurred. Accordingly, the cost of the wall works was not recoverable from the respondent.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.