Solitaire’s Co-Operation When They’ve Been Replaced
By admin | February 3rd, 2010 | Category: Past Articles | 15 commentsThere’s been lots of lively debates going on recently in regards to Right To Manage and LVT’s, which demonstrates, that finally, residents are starting to fight back against Solitaire / Peverel.
This has co-incided with a homeowner, who had managed to replace Solitaire Property Management and appoint their own chosen local PMC for their development, without going RTM or LVT.
They’ve told us that despite the ‘handover’ taking place last year, the new PMC are still yet to receive all the correct paperwork from Solitaire (electric bills, water bills, etc). What was of particular interest was the fact that the new PMC is unable to source insurance for the development, due to Estates & Management informing the new PMC – that they will be responsible for it.
The figures that the new PMC have had to budget for are scandalous and once again would suggest, that E&M / Consensus Business Group, may possibly be looking to source the insurance through another of their companies, to profit?
The cost of the insurance premiums that Solitaire / Peverel take out on estates, is a hot-topic of itself and is one that is being reviewed / investigated by the FSA.
Apart from the above, the new PMC has raised doubts in regards to the percentages that residents were contributing towards the management fee. In some of the schedules, despite some properties being identical, they weren’t paying a penny and others paying almost double!
From what we understand, based on the Solitaire / Peverel set of accounts, ‘Schedule 1′ – is what all residents should be contributing to equally, as this includes the road / parking spaces / landscape. Therefore, if you have 30 properties, each property should pay 3% of the total of ‘Schedule 1′.
‘Schedule 2′ is usually for communal areas, such as flats that have access via a stairwell. Subject to the number of properties that have this access e.g. 10 properties, each would be paying 10% of the ‘Shedule 2′ total fee.
‘Schedule 3′ – we have found normally relates to properties such as coach houses and town houses that have a car port / garage. This covers the cost of insuring the garage separately and maintenance costs. Therefore, again, if you have 20 properties with garages, each would be paying 5% of Shedule 3.
As an example, we have put the following together based on an estate with 30 properties (10 flats / 20 houses):-
|
Property |
Shedule 1 |
Schedule 2 |
Shedule 3 |
Projected Yearly |
|
10 Flats |
3% of total cost = £333.33 |
10% of total |
0% of total cost |
£533.33 |
|
20 Houses |
3% of total cost = £333.33 |
0% of total cost = £ 0 |
5% of total cost = £50 |
£383.33 |
We recommend that those of you that have received the ‘Yearly Accounts’ view the breakdown of the percentages that each property contributes to, and ensure it matches your lease, because we feel the above goes to demonstrate that, information is clearly wrong and despite residents knowing this and complaining, Solitaire were / are never prepared to find out the facts!
Another piece of information that came as a massive surprise was, that one of the properties at the estate in question owed over £2,500 in management charges dating back to 2007, which was still outstanding. We were shocked by this, considering the fact that Solitaire issue the ‘debt collection / bailiff threats’ to force people to pay, when this was a prime example of when this action should have been taken.
This is a vast amount of money for the management accounts to be down and unless the homeowner in question pays, then who loses out? The residents, because if that £2,500 isn’t available to pay for services at the estate, the jobs don’t get completed, which then results in residents being angry that Solitaire aren’t providing a service, which is because there isn’t any money available to do the job. (Please Note:- TheTruthAboutSolitaire have actually defended Solitaire for once)
Taking some of the above into consideration, we came to the conclusion that Solitaire / Peverel, maybe increasing everyone else’s premiums, to cover the outstanding service charge payments of non-paying residents, without going the legal route with the non-payer and getting the money!
Who knows? But it definitely would make sense why we are seeing drastic increases in maintenance fees?
Over to you all to discuss.
Many thanks – this is very interesting. We also appear to have reached the stage of removing Solitaire without recourse to RTM, which both they and E & M are aware, is always the leaseholders backstop.
E & M has been advised that if there are any unsatisfactory aspects to the current process then we do certainly have the requisite majority to go RTM and importantly, they will have the administrative task of having to go through the process again, in regard to the eventual installation of the Leaseholders chosen alternative to Solitaire.
At the moment we are in the consultation period – three quotes having been submitted to E & M for the provision of PM services with all three potential service providers being companies submitted by Leaseholders and categorically not anything to do with Consensus related companies.
In understanding the relationship between the various Consensus entities involved and having endured 10 years of Solitaire, we are naturally cautious and potentially suspicious of the whole process. We would very much welcome any additional guidance you may be able to proffer resultant from you experiences.
Thanks again in anticipation.
I smell a rat!
If I have understood the facts in the original post correctly, E & M (a CBG company) is the freeholder/lessor. As such they hold the legal responsibility to insure the buildings that are built upon the freehold land they own and to which the flatowner has the rigjts stated in their lease.
I have a copy of a letter from a RICS Chartered surveyor that applies to a site I know. He states ” I understand that the ground rent is £xxx per flat and I assume, as would be usual, that the freeholder is entitled to the commission on the insurnace premiumand that the freeholder has the right to nominate the Insurer”.
I am also aware of at least 1 national Property Management Company that is currently (well 2 weeks ago) advertising on its website “free RTM to those sites currently managed by Peverel”. It also has a picture of the Houses of Commons on its site, refers to the CARLEX/Peverel bad publicity fiasco and claims to be in support of greater regulation.
There is no such thing as a free lunch.
I heard a rumour that apparently at a recent ARMA / get together of other PMCs that Peverel admitted their mistakes and asked for other members to go easy on them and not take estates away from them?
Maybe Andy could confirm this?
Oops re my firt comment above – If forgot to also comment on my surprise at seeing an insurance cost under Schdule 1 (road, parking spaces, landscape)? Why are these insured? There will be natural wear and tear and a need for maintenance of surface and landscape areas, but insurance against what?
Also, the precise percentage of service charge for each of the schedules in their lease, that a leasholder is due to pay should stated in the lease as a percentage, if all properties do not pay the same.
RULE ONE of TAKING CONTROL : get a copy of your lease.
RULE Two of TAKING CONTROL : read your lease.
RULE THREE of TAKING CONTROL : if you can’t understand the legal jargon in your lease, pay a solicitor to “translate” it into palin English.
More on Estates and Management: Strictly speaking E&M is not the landowner or freeholder, but an agent responsible for collecting ground rent on behalf of the freeholder. I’m not certain that E&M are a CBG company, but it does share some of the same directors as Solitaire so there is a link.
The main reason why it matters is that if you are thinking of invoking your Right to Manage, you must serve notice (Sec 79) in the name of the freeholder and NOT E&M. Although you’d serve the notice at E&M’s address.
Likewise negotiations to buy the freehold (Collective Enfranchisement) are handled by E&M; and E&M will write and confrim recognition of a residents’ association. The freeholder or its agent cannot prevent a RTM company seeking a new buildings policy. You must provide a copy of the policy to the freeholder whose building is being covered not the RTM co’s. It’s my understanding that buildings insurance has to be bought via a broker – I think it’s an FSA rule as PM cos do not come under the FSA’s remit.
Anon,
Interesting.
But in the case quoted in the original post, there is no RTM company as E & M agreed to a new Management Company to replace Solitaire (unless I have misinterpreted the facts).
Yet again there must be information in the relevants LEASES that could throw light on this situation and what and who is what.
Looks like this is an issue to which the Leasehold Advisory Service may be able to provide a definitive answer, because definitive (if that can ever be obtained in law) is what is needed here and for others who may be in the same situation, otherwise leaseholders will just be going round in circles getting nowwhere.
Just making the point that if you’re thinking of invoking RTM, make sure it’s on the freeholder. The freeholder can voluntarily replace the PM Co – as soon as we discovered the link between Solitaire and E&M, we just went straight to RTM.
Leases are often drawn up and issued to residents in a company name in which the residents are all members.
Where I live, the freehold was originally retained by the builder, and then it was sold to another company, then bizarely sold again on the same date to another company. In other words, the physical owner of the freehold is not mentioned in my lease. It’s very confusing but basically the freeholer became the director of our originanl residents company.
All that said – and it’s impossibly complex – the name of the freeholder must be named on your service charge bill – I think that’s alegal req of the Lanlord and Tenant Act. You can force the sale of the freehold (Leasehold Reform Housing and Urban Development Act 1993) – not the same legislation as RTM. So there are three ways of removing the PM Co – and the LVT route for challenging unreasonable service charges.
Anon,
For clarification and to assist others less well-informed than you, who was your builder and how many years ago? I.e. was your site built by a national developer or by a small builder?
I cannot understand how a lease could be drawn up without naming the freeholder. What does your lease state? “The freeholder” / “The lessor”?
When the freehold was first sold on were you, the leaseholders offered Right of First Refusal and if not, why not?
When our reserve fund has been handed over, and our RTM 100% complete I’ll be a little more candid, and a little less Anon.
The builder was a national PLC, let’s call it \Company A\ it was a new build development, less than 10 years old.
I was the first person to complete and move in. The parites to my lease are:
Company A
Company B
Myself
So Company A is the builder. Company A names a management company as party to the lease: \Company B\. BUT Company B isn’t Solitaire, it isn’t a PPMG co, in fact it isn’t a real company with an address, it’s just a company name, that me and all my neighbours own a £1 share in.
On the lease Company B is registerd at Company A’s national headquarters.
At this point in time, the builder as such, is the freeholder and Solitaire have no connection to the develpoment. Building continues for another six or seven months, and towards the end of that process Solitaire first appear as Property Managers. The co doesn’t introduce itself – there is a long handover, and eventually a service charge bill appears from…
Solitiare: Company C. (meanwhile the builder took and advance, on completion, this covers part of the first service charge.)
Company D: E&M appear a while later with arrears for ground rent.
Let’s say it’s now two years since the block was complete.
There have been no amendments to my lease – the lease is essentially cast-in-stone on the date it’s signed.
There are now five parties all with some legally binding connection:
Myslef
Company A: Builder
Company B: The residents’ Management Company (not Solitaire)
Company C: Solitiare
Company D: E&M
On the two year anniversary of completion, Company A transfers the freehold to another company; you’ve guessed, Company E. It is now registerd separately at Companies House. The freehold was not offered to the residents.
On the same date, Company E, transfers the freehold to Company F. None of this changes the lease.
Much later we discover Company F has one shareholder: Company A – so the link was never really broken. Companies B,C,D,F have at least two directors that sit on the boards of ALL the companies. So they’re linked but legally separate companies.
When we invoked the RTM, we discovered that Solitaire or Solitaire Directors (call them Company G if you like) were the sole director in Company B – of which every resident still has a £1 share.
When the RTM was invkoed, Company G (Solitaire Dirs) HAD to stand down as the sole director of Company B. It was by being a director that Solitaire, although not named in the lease was bound to the lease by being appointed by its mate Company A as sole direcor.
Now it’s in Company H, yep, the RTM’s co’s hands – Company H is the sole director of Company B.
So each change affects the lease, but the lease is never re-written or replaced – it’s not even updated. You just have to spend hours wading through the paper trail. There’s no easy way of explaining it, but feel free to ask questions if that does not make sense.
Incidentally Company F, using Company D as its agent is now a member of Company H – the RTM company, but the freeholder (Co F) only has one vote so its ability to influence a vote/decision is limited.
And – Company B is supposed to live on for the \benefit\ of non RTM residents – except we got 100% participation so we’re finding out about winding it up. The RTM now has to deal with all the compliance for Co B & Co H.
So we’ve moved the Registered Office for both companies to an outside firm of accountants and auditors… Company I. It just goes on and on.
Thank you Anon.
Looks like there may not be enough lettes in the alpabet, but I look forward to hearing the full story and the ultimate outcome.
Should Newsontheblock set up a prize for the most complex leasehold / freehold case? Yours should surely win!
I think it IS complicated when the lease is signed before the property manager is in place. I think “they” make it more complex than it needs to be, and of course when a new build flat is sold, then a new lease has to be drawn up to reflect the lessee’s name change.
Cunningly, we got a letter just before the two year anniversary saying the freehold had been sold, in effect it’s just transferred. I asked “Company A” (the builder) why we were NOT offered the freehold. Co A fudged it by saying they sell them in large batches. At the time, you couldn’t buy the freehold of a new develpoment until it was two years old, but I think this might have changed. So they defelcted the issue away from us.
RTE – right to enfranchise or collective enfranchisement forces the sale of the freehold – but if you need a LVT hearing (to agree the price of the freehold) and you probably will if you’re dealing with our friends, the legal costs are front loaded.
You also have to get your own valuation done by a surveyor familair with RTE. I phoned about five before I even found one who knew what I was talking about. That survey cost £1150. It might have even been more, but comapred with RTM, the RTE costs are a bit more front-loaded.
Anon,
“Selling in batches” is spot-on. Twenty-seven across England and Wales in the same transaction!
If everyone who owns a newish, managed, leasehold apartment, or a freehold house on a newish site where there are bits of land that is maintained by a management company, knew what went on and goes on behind the scenes I think there would be a modern day “Peasants’ Revolt”.
In that event, all MPs would need to live in a house with a moat with a reinforced drawbridge!
Its a criminal offence for freeholders since 1996 not to offer right of first refusal to leaseholders when there is a sale transfer. You should check out the “date and price” of a sale transfer by buying a copy of the freehold title from Land Registry Online.
If you have not been offered the RFR , and your group of leaseholders can afford to buy the freehold then try to get it.
I’d have to look back through all the paperwork to check but I don’t the freehold was sold as such, I think it was transferred to into the names for different companies. The current freeholder company has one shareholder: the builder. So I’d imaging they would say the freehold has never been sold.
Such builders/freeholders must scoop up hundreds of thousands of pounds in ground rent. That’s why the whole leasehold system is so flawed because you only really own the right to live there for the period of the lease or sell the lease to someone else. The freeholder wields all the power.
SaxonHero:
Who is the present freeholder of your block ? Buy a copy of the freehold title from Land Registry.
It may not be enough simply to change the managing agent for service charges account if the Lease still leaves payment of annual building insurance and payment of Notices of Transfer to Lessor who still gets the annual ground rent.
Best way forward is to set up a “Right to Manage” Company (RTM) to legally take over full administration of the lease including all Lessor’s income which becomes income due to RTM. ( Read clauses 95-97 in Chapter 15 of the Commonhold & Leasehold Reform Act 2002 about the powers of the RTM ( right to manage company.)
After RTM commences , the freeholder can only collect ground rent and deal with re-entry & forfeiture un der the lease.