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Failure to consult properly costs landlord £270,000

Posted: 18th July 2011   In: Dispute Resolution, Commercial Property

A corporate landlord has been left with a bill of £270,000 after failing to consult properly with tenants.

The case involved five leaseholders at a block of flats which required major renovation. The landlord was entitled to recover most of the cost through service charges as long as there was full consultation with the tenants.

This involved letting the tenants have a say in which company should be awarded the work.

However, the landlord only provided the tenants with details of one of the four tenders before serving notice that the contract had been awarded. The tenants objected and refused to pay their share.

The case went before the Leasehold Valuation Tribunal which concluded that the landlord had not given the tenants the chance to consider the different tenders and so had not complied with the Service Charges (Consultation Requirements).

This meant the landlord could not recover the costs as expected.

The liability of each lessee was limited to just £250 each and so the landlord would have to pay the remaining £270,000 necessary to carry out the work.

The case went all the way to the Court of Appeal, which accepted that the decision seemed harsh on the landlord. However, it said the financial consequences for the landlord were irrelevant. It was impossible to view the consultation failure as minor or merely technical.

Please contact us if you would like more information about the issues raised in this article.