Frequently Asked Questions

Q1: In broad terms what might the valuation approach be to sell a balcony to a flat and give them the right to enclose it subject to planning permission etc when their current legal status is a right to use the balcony only. Q2: We live in a 5 year old development and have problems with the property developer repairing loose and leaky roofs on these three buildings. Crest sold the freehold to a leaseholder-owned freehold company, but some of these problems predate this changeover. Q3: The management company is supposed to run the development on behalf of the freehold company, and the management company deals with the hiring and firing of the agent. it seems that the freehold company can only step in if the management company are failing to do their job. I do wonder what power the 3 freehold company directors have in forcing an agent change, without having to propose a resolution of all members (which we are far from certain would be successful). Incidentally, there does not appear to be anything in the management company's articles of association requiring management company members to consent to a change of agent - it seems to be simply a board decision. There is however a requirement to consult members only when something will cost more that 250 per flat (ie. exceeds approx 15,000), but I don't think this applies to a change of agent?

ANSWER 1: In broad terms the valuation approach might be Added value to property from the extra floor space (post development) Less build costs = Equals residual land value to be shared between the parties The residual land value of the balcony is released by the marrying of 2 legal interests under the principles of marriage value the benefit might be split 50 : 50 ANSWER 2: The developer should have given you an NHBC, Buildmark or Zurich Guarantee which covers different building elements for up to 10 years. Roofs is usually 2 years for gutters and flashing and 10 years for structure. There are 4 legal routes which can be followed and there are protocols to follow. The developer is accountable to you despite the freehold having been sold as they have duties under the Defective Premises Act in 'contract law' to the 1st purchaser and also duties under latent defect legislation The route map should be 1. The Agent should have formally written to the developer And you should ask for copies of these letters. There is a contractual obligation to give Crest the opportunity to carry out the remedial works or not 2. Your Agent should get the remedial works quantified, expert surveyor, as the defect needs to be benchmarked to (a) building regulations and (b) against build defects as opposed to lack of maintenance issues. The quantified remedial works should also be presented to Crest giving them a last chance before you pursue your remedies in either: A).

County Court claim for 'actual financial loss' if they non action forces your hand to do the works B) ' or Construction Tribunal Claim You don't actually necessarily need to do either as if this does not wake them up then you lodge the issue with NHBC, Zurich or the Premier warranty. This will cost you nothing but will cost the developer. The guarantee people will inspect and adjudicate and have the power to spend the developers money. The drawback is that usually there is a 950 excess on claims and if 10 flats in a building they will deduct 10 x 950 - 9,500 from the cost of the works. But going to the guarantee will show the developer you mean business. Depending on the outcome you may be able to still continue to County Court if you can prove that you (the FH company) with the covenants to manage the building inherited a roof not fit for purpose. Time is of the essence as sometimes the claim can be marginalised to just original purchasers as subsequent purchasers do not benefit from the same contractual rights to build quality that the original buyers do. In any event the limitation period is 6 years. If you Agent is not giving you advice like this and setting out a route map you are being fobbed off, probably until you loose certain contractual rights. All developers have a 'commercial director' whose entire day job is dealing with such issues. Ask for his name and the correspondence with him. If there is none then your issue is not properly on the developer's radar. ANSWER 3: There is some merit to the freehold company forcing the issue but as always decisions by agreement are preferable. You do not need agreement of all members to change agent - just 51 percent of the Board. Changing an agent does not need members consent nor does changing the cleaner. Both are hired help. The 250 consultation applies to "works" not professional help

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