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Owner Managed Freeholds

Another case involving Owner Managed Freeholds has recently been decided by the Court of Appeal in Newman v. Framewood Manor Management Co Ltd.

In this case the Various leaseholders were in a typical way shareholders in a Company which managed the development. It would appear that this was a smart development which had various communal leisure facilities which had given rise to various problems. The various leases had covenants governing the provision of the various leisure facilities by the Management Company. As all too often can be the case various problems arose concerning the leisure facilities and repairs and replacement. The costs involved looked as though they would be considerable and many leaseholders seem to have had little appetite to incur these costs.

The Company then after various meetings at which a majority of Leaseholders agreed with the Companies proposals made various changes. Sadly Mrs. Newman, as Leaseholder, did not agree and proceedings were bought for specific performance and damages.

The lease contained a provision which appeared to exonerate the Company from damages claims if these were not covered by Insurance. The Court of Appeal found firmly that in there view this clause did not prevent a leaseholder bringing a claim for loss of amenity under the lease.

The Court then went on to consider the various individual claims. Whilst it did not award specific performance (although certain works had been undertaken or undertakings were given by the Company) damages were awarded. What is clear from the decision is that Owner Managed Freeholds as with any Freehold/Leasehold relationship are bound by the terms of the lease. In practice it is vital that all Freeholders have regard to the lease terms. If services are to be provided under the lease simply because a majority is happy with a change that of itself will not be sufficient to just proceed as the Freeholder will be open to claims as in this case.

That is not to say that the situation cannot be resolved. It is always open to parties to mutually agree variations (if all agree) or in certain circumstances can an application be made to the LVT to vary the terms of the lease.

As we have flagged before in various articles it is vital that Freeholders and their advisers consider the Lease terms and check exactly what they allow or provide. A failure to do so can be expensive for all and whilst it seems in the case referred to there is a separate costs appeal undoubtedly all sides will have spent large sums given the matter has got as far as the Court of Appeal. PainSmith Solicitors are happy to advise Freeholders or Leaseholders on the obligations under a lease and generally with regards to this complicated area of law.

2 Comments

  • Visit London 3rd May 2012 at 10:37 am

    It is really important that you and your leaseholders should agree on a term even if it is already on contract.

    • PainSmith 8th May 2012 at 12:47 pm

      If its in the contract then its irrelevant as to whether there is agreement. It exists already and so it applies.

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