Freeholder writing off service charges from some leaseholders
I own a number of flats in a block comprising flats above shops. The freeholder has delegated management to a management company, who collect service charges. The freeholder handles legal issues such as transfer of leases. Two shops fell behind with their service charges by a total of £13,000 and subsequently sold their leases. The buyer's solicitors will therefore have contacted the freeholder to ask is there were any debts, and should have recovered them from the sale price and reimbursed the management company.
However, the freeholder failed to do this, so the service charge account shows a deficit of £13,000. The old leaseholders are probably no longer traceable and I don't believe the new leaseholders can be held liable. The freeholder has instructed the management company to write off the debts.
This means that the other leaseholders will have to pay more to cover the loss. The leases define that we are liable to pay service charges as a defined percentage of the total cost of maintaining the block. The cost of maintenance doesn't include writing off losses incurred due to freeholder's incompetence, so we are effectively paying more than the percentage defined in the lease. Do you think we have a legal claim against the freeholder?
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