Small freehold company responsibilities

[Toothy321]

Hi I have share of freehold of a Georgian conversion with several other flats, we are all directors.

Other than not causing intentional damage and filing accounts and maintaining building insurance - what do we actually have to do? I can't see anywhere online that says eg you need a fire risk assessment every X years, or if there are any other assessments we need. Do we legally need a health and safety assessment (& what is that?) or legionnaire assessment (tank in loft) or anything like that?

Really surprised at how hard it is to find this info - read a few HMRC articles that just basically say to act in good faith. We hardly ever have meetings and many directors are very disengaged, but I want to make sure we're fulfilling our legal duties.

No, no need for fire assessments etc. make sure the building is properly insured is the most important, then filings at Companies House (confirmation statement, annual accounts and any changes of ownership/shares). Keep accounts and distribute these to freeholders once a year and bill all leaseholders for their share of costs.

Also to note the accounts sent to freeholders should contain more detailed info than the micro-company filing at companies house which is just a balance sheet. Freeholder accounts will include an income and expenditure statement, a balance sheet and a schedule of retained balance for each freeholder (which may be different for each).

As freeholders you are responsible for maintaining the building in line with the terms of the leases. Costs of this are split between leaseholders (who may or may not also be freeholders) in line with terms of the leases.

So...that's it? Seems very easy! Especially if no requirements for fire safety etc. terms of lease are pretty general and we have an accountant who presumably does all of that side of things. Great news! Only way we could be doing something wrong is it no insurance - even though we hardly ever meet...

So...if there is legionnaires, we can't be sued or anything? And if we are do I personally have a defensive as having requested this at several meetings but being overruled?

Do you have a communal water tank? If you do, you need to get it tested for legionella and cleaned every so often.

Yes we do have a tank in the loft. I can't find where it says it's a legal requirement to get it tested and how often etc - doesn't seem to be anywhere that is a list of legal requirements for residential management companies. I think I'd need to show this to the other directors to get them on board, I've told them we should do it but it's not enough.

We get oura done regularly but we employ a Managing Agency who deal with all of this stuff.

The other way to look at it is you all live in the property- do you want to risk a legionella infection?

If you have any asbestos on the property (can be in gutters, fascias etc....) then that needs checking and reporting on every 2-3 years.

If you have communal smoke/fire alarms (which you should have) then they need testing regularly.

A communal tank will need testing for legionnaires regularly. Although it is rare to have communal hot water tanks these days even in old converted buildings.

People automatically assume because the shared freeholders all live in the building these things don't need to be done. They do! You may be all freeholders. But you are also all leaseholders and they are 2 very separate entities in law.

One of the leaseholders could still sue for the freeholders for health and safety violations.

Get yourself a good managing agent and leave it all to them.

https://www.lease-advice.org/article/health-safety-in-buildings-containing-flats-obligations-and-who-pays/

https://www.lease-assn.org/leasehold-information-sheets/health-and-safety.php

Thanks @LuckysDadsHat I'll have a look through those.

I am on the side of wanting to get the tank tested, and to employ a managing agency, but no one else is!

Another question, should we have directors and officers liability insurance? What circumstances would this come up? V hard to convince anyone to spend money

YES! We have had a long ongoing legal case with a lessee who is convinced the condensation in his flat is a leak despite numerous independent surveys telling him otherwise. Legal insurance has been a god send.

OP you are going about it the right way. Let me tell you a story.

I live in a lovely 1930s block, but it has seen better days. In the eighties the lessees bought the freehold and started managing it themselves. Like your fellow directors they did not see the need for "all this legal stuff" and spent as little as possible, mainly doing jobs themselves - overjoyed to be released from the service charge.

The building gradually deteriorated and it become really hard to convince lesses - used to paying hardly anything - to start paying a service charge again. Things apparently came to a head about 15 years ago when things were so bad they could not get buildings insurance. One of our current directors through sheer persistence appointed a managing agent, set up a service charge regime and put in place a 10 year repair plan.

According to him it was a nightmare - EGMs, tantrums, refusals to pay, threats of legal action. By the time we bought our flat things were progressing and essential repairs were happening, many of the most stubborn directors resigned and/or sold up.

I took over 4 years ago as chair and we are now stable, have a good managing agency, have a good sinking fund and are about to embark on a major works programme that ideally should have been done 10 years ago.

Don't go down that route.

@Ginmonkeyagain yes I fear this is our future! Also considering selling for this reason!

Yes sane (but outs is England)

The risks are that you do not do that a reasonably diligent director would do. Ie insure they know their legal responsibilities or pay someone to inform them.

As you are small you probably don't need as much management as we do, but I would advise getting a consultant to come to a directors meeting and set out what you need to do legally and then you can all make a decision as to whether you can do it yourselves or if you want to employ a managing agent.

A previous poster was right, you need to remember you are wearing two hats - freeholder and leaseholder. Just because the hats are worn by the same people, it does not make the responsibilities go away.

How would I find a consultant? I contacted lots of management agencies but not many deal with such small buildings

Try and find a health and safety adviser who specialises in leasehold flats. There are a lot around. You could also try a consultant surveyor who will also be able to help.

There are management agents who will run small blocks for you. Will probably cost about 2k a year ish for them to do it.

There are lots organisations who offer advice on right to manage. I would start there.