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Jenny Joint - CMS Cameron McKenna
Online advisor - 2 posts
Dear Andrew,
The resolution of this issue depends on the wording of the lease. Typically the heads of service charge expenditure will allow a landlord to recover the costs of employing an agent to carry out the services on its behalf and to prepare accounts etc. Sometimes a lease will limit managing agents fees to a percentage of the service cost.
Similarly a lease will usually permit the landlord to charge an admin fee if it does not employ managing agents. Again this should be specified in the heads of service charge expenditure. Sometimes a lease will specify that such fee has to be reasonable and/or should not exceed a specified percentage of the service charge expenditure.
Unless the lease sets out a percentage (which will either be charged correctly or not) it may be open to you to argue that these charges are unreasonable but again depending on the actual wording of the lease. If the OSCAR benchmark is currently running at 8% then this is a strong argument that 15% is unreasonable.
I would be wary about declining payment unless you are sure of your ground as this could give the landlord grounds to forfeit the lease.
Incidentally the RICS service charge code recommends that managing agents fees are not based on a percentage but are fixed and indexed as clearly a percentage fee does not incentivise to ensure best value.
I hope that this helps
Jenny Joint
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Jenny Joint - CMS Cameron McKenna
Online advisor - 2 posts
Maintenance of Vacant Property
Aside from your eventual plans for the properties (i.e. are they likelihood of the properties being occupied in future) how much maintenance you need do depends on the liabilities you may have to others if you do not do so.
1. Contractual Obligations
You do not say whether the properties are leased but if they are it is likely that as tenant you will have obligations to keep the buildings in repair. Also if the properties are mortgaged to a bank ? the mortgage is likely to contain similar obligations. You should also bear in mind any requirements that your insurers may have in relation to these properties.
2. Other Liability
Assuming that you have no contractual obligations to third parties there are obligations imposed by both common law and statute that will effect what you need to do. I will look at each of these in turn.
2.1 Common Law Duty of care
a. Duty to persons and adjoining properties
An occupier (this includes the owner) of premises owes a duty to take reasonable care to prevent damage to persons and property on adjoining property. This harm may result from failure to repair his premises. The occupier would be liable under the tort of negligence to such individuals.
Generally an occupier will not be liable if uninvited visitors (i.e. thieves or vandals) have come onto his property and caused the damage. However, an occupier will be liable if the damage was reasonably foreseeable. For example:
· The occupier knew that the area was notorious for vandalism.
· The property was left the property unlocked.
· Vandals entered onto the premise and started a fire, which damaged other properties. A court might find that the occupier should have taken precautions against a risk that was foreseeable.
The more unpredictable the conduct in question, the less likely that a court will find the occupier liable for the actions of third parties who have come onto their land uninvited.
b. Risk reduction
An occupier can reduce the risk of potential liability by doing the following:
· Conducting reviews of the condition of their property;
· Considering neighbouring properties when deciding whether to remedy potential dangers on their premises; i.e. if ?x? is not fixed could it have a potential impact on the adjoining building etc.
· Ensuring that the property is effectively locked to prevent illegal entry by third parties.
2.2 Statutory Duty of care
The Occupier?s Liability Acts of 1957 and 1984 placed a ?common duty of care? on the owners of property throughout England to those who come onto their land.
a.Duty of Care to individuals invited onto the property
The 1957 Act deals with individuals the occupier invites onto his land. It is important to remember that this will include individuals who are entering premises to exercise a right conferred by law; the occupier of the land must to do the following:
· All that is reasonable to ensure that the visitor will be reasonably safe in using the premises for the purposes for which he is invited or permitted; and
· In considering what precautions are reasonable to make the occupier must consider the fact that children will be less careful than adults.
Reducing the risk of liability to visitors
· If the visitor has been warned of the danger this may be sufficient to remove liability. The contents of the warning will be considered to establish if it was sufficient to enable the visitor to be reasonably safe.
· An occupier does not owe a duty of care to a visitor with regard to visitors in respect of risks willingly accepted as his by the visitor. These would need to be clearly stated in a document signed by the visitor.
· However, whilst the occupier can restrict, modify or exclude its duty by agreement, it cannot exclude liability for death or personal injury resulting from its negligence.
Duty of care to other individuals
The Occupier?s Liability Acts 1984 extended the duty of care owed by occupiers to individuals that had not been invited onto the land. An occupier owes a duty to these individuals where there is a risk of them suffering injury due to the state of the premises or things done or omitted to be done on them; i.e. maintenance work.
The occupier owes a duty to these individuals in the following circumstances:
· It is aware of a potential danger on its premises or has reasonable grounds to believe that it exist;
· It knows or has reasonable grounds to believe that the other is in the vicinity of the danger or may come into the vicinity of the danger.
· The risk must be one, which in all the circumstances of the case, he may reasonably be expected to offer the other some protection.
The duty imposed on the occupier is to take steps as are reasonable in the circumstances of the case to see that people that come onto their land do not suffer injury by reason of the danger concerned. If the occupier has taken all reasonable steps they will have discharged their duty of care.
Reducing liability to uninvited visitors
Obviously this is a difficult area for an occupier as they have to consider the potential dangers on their property, who might come into encounter with them and steps they need to take to prevent potential liability. In these circumstances it is better to be over cautious than under cautious. With regard to those people it invites onto its land it can seek to limit its liability through agreement. It becomes more complicated when considering individuals it did not invite onto its property.
An occupier of a vacant building can take a number of steps to reduce its potential liability under its duty of care. For example:
· Fencing off of property to restrict access to buildings that are vacant for prolonged periods. This will restrict those who can access the property.
· Ensure that the property is securely locked to ensure that individuals do not come onto the property and cause harm.
· The use of signs stating any potential risks on the property; i.e. lakes, tripping hazards, building works etc.
I hope that the above assists; if you have any questions or queries please do not hesitate to contact me.
Jenny Joint
email: jenny.joint@cmck.com
tel: 020 7367 2943
fax: 020 7367 2000
CMS Cameron McKenna
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