Burrells Wharf Messageboard

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Managment fees from R&R

Posted by martyjnh on December 21, 2007, 4:37 pm
Message modified by board administrator December 24, 2007, 11:26 pm

We opened our cards hearing fromold friends and then found one lurking red faced at the bottom of the pile. It was a statement requesting as much again for the replacment of the lifts in Chart House.
I find it amazing we simply feel that everyone can just stump up such amounts at a drop of a hat and understand that the estate has been hit by one bad news after another this year but this takes the biscuit.

We seem to be very good at spending money on 'unexpected events' and poor at managing communications and shareholder expectations. Only weeks ago we knew we had a problem but failed to state the level of cost and more importantly the plan of action.

I would suggest we seriously consider cutting costs (***phrase removed by board administrator***) and not expect this level charges which on the back of the heating fiasco (not the fact what happened but the approach and method of respolution) is becoming unacceptable.

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Re: Managment fees from R&R

Posted by David on December 21, 2007, 5:55 pm, in reply to "Managment fees from R&R"

So – for a 2 bedroom charthouse flat, a demand for just under Ł3500 for 6 months of service and a plan to replace the lift one day. Oh yeah, and for "immediate payment". Merry bloody Christmas.

Last time there was a big thread about service charges, the directors agreed that some warning should be given to lease holders when big rises were coming. I guess that has been ignored.

Demanding over Ł1700 for the replacement of the charthouse lift, plus suggesting there will be an extra demand of around Ł600 per year every year until 2012 is way, way out of line.

Leaseholders cannot be expected to swallow such demands without any notice. These vast expenses relate to long-term assets that should be financed over a good proportion of their working lifetime and NOT in advance of even getting a quote for the work.

Come on directors - think! In a real company, you don’t go off to the shareholders and demand money when new assets are needed. You have to plan the finances accordingly so the cash flow doesn’t get crippled. That means looking at long term asset financing if the cash reserves cannot, or should not, pay for the asset.

I strongly suggest that leaseholders pay their service charge on time but withhold this obscene advance payment for the lift replacement until a better plan is discussed.

David

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Re: Managment fees from R&R

Posted by Anthony on December 21, 2007, 6:10 pm, in reply to "Re: Managment fees from R&R"

Agreed. It is crazy to hit us with a Ł1700 levy with 15 days notice. Christmas is cancelled I guess. I can't believe this cannot be done over time or at least warn us of the levy to come with the June bill - the work has not even started yet (although the lift hasn't been working in Chart House since September !) Serious cutbacks are going to have to be elsewhere because this is getting ridiculous. I'm trying to sell my flat at the moment - several viewers have said that Burrells seems expensive. Shame the AGM isn't in January - I reckon a few people would turn up ! Merry Christmas everyone (apart from whoever it who plans the finances for BWFL)

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Re: Managment fees from R&R

Posted by PhilB on December 21, 2007, 7:05 pm, in reply to "Re: Managment fees from R&R"

This finance management of this estate is becoming unacceptable. I am starting to lose my confidence in the Management's ability to satisfactorily run this estate.

I now am concerned that the Chart House lifts are being replaced after only 18 years of service. Someone should investigate the costs of repair or partial replacement. Throwing OUR money at it is an abdication of your responsibility.

High priced assets should have a replacement cost budgeted for and funded over the lifetime of the equipment or a lesser period if caught by surprise.

I recommend that all the Chart house households should only pay deficit, ground rent and the 6 months Service Charge, although consider methods of reducing this by reducing other costs. The lift ley should NOT be paid.

We should not accept the lift levy as an acceptable charge at this stage and therefore not pay it until we have seen examples of quotes for the economic repair or possible replacement of just the failed lift.

Merry Xmas.

Phil B

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Re: Managment fees from R&R

Posted by AndyS (Director's Hat on) on December 22, 2007, 8:49 pm, in reply to "Re: Managment fees from R&R"

OK. re the lift. I am not going to go into too much detail as I don't have the letter and exact breakdowns to hand.

One of the Chart House lifts has suffered a major control failure and the only solution to this is the complete replacement of both control units. The reason is that both of the lift mechanisms are linked and have been since construction.

We have explored a few possibilities and will continue to do so. One thing that we looked at is getting a loan to spread the cost to the building, but this isn't possible for the main reason that we cannot get it secured as that would involve mortgaging one of the buildings.

In terms of the works needed, I will let one of the other directors respond in more detail, but we are satisfied that there is no other option available that would be cheaper and satisfactory. We have looked into other possibilities and there is not an acceptable one.

The lifts had an anticipated service life of 20-25 years, and so in response to two of the posts above, we didn't anticipate this level of expenditure before the anticipated demise as the lifts had been functioning perfectly well until this happened and so we saw no need to accelerate previous demands.

Yes, we are aware that this is unpalletable and we are still seeing what can be done about it. However, we had no way of seeing this coming and whilst we attempt to keep charges down wherever possible, we felt that functioning lifts in the Chart House was necessary for the good running of the Estate.

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Re: Managment fees from R&R

Posted by David on December 23, 2007, 12:06 am, in reply to "Re: Managment fees from R&R"
Message modified by user CD December 23, 2007, 12:22 am

Andy,

Thank you for your response.

The key issue here is the spread of the cost. The lifts were going to fail sooner or later and their replacement (or replacement parts) would always need to be funded.

It would be a fair point to say that this far into their lives, the reserve fund of the block should be at a level to deal with this. If they were expected to need replacing after 20 years, then now (18 years in) properly managed reserves should be able to pay at least eighteen twentieths of the cost.

Given that this is not the case, I feel very strongly that it is not for the current leaseholders to pay in advance for replacement of the lifts, as this would mean paying for an asset that has long-term benefits to BW – i.e. long after many of the current lease holders move on. One of the points of a reserve fund is that the cost of these major purchases is spread across all the leaseholders that will benefit from that asset. That means all the leaseholders over the 20-year lifetime of the asset, not just the ones in situ on the day of break down.

Therefore, if the reserve fund cannot fund the replacement, then the directors of BW must look for external financing. Asset financing is usually secured on the asset in question – i.e. the new lift, as opposed to the entire block.

I believe it is necessary at this time for the directors of BW to write to all leaseholders of the Charthouse, withdrawing the demand for the lift levy at least for the time being. I do not believe that a clear plan of action exists, in that there is not a clear specification for works nor quotes for that work. You mentioned in your reply that you were still looking into various options and that confirms to me that it is very unreasonable to place such a demand for cash while there is no immediate need for it. Further more, without completion of the Section 20 procedure, there are no legal grounds for a leaseholder to pay at this time. The directors should act promptly to avoid a full on fight with the leaseholder/shareholders they represent.

They should then actively pursue all avenues to resolve this issue, as sneaking in an unannounced demand on the last working day before Christmas, with a due date being before the first working day of the New Year, could be interpreted as sneaky and underhand.

I will now be out of web range until after the new year. I have already written to R&R to confirm that my service charge will be paid on time, but that I will not be paying the lift levy until further consultation has taken place. I strongly encourage my neighbours to do the same.

David

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Re: Managment fees from R&R

Posted by AndyS (Director's Hat on) on December 23, 2007, 1:14 am, in reply to "Re: Managment fees from R&R"
Message modified by user AndyS December 23, 2007, 1:17 am

A Section 20 notice is issued as a notice that works may be carried out. In this case it is highly likely that they will be carried out.

In response to a few points :

1. Should the anticipated cost of this have been spread out over 20 years? To be honest, the lifts serve the people who are resident at the time that the lift is serviceable, so theoretically I take your point on board completely. However, in a siuation where a lift becomes unserviceable within its anticipated life it is very difficult to say who should pay for what. In an ideal world of course, we could bill people in arrears of course for how long they lived there or how many floord they travelled up, but this is not possible.

2. As to external financing, it is very difficult to obtain. There are three reasons for this. First, we can't do it because you cannot get secured financing against an item like a lift because it is attached to the building. Therefore, there is no security for the lender. Secondly, we cannot secure against the buildings as that would be prejudical to shareholders as they would be in a disadvantaged position vis a vis the leaseholders. Thirdly, unsecured finance is not possible unless each individual leaseholder is willing to guarantee personally the loan and then sell on that obligation to their sucessor - something that is practically impossible.

The demand is not unannounced unintentionally. It is simply that we put in a lot of hours over the last couple of weeks looking into this and until just before the letter was issued we were hoping to reach a better conclusion.

I would strongly urge people not to withhold service charge on the basis of this demand. If people have suggestions then I am happy to look into them. I work financing capital assets and have been unable to procure a solution that will help. If someone has a better idea then please let us know and I will pursue it by whatever means possible. However, withholding service charge will not benefit the leaseholder and will not benefit BWFL. If there is a financially better solution then money will be refunded/allocated to the reserve fund.

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Re: Managment fees from R&R

Posted by ST on December 24, 2007, 12:57 pm, in reply to "Re: Managment fees from R&R"

David, I agree with your course of action, and will also be withholding the payment of the additional lift levy. If any other leaseholders feel the same, it may be worthwhile us acting as one.

Directors - whilst I appreciate the time and effort that goes into maintaining the estate, perhaps you could appreciate that issuing a demand for a service charge double what was expected, without any prior notice, and with no period of time for payment to be made is completely unreasonable and unrealistic. I doubt I am the only one who simply does not have access to this sort of money, particularly over the Christmas period, when funds are already very low. I also doubt that I am not the only one who this additional financial burden is causing significant worry. Was it really necessary to include the threat of legal action at the bottom of the letter accompanying the demand? Do you really need all of the money for the lift repairs within fifteen days when you have not even established what course of action you need to follow, and what the repair costs are? How exactly has the additional levy been calculated?

I am so very disappointed that the Directors have chosen this course of action, with such apparent disregard for the effect it may have on leaseholders.

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Re: Managment fees from R&R

Posted by claire (director's hat on) on December 24, 2007, 1:52 pm, in reply to "Re: Managment fees from R&R"

ST, we have certainly not gone down this route with disregard for the effect it may have on leaseholders. Since the problems with the Chart lift came to light, we have looked at various solutions but it turns out that because of the way the lifts operate, full replacement is the only course available. Estate reserves are fairly low at the moment due to various costly events, in partcular the gym works that have recently been undertaken. Our preference would be to borrow the money to spread the burden over a number of years. However, after exploring various financing options we have discovered that this is not a viable option. As Andy said further up this thread, we cannot secure the loan and an unsecured loan would be prohibitively expensive - and leave leasholders paying more.

As for the general level of service charges, before the AGM we obtained some comparables from other local estates and found that the service charge levels here are at the market level for the facilities that we have (estate office, gym, etc). Unfortunately, wherever you live (freehold or leasehold) there will be unanticipated expenses and some years will be more costly than others.

The directors urge all Chart residents not to withhold service charge monies. This money is needed for the functioning of the estate and in accordance with the terms of the lease, we may take legal action to recover unpaid charges. This is not something we ever want to do, but if everyone stopped paying we would find ourselves unable to maintain the estate or pay the staff.

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Re: Managment fees from R&R

Posted by Martyn Daniels on December 24, 2007, 3:23 pm, in reply to "Re: Managment fees from R&R"

Why have the diretors not called an EGM re this issue? Why was it communicated in such a high handed manner after the debacle of the plumber checks and heateing where the ciommunication was clearly lacking? We do not appear to learn from experience.
How can you make a demand under legal threat when you can't produce the plan to justify the the figure?
Can you please disclose off line the detailed calulations on how the figures where dirived and the estimated costings / quotation. Also how this is to be speread?
Can the directors please withdraw this charge or hold an EGM and remove the current legal threat re settlement in full?
Can i ask why the chairman or directors have not written to all leaseholders on the matter and left it to R&R and the messaboard to do the communication. The timing of this letter we believe, was particuliarly un-Christian.

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Re: Managment fees from R&R

Posted by PhilB on December 28, 2007, 1:34 am, in reply to "Re: Managment fees from R&R"

I do not believe that the directors or R&R can make legal threat regarding the levy. I understand that they can only legally do so on the service charge and ground rent.

If only the Chart House residents are paying for replacement of the lifts then there should be no payment by Chart House residents for the front car park leveling and the wheelhouse roof; can this be confirmed? I personally believe that the residents of each block should be liable for the revenue stream of block assets, but not of capital costs as these are Estate assets. Can someone please confirm this?

An additional (and surprise) Ł1700 charge demanded within 3 weeks is unacceptable. If I was a director, I would have contacted residents first and discussed finance options, to ensure that it was affordable at a very costly time of year.

Furthermore, I would also have suggested smaller charges now and again in July and then only start the replacement of the lift after July or next xmas once the funding is sufficient.

This all seems appalling management.

I will be paying the service charge, but informing R&R that I will not be paying the additional levy until this has been discussed and agreed.

Do you all think that we should pin something on the Chart post room notice board and perhaps write to all the Chart House owners to ensure that we have agreement here, as I am sure not all residents read this messageboard. If anyone wants to contact me directly, please drop a note in my post box.

Phil (501)

p.s. Happy New Year.

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Re: Managment fees from R&R

Posted by Charles Walker [BWFL] on December 28, 2007, 3:25 pm, in reply to "Re: Managment fees from R&R"

Phil,
Please allow me to clear up some misconceptions in your e-mail.
1. Each block's leaseholders pay only for those works that apply specifically to that block. IE Chart House leaseholders did not pay a penny towards the repairs of The Wheelhouse roof. Conversely Wheelhouse leaseholders will not be paying a penny towards the Chart House lifts.
2. Car park leveling is not a block specific item and is paid by all leaseholders across the estate. Much like expenditure on the leisure centre etc.

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Re: Managment fees from R&R

Posted by Martyn Daniels on December 24, 2007, 3:32 pm, in reply to "Managment fees from R&R"

i have already asked about the life expectancy of the lifts and not got an answer.
Can you please supply the stats that support the 20 year life, and body or bodies that claim that lifts only last 20 years. Can this information be verified by an indeprndant source?
We accept the current situation but are finding it hard to accept the sweeping statement that all lifts only have a 20 year life expectatancy.
If correct then Dave is corect is saying that these should be spear over 20 years not as proposed.

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Re: Managment fees from R&R

Posted by dc on December 26, 2007, 11:48 am, in reply to "Re: Managment fees from R&R"

Thank you Andy and Claire for your responses.

Please be aware that I am recommending that residents withhold the lift levy payment, not their service charges as you have interpreted.

There is currently no legal basis for the demand of the levy as the section 20 process is not complete. The purpose of this process is to allow a period of consultation and to review tenders for the work. Since this hasn't been done yet, demanding immediate cash from leaseholders is wrong.

Andy came up with a list of reasons why finance was not possible. One point was that shareholders would be disadvantaged by the use of a secured loan. This is not true. Indeed shareholders are disadvantaged at the moment because the charthouse is devalued by the fact that the lift is faulty. Taking a secured loan does not affect shareholder value because the debt of the loan is balanced out by the value of the asset purchased.

Can I ask if any of the directors have experience raising capital for business? That's not a jibe, its just that in Andy's first response, he mentioned a bank loan. It is a common misconception by people who have not started a business that banks loan money for purchases of major assets. By and large they don't, rather leaving this to specialist lenders who know the market for the assets they are lending against. Over 90% of businesses finance assets this way and I don't really see that bw should be an exception.

Can I please receive copies of the minutes of board meetings where offers of finance were solicited and their subsequent offers debated? I have started and run a business for 12 years that eats it's way through high value assets, and perhaps can offer some pointers if I know what you have looked at so far?

Clearly there is more research to do on this, not least to agree what work gets done by whom and for how much. Until at least this is resolved, I cannot see how the directors can push forward with the demand for the lift levy. I therefore strongly urge them to withdraw this demand in order to avoid an unnecessary head on collision with leaseholders and shareholders.

dc

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Re: Managment fees from R&R

Posted by gus on December 27, 2007, 3:43 pm, in reply to "Re: Managment fees from R&R"

I, too, was concerned at the suddenness of the demand for this levy - especially since I have recently exchanged contracts on the sale of the our flat.
In the circumstances, I have processed a payment in respect of the Service Charge (and ground rent) in full but intend withholding any payment of the levy until such time as the validity (legality?) of this is established.

Gus

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Re: Managment fees from R&R

Posted by Gareth Frith (BWFL Director) on December 27, 2007, 8:13 pm, in reply to "Re: Managment fees from R&R"

DC,

Could you possibly contact me to discuss this. If you send you contact details to directors@burrellswharf.com I will give you a call.

Gareth

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Re: Managment fees from R&R

Posted by dc on December 27, 2007, 11:03 pm, in reply to "Re: Managment fees from R&R"

Hi Gareth,

I'll send through my details now although I am away from home until probably the 3rd January.

Given that the section 20 process is not complete and there is not a fixed plan to correct the lift issue at this time (no tender has been accepted), are you now in a position to postpone the demand for the lift levy? As I'm sure you can appreciate, the demand will cause financial stress for many leaseholders coming so soon after Christmas and without any warning. Since there is no immediate need for the cash, surely postponement is the right thing to do.

I appreciate that the background plan might have been to get the cash in place so that when the corrective works were specified, they could be actioned quickly. But I don't think the problems this causes leaseholders is justifiable.

david

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Re: Managment fees from R&R

Posted by AndyS (Director's Hat on) on December 27, 2007, 8:36 pm, in reply to "Re: Managment fees from R&R"

The issue of whether shareholders are disadvantaged or not is indeed debatable. We put this forward as a solution and got knocked back the accountants. We can, of course, re-check but it was pretty categorical.

Do any of the directors have experience in financing assets - yes. I provide financing for high value assets and capital projects in my job.

I have approached four companies who specialise in this type of financing. Two I approached direct (one was GE and the other I can't recall) and the other two were brokers. One said that he couldn't find anyone to do it without checking. The second has tried over 30 specialist lenders and has received a "No" from all of them, much to his surprise. The reason is that without security they won't do it. A lift cannot be used as security as it is attached to the building. The other option is to give something else up as security and the only thing that we could offer would be some form of charge over the freehold. The service charge payments themselves, even with a history of BW's finances, are not sufficient to induce the lenders to talk to us.

If you have an idea of a lender that will work with us then we are happy to talk to them. As Gareth said, drop us a mail and we can look into it.

The financing specifically has not been discussed formally at a Directors' Meeting due to the suddenness of this. I believe that our last formal agreement was for me to look into it. The Managing Agents felt that it was highly unlikely but we said that we would try.

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Re: Managment fees from R&R

Posted by dc on December 27, 2007, 11:37 pm, in reply to "Re: Managment fees from R&R"

Hi Andy,

Thank you for the constructive response.

Asset lenders do like assets they can repossess if the recipient doesn't keep up repayments, and of course a lift is a right pig to carry out the door.

I can also see that lenders might have a problem with bw's profit - in that there isn't much (we call it reserves of course).

So my view would be that security in the form of a limited charge over one of the assets - for example, The Charthouse, would be an appropriate route to investigate. I am assuming that we don't have any concerns about our ability to meet the repayments? For example, have we ever not met the staff salaries due to poor cash flow?

If we are confident about the repayments then the charge becomes mostly irrelevant, because it never gets called on and only becomes an issue if The Charthouse were sold prior to discharge of the debenture.

Of course there might be something in our lease that prohibits "the landlord" from placing charges against the property, but a charge for something that adds value to that property must surely have merit?

dc

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Re: Managment fees from R&R

Posted by Martyn Daniels on December 28, 2007, 10:32 am, in reply to "Re: Managment fees from R&R"

I remain amazed that we have not taken one step back from this debacle and the directors have not recinded the levy whjilst a solution is sought. If nothing else can they please convene a mgt meeting and decide on how they should communicate this to Chart house leasholders and what plan of action they propose to take. Merely responding to a messageboard in a tennis fashion as before is proving both tiresome and non productive. The clear firsty oissue is the withdraw of the levy and seperation of it from the fees - this is not difficult and is only sesnisble as people are confused. Two clear correspondense to all leasholders as to the problem, options and finacing plus schedule - this should come from the board and be documented top all. Thirdly the facts - which have been requested and not supplied (one lift operates today - how and why, Wheel house had a lift issue last year how is this different? What would happen if the one lift where to fail tomorrow? What is the life expectancy of a replacement? Why did Crown not pick the deteriation up under their maintance contract? ass oki

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Re: Managment fees from R&R

Posted by Gareth Frith (BWFL Director) on December 28, 2007, 11:07 am, in reply to "Re: Managment fees from R&R"
Message modified by board administrator December 28, 2007, 11:26 am

Martin,

That is what we have been doing. We worked with Rendall and Rittner yesterday and have produce a review of the situation and a proposal for a way forward.

Every Leaseholder in Chart House will receive a letter from BWFL today. They will be hand delivered to Chart House for Leaseholders who are resident. Copies to non-resident leaseholders will be posted today. We will respond to any comments e-mailed to directors@burrellswharf.com

Gareth Frith

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Re: Managment fees from R&R

Posted by PhilB on December 31, 2007, 2:01 pm, in reply to "Re: Managment fees from R&R"

Gareth,

Thank you for your BWFL letter dated 28 Dec.

Please confirm that Phase 1 is to replace the faulty control mechanism, which is causing the second lift to not work at a cost of Ł114k. Then Phase 2 is to replace the lifts by 2011, which is budgeted over the next 4 years. The cost of replacing the lifts is an additional Ł140k.

Will the cost of replacing the lifts utilise the proposed control circuitry that is being planned in phase 1? If not, why do we not just go ahead and replace the lifts sooner and save ourselves Ł114K? Do we really need the second lift working that urgently? My sympathies are with leaseholders on the ground and lower floors that may not use the lifts.

Are there any BWFL directors that are Chart House leaseholders? May I see the consultants report from Cook and Associates on the lifts?

Chart House leaseholders: May I suggest a meeting of all Chart House leaseholders to discuss this before 7th Jan (as it is the deadline for responses set in the letter of 28th Dec)? If you cannot attend and would like to contact me, please email me at philip.busby1@btinternet.com

Regards,

Phil

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Re: Managment fees from R&R

Posted by AndyS on December 28, 2007, 10:11 pm, in reply to "Re: Managment fees from R&R"

I agree completely that theoretically we should not have problems meeting repayments. The broker that I am with theoretically agrees totally with us (hence his mystification!).

However, as a financier making this sort of loan I would want security even if this looked like a theoretical safe bet. There are two main reasons.

1. There could be a wholesale non-collection of service charges caused by either a leaseholder strike or the directors just getting so fed up with doing this that we just don't bother doing what we do and allowing the blocks to fall into disrepair and reduce the capital value of the block to zero.

2. The "profit" of the blocks is actually only the ground rent for accounting purposes. This is very small (15 quid pa or something?) which doesn't provide much in the way of income. The service charges are a shared proportion of maintenance rather than an accounting profit. Reserve funds are, I would imagine, directly attributable in proportion to the individual leases and so a lender could not enforce against this directly without the explicit consent of every individual leaseholder to a debt.

This is proving to be the case time and time again.

So as a Director, the question is whether I can put BWFL in the position of being a creditor to Chart House? The answer is probably no. It is a bizarre dichotomy, but (even more so in the light of some comments on here!) I could not make a loan with absolute certainty that some leaseholders will not turn around next year and say that the interest is too high or that they never consented or something else. This already concerned me, but our account bods seem to feel that it is the correct position.

If we clearly had the power to do it then it would be a different matter. However it seems that we don't have the power and to do it we have to cross a heck of a lot of hurdles that will take a lot of time and may not be fruitful....

Anyway, as Gareth said, a letter has gone out and we will continue enquiries to see whether there is a solution that is palettable to all.

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Re: Managment fees from R&R

Posted by dc on December 29, 2007, 2:18 pm, in reply to "Re: Managment fees from R&R"

Hi Andy,

I'm not sure I totally follow the argument about not using the assets of bwfl to provide finance security.

You said that bwfl would become a creditor to the Charthouse. How so? The Charthouse is not a separate company, is it?

Perhaps your point is that it would be unfair to leaseholders of properties not in the Charthouse, if bwfl were to take secured finance against an asset of bwfl that only benefits the Charthouse? Again this shouldn't really be an issue because the debt is counterbalanced by the value of the new asset, i.e. the lift. So it doesn't make any difference to the value of the estate.

Alternatively, perhaps your point is that bwfl would be liable for the repayments of the finance agreement, even though only leaseholders of the Charthouse benefit. Again, this is no different to any other expense. For example, when the windows of the Charthouse are cleaned, bwfl has the liability to pay the window cleaners. This cost is then apportioned to leaseholders of the Charthouse only, as no other leaseholders benefit from that service. I don't see that repayments to a loan would be any different than payments for any other block expenses.

Leaseholders do not have the choice to decide not to pay their part of the loan repayments, because they are just part of the running costs of the block, collected via the service charge.

You also suggested a lender might be worried about leaseholders withholding service charges on mass. You will no doubt agree this is a ridiculous excuse because 90% of business raise asset finance, and they don't have any guarantee that their customers will pay up, unlike bw leaseholders who are bound by a contract to pay or forfeit their lease!

Given the continued doubt about the way forward, the works involved or their cost and the incomplete section 20, I still stand by my view that leaseholders of the Charthouse must withhold the lift levy (not the service charge) until the future path is better laid out.

Withholding the lift levy will also provide time for leaseholders of the Charthouse to meet and discuss what we feel is right, which might necessitate legal advice if we come to an impasse. I trust the directors will act responsibly and avoid this though.

dc

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Re: Managment fees from R&R

Posted by AndyS on December 29, 2007, 5:58 pm, in reply to "Re: Managment fees from R&R"

re Chart House vs BWFL - technically the finances of BWFL are separate to those of Chart House. The finances are tied in to Burrells Wharf but not necessarily legally to the operations of BWFL.

re value of the lift as an asset - it is not a recoverable value and so we don't have any "real" security that we could sell. The value of the Freehold itself is basically the ground rents plus the spaces that BWFL itself owns (this does not include the blocks themselves) and a few other misc odds and bobs, as well as cash on hand. Therefore the value of shares is the value of all of those divided by the number of shares on issue. To my recollection, the last valuation of the freehold would not take into account any capital assets that we had a charge over. You would probably be quite surprised at how little the Freehold itself is valued at.

The above points aren't just us being difficult - it is what we have been discovering gets raised by lenders. I don't necessarily agree with them, and I am happy to take other points on board.

I also agree with you that a mass withholding by service charge payers is unlikely - but at the end of the day we are getting told this by lenders.

Yes - I agree that theoretically this is as safe a bet as a lender normally gets and it is ridiculous that they don't feel that the cash flows are secure enough to provide a loan against. However, I have been unable to find a lender that is able to provide the financing. If someone else can do so, then I am happy to run over it with them and find out what the terms are and present them for Chart House residents.

It is fine for us to discuss theoretical possibilities and express our disappointment...but if we can't find a practical solution, then we have to go with what is available.

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Re: Managment fees from R&R

Posted by dc on December 29, 2007, 8:46 pm, in reply to "Re: Managment fees from R&R"

Hmmm.

"The finances are tied in to Burrells Wharf but not necessarily legally to the operations of BWFL. ".

I'm afraid that doesn't make any sense at all. If there are oddities with the structure of bwfl that are upsetting potential lenders, then the directors need to propose a restructure to the shareholders.

"..but if we can't find a practical solution, then we have to go with what is available.".

Great! So there is an option on the table you haven't mentioned? Obviously you won't be thinking that the current residents of the Charthouse are about to prepay for 20 years of lift service, provided free of charge to all future leaseholders? If you're thinking that this is "what's available", then we have a problem.

"It is fine for us to discuss theoretical possibilities and express our disappointment"

I don't think we are disappointed that the lift has broken down. We are disappointed that despite being 90% through their expected lifetimes, the directors of bw have not managed to amass any reserves for their repair. We are also disappointed that knowing this, the directors have failed further to provide any financial plan in lieu of the reserves other than to demand leaseholders bail them out. We are also disappointed that the directors felt the only reasonable thing to do was so provide a demand the day before Christmas eve for payment on the 1st January without any notice.

dc

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