Stressful Situation re Section 20
Q: We really appreciate this service and the fact that you publish previous questions in the web which are very helpful to others in similar situation. Our current situation is that we have to repair our roof (cost between £150.000 – £200.000). Section 20 stage 1 was completed and after the statutory period stage 2 letter with estimates were sent to leaseholders (who are also shareholders as ours is a share of freehold building). Estimates from three contractors, let’s call them A, B and C, were presented and also it was mentioned in the letter how a 4th contractor, let’s call it D, was also invited but was not interested in the project and didn’t produce a tender.
Tenders were made available for inspection upon request. Since that letter the project has been on hold for a few months but the situation is that when we were ready to move forward the cheapest contractor decided to increase the cost significantly. At that point, the property manager and surveyor contacted again contractor D (the one that was not initially interested) and that time he was interested and produced a quote which happened to be the cheapest. Apparently that contractor is ready to start within a week and the property manager is suggesting we sign a contract with him and start as soon as possible (the property manager has pencilled 1st of October as start of the works and wants our confirmation and signature of contracts). He thinks that because we already showed a minimum of two quotations in stage 2, we can give the contract to a contractor that didn’t present a quotation in stage 2 for as long as we wrote a stage 3 letter saying why we have chosen him after we sign the contract.
Our question is: Can a contract be awarded to a contractor who didn’t produce a tender in stage 2? We understand that according to s20 rules leaseholders have 30 days to make observations to the estimates received, and that new quotation has not been seen by any leaseholder. So, we cannot fulfil the requisite of having regard to the observations about the quotation. We thought that the new tender should be made available to leaseholders for another new 30 days to fulfil the s20 requirements. We are really very concerned about making the wrong decision under time pressure and leaving the company in dire straits if something goes wrong. Actually, this is pretty stressful for the board.
FPRA Committee Member Yashmin Mistry replies:
A: Thank you for your email. Stage 5 in the consultation process is the Second Notice and Paragraph B statement.
This is where the landlord must obtain at least two estimates for carrying of the proposed works and must supply, free of charge, to each tenant and Recognised Tenants Association, a statement (the paragraph b statement). At least one of the estimate must be from a person wholly unconnected with the landlord and where the landlord has obtained an estimate from a nominated person, the estimate must be included in the paragraph B statement.
The paragraph b statement must set out:
As regards at least two estimates, the amount specified in the estimate as estimated costs of the proposed works;
- Where the landlord has received observations, a summary of the observations and the landlord’s response to them
- The estimates must be available for inspection at a specified time and place
Stage 6 is the next important stage – the second relevant period. A second period of 30 days beginning with the date of the notice must be allowed to pass. The length of the period and the closing date must have been specified in the notice.
From the below email it seems from what is being proposed in respect of “contractor D” neither stage 5 nor stage 6 have been carried out which will suggest would be in breach of the consultation requirements.
[Submitted September 2018]