Commonhold and Leasehold Reform Act 2002

Operation of commonholdE+W

37 Enforcement and compensationE+W

(1)Regulations may make provision (including provision conferring jurisdiction on a court) about the exercise or enforcement of a right or duty imposed or conferred by or by virtue of—

(a)a commonhold community statement;

(b)the [F1articles] of a commonhold association;

(c)a provision made by or by virtue of this Part.

(2)The regulations may, in particular, make provision—

(a)requiring compensation to be paid where a right is exercised in specified cases or circumstances;

(b)requiring compensation to be paid where a duty is not complied with;

(c)enabling recovery of costs where work is carried out for the purpose of enforcing a right or duty;

(d)enabling recovery of costs where work is carried out in consequence of the failure to perform a duty;

(e)permitting a unit-holder to enforce a duty imposed on another unit-holder, on a commonhold association or on a tenant;

(f)permitting a commonhold association to enforce a duty imposed on a unit-holder or a tenant;

(g)permitting a tenant to enforce a duty imposed on another tenant, a unit-holder or a commonhold association;

(h)permitting the enforcement of terms or conditions to which a right is subject;

(i)requiring the use of a specified form of arbitration, mediation or conciliation procedure before legal proceedings may be brought.

(3)Provision about compensation made by virtue of this section shall include—

(a)provision (which may include provision conferring jurisdiction on a court) for determining the amount of compensation;

(b)provision for the payment of interest in the case of late payment.

(4)Regulations under this section shall be subject to any provision included in a commonhold community statement in accordance with regulations made by virtue of section 32(5)(b).

38 Commonhold assessmentE+W

(1)A commonhold community statement must make provision—

(a)requiring the directors of the commonhold association to make an annual estimate of the income required to be raised from unit-holders to meet the expenses of the association,

(b)enabling the directors of the commonhold association to make estimates from time to time of income required to be raised from unit-holders in addition to the annual estimate,

(c)specifying the percentage of any estimate made under paragraph (a) or (b) which is to be allocated to each unit,

(d)requiring each unit-holder to make payments in respect of the percentage of any estimate which is allocated to his unit, and

(e)requiring the directors of the commonhold association to serve notices on unit-holders specifying payments required to be made by them and the date on which each payment is due.

(2)For the purpose of subsection (1)(c)—

(a)the percentages allocated by a commonhold community statement to the commonhold units must amount in aggregate to 100;

(b)a commonhold community statement may specify 0 per cent. in relation to a unit.

[F2(3)In subsection (1)(a) “expenses of the association” does not include building safety expenses of the association (within the meaning of section 38A).]

[F338ABuilding safety assessmentE+W

(1)A commonhold community statement for a higher-risk commonhold must make provision—

(a)requiring the directors of the commonhold association to make an annual estimate of the income required to be raised from unit-holders to meet the building safety expenses of the association,

(b)enabling the directors of the commonhold association to make estimates from time to time of income required to be raised from unit-holders in addition to the annual estimate,

(c)specifying the percentage of any estimate made under paragraph (a) or (b) which is to be allocated to each unit,

(d)requiring each unit-holder to make payments in respect of the percentage of any estimate which is allocated to their unit, and

(e)requiring the directors of the commonhold association to serve notices on unit-holders specifying payments required to be made by them and the date on which each payment is due.

(2)For the purpose of subsection (1)(c)—

(a)the percentages allocated by a commonhold community statement to the commonhold units must amount in aggregate to 100;

(b)a commonhold community statement may specify 0 per cent in relation to a unit.

(3)In this section—

• “building safety expenses of the association” means the expenses incurred by the commonhold association or special measures manager for the higher-risk building in connection with taking measures that the association or manager is required or permitted to take under Part 4 of the Building Safety Act 2022, or regulations made under that Part of that Act;

• “special measures manager” means a person appointed under paragraph 4 of Schedule 7 to the Building Safety Act 2022.]

39 Reserve fundE+W

(1)Regulations under section 32 may, in particular, require a commonhold community statement to make provision—

(a)requiring the directors of the commonhold association to establish and maintain one or more funds to finance the repair and maintenance of common parts;

(b)requiring the directors of the commonhold association to establish and maintain one or more funds to finance the repair and maintenance of commonhold units.

(2)Where a commonhold community statement provides for the establishment and maintenance of a fund in accordance with subsection (1) it must also make provision—

(a)requiring or enabling the directors of the commonhold association to set a levy from time to time,

(b)specifying the percentage of any levy set under paragraph (a) which is to be allocated to each unit,

(c)requiring each unit-holder to make payments in respect of the percentage of any levy set under paragraph (a) which is allocated to his unit, and

(d)requiring the directors of the commonhold association to serve notices on unit-holders specifying payments required to be made by them and the date on which each payment is due.

(3)For the purpose of subsection (2)(b)—

(a)the percentages allocated by a commonhold community statement to the commonhold units must amount in aggregate to 100;

(b)a commonhold community statement may specify 0 per cent. in relation to a unit.

(4)The assets of a fund established and maintained by virtue of this section shall not be used for the purpose of enforcement of any debt except a judgment debt referable to a reserve fund activity.

(5)For the purpose of subsection (4)—

(a)“reserve fund activity” means an activity which in accordance with the commonhold community statement can or may be financed from a fund established and maintained by virtue of this section,

(b)assets are used for the purpose of enforcement of a debt if, in particular, they are taken in execution or are made the subject of a charging order under section 1 of the Charging Orders Act 1979 (c. 53), and

(c)the reference to a judgment debt includes a reference to any interest payable on a judgment debt.

40 Rectification of documentsE+W

(1)A unit-holder may apply to the court for a declaration that—

(a)the [F4articles of association] of the relevant commonhold association do not comply with regulations under paragraph 2(1) of Schedule 3;

(b)the relevant commonhold community statement does not comply with a requirement imposed by or by virtue of this Part.

(2)On granting a declaration under this section the court may make any order which appears to it to be appropriate.

(3)An order under subsection (2) may, in particular—

(a)require a director or other specified officer of a commonhold association to take steps to alter or amend a document;

(b)require a director or other specified officer of a commonhold association to take specified steps;

(c)make an award of compensation (whether or not contingent upon the occurrence or non-occurrence of a specified event) to be paid by the commonhold association to a specified person;

(d)make provision for land to cease to be commonhold land.

(4)An application under subsection (1) must be made—

(a)within the period of three months beginning with the day on which the applicant became a unit-holder,

(b)within three months of the commencement of the alleged failure to comply, or

(c)with the permission of the court.

41 EnlargementE+W

(1)This section applies to an application under section 2 if the commonhold association for the purposes of the application already exercises functions in relation to commonhold land.

(2)In this section—

(a)the application is referred to as an “application to add land”, and

(b)the land to which the application relates is referred to as the “added land”.

(3)An application to add land may not be made unless it is approved by a resolution of the commonhold association.

(4)A resolution for the purposes of subsection (3) must be passed—

(a)before the application to add land is made, and

(b)unanimously.

(5)Section 2(2) shall not apply to an application to add land; but the application must be accompanied by—

(a)the documents specified in paragraph 6 of Schedule 1,

(b)an application under section 33 for the registration of an amended commonhold community statement which makes provision for the existing commonhold and the added land, and

(c)a certificate given by the directors of the commonhold association that the application to add land satisfies Schedule 2 and subsection (3).

(6)Where sections 7 and 9 have effect following an application to add land—

(a)the references to “the commonhold land” in sections 7(2)(a) and (3)(d) and 9(3)(f) shall be treated as references to the added land, and

(b)the references in sections 7(2)(b) and (3)(c) and 9(3)(e) to the rights and duties conferred and imposed by the commonhold community statement shall be treated as a reference to rights and duties only in so far as they affect the added land.

(7)In the case of an application to add land where the whole of the added land is to form part of the common parts of a commonhold—

(a)section 7 shall not apply,

(b)on registration the commonhold association shall be entitled to be registered (if it is not already) as the proprietor of the freehold estate in the added land,

(c)the Registrar shall make any registration required by paragraph (b) (without an application being made), and

(d)the rights and duties conferred and imposed by the commonhold community statement shall, in so far as they affect the added land, come into force on registration.

42 OmbudsmanE+W

(1)Regulations may provide that a commonhold association shall be a member of an approved ombudsman scheme.

(2)An “approved ombudsman scheme” is a scheme which is approved by the [F5Secretary of State] and which—

(a)provides for the appointment of one or more persons as ombudsman,

(b)provides for a person to be appointed as ombudsman only if the [F5Secretary of State] approves the appointment in advance,

(c)enables a unit-holder to refer to the ombudsman a dispute between the unit-holder and a commonhold association which is a member of the scheme,

(d)enables a commonhold association which is a member of the scheme to refer to the ombudsman a dispute between the association and a unit-holder,

(e)requires the ombudsman to investigate and determine a dispute referred to him,

(f)requires a commonhold association which is a member of the scheme to cooperate with the ombudsman in investigating or determining a dispute, and

(g)requires a commonhold association which is a member of the scheme to comply with any decision of the ombudsman (including any decision requiring the payment of money).

(3)In addition to the matters specified in subsection (2) an approved ombudsman scheme—

(a)may contain other provision, and

(b)shall contain such provision, or provision of such a kind, as may be prescribed.

(4)If a commonhold association fails to comply with regulations under subsection (1) a unit-holder may apply to the High Court for an order requiring the directors of the commonhold association to ensure that the association complies with the regulations.

(5)A reference in this section to a unit-holder includes a reference to a tenant of a unit.