Understanding Reserve Fund & Service Charges From The Leaseholders Perspective

1. Understanding Reserve Fund & Service Charges From The Leaseholder's Perspective Payment of service charge is a standard requirement of a lease for flats and apartments. Lease holders who are members of the freehold company hold shares that are transferable to a new lease holder after the sale of the flat. Lease holders who buy a flat with a share of freehold have to deal with two types of legal relationships. One is between the company and the shareholder arising from the share in the freehold company that owns the block, the other is between a landlord and tenant arising from the lease. Payment of leaseholder's service charge and reserve funds rely on these two legal relationships. A good lease will have a clause in it allowing the freeholder, of the freehold management company that bought the freehold to collect a reserve fund as part of the normal service charge collection. But some leases don't! Service Charge Sorted