Q: Is there an onus on a management company to keep leasehold residents informed about any plan to use money from their “sinking” or “reserve” fund account? What can be done if the fund has been “raided” without the residents’ knowledge? Is it incumbent on the management company to provide an annual statement showing the status of the account?
A: “Sinking” or “reserve” funds are special advance service charge contributions covering future expenditure, such as roof repairs. They are intended to avoid wild fluctuations in service charges from year to year. There are technical distinctions between the various types of these funds, but they are called sinking funds.
The first thing to do is to check the landlord’s obligations under the lease. These may or