Part V Management of Leasehold Property

Service charges

F142A Service charge contributions to be held in designated account

(1)

The payee must hold any sums standing to the credit of any trust fund in a designated account at a relevant financial institution.

(2)

An account is a designated account in relation to sums standing to the credit of a trust fund if—

(a)

the relevant financial institution has been notified in writing that sums standing to the credit of the trust fund are to be (or are) held in it, and

F2(b)

no other funds are held in the account,

F2(b)

any other sums held in the account are sums standing to the credit of one or more other trust funds,

and the account is an account of a description specified in regulations made by the F3Secretary of State. F3appropriate national authority

F4(2A)

The appropriate national authority may by regulations ensure that a payee who holds more than one trust fund in the same designated account cannot move any of those funds to another designated account unless conditions specified in the regulations are met.

(3)

Any of the contributing tenants, or the sole contributing tenant, may by notice in writing require the payee—

(a)

to afford him reasonable facilities for inspecting documents evidencing that subsection (1) is F5, or regulations under subsection (2A) are, complied with and for taking copies of or extracts from F6them F6such documents, or

(b)

to take copies of or extracts from any such documents and either send them to him or afford him reasonable facilities for collecting them (as he specifies).

(4)

If the tenant is represented by a recognised tenants’ association and he consents, the notice may be served by the secretary of the association instead of by the tenant (and in that case any requirement imposed by it is to afford reasonable facilities, or to send copies or extracts, to the secretary).

(5)

A notice under F7this section F7subsection (3) is duly served on the payee if it is served on—

(a)

an agent of the payee named as such in the rent book or similar document, or

(b)

the person who receives the rent on behalf of the payee;

and a person on whom such a notice is so served must forward it as soon as may be to the payee.

(6)

The payee must comply with a requirement imposed by a notice under F8this section F8subsection (3) within the period of twenty-one days beginning with the day on which he receives the notice.

(7)

To the extent that a notice under F9this section F9subsection (3) requires the payee to afford facilities for inspecting documents—

(a)

he must do so free of charge, but

(b)

he may treat as part of his costs of management any costs incurred by him in doing so.

(8)

The payee may make a reasonable charge for doing anything else in compliance with a requirement imposed by a notice under F10this section F10subsection (3) .

(9)

Any of the contributing tenants, or the sole contributing tenant, may withhold payment of a service charge if he has reasonable grounds for believing that the payee has failed to comply with the duty imposed on him by subsection (1); and any provisions of his tenancy relating to non-payment or late payment of service charges do not have effect in relation to the period for which he so withholds it.

F11(9A)

Regulations under subsection (2A) may include provision about —

(a)

the circumstances in which a contributing tenant who has reasonable grounds for believing that the payee has not complied with a duty imposed on him by the regulations may withhold payment of a service charge,

(b)

the period for which payment may be so withheld,

(c)

the amount of service charge that may be so withheld;

and the regulations may provide that any provisions of the contributing tenant's tenancy relating to non-payment or late payment of service charge do not have effect in relation to the period for which the payment is so withheld.

(10)

Nothing in this section F12or in regulations under subsection (2A) applies to the payee if the circumstances are such as are specified in regulations made by the F13Secretary of State F13appropriate national authority .

F14(10A)

Regulations under this section may—

(a)

make different provision for different cases, including different provision for different areas,

(b)

contain such supplementary, incidental, consequential, transitional, transitory or saving provision as the appropriate national authority considers appropriate.

(10B)

Regulations under this section are to be made by statutory instrument which—

(a)

in the case of regulations made by the Secretary of State, is to be subject to annulment in pursuance of a resolution of either House of Parliament, and

(b)

in the case of regulations made by the Welsh Ministers, is to be subject to annulment in pursuance of a resolution of the National Assembly for Wales.

(11)

In this section—

F15“the appropriate national authority”—

(a) in relation to England, means the Secretary of State, and

(b) in relation to Wales, means the Welsh Ministers,

“recognised tenants’ association” has the same meaning as in the 1985 Act, and

“relevant financial institution” has the meaning given by regulations made by the F16Secretary of State F16appropriate national authority ;

and expressions used both in section 42 and this section have the same meaning as in that section.