What is a “Section 20 Consultation”
Section 151 of the Commonhold and Leasehold Reform Act 2002 (colloquially known as “Section 20”) grants leaseholders the right to be consulted on costly works in their building before they are carried out.
When does Section 20 need to be used?
The freeholder/RMC/managing agent (responsible party) that wishes to carry out major works in the property must give sufficient notice to the leaseholders, in the form of a Section 20 notice.
A Section 20 notice must be provided in the following instances:
- Where the work exceeds a cost of £250 for any leaseholder.
- Where the responsible party intends to enter a long-term agreement with a contractor which will cost any leaseholder an amount over £100.
It should be known that a Section 20 notice must be served to all leaseholders irrespective of whether the works’ costs affect all leaseholders, or just one.
Section 20 Consultation for major works: The three notices
- Notice of intention
The responsible party must write to the leaseholders with their intention to carry out works.
The leaseholders must have at least 30 days to contest these works.
- Notice of Estimates
Here, the responsible party must supply several estimates or quotations of the proposed works.
Similarly to the notice of intention, leaseholders must be given at least 30 days to inspect and/or contest these estimates.
- Notice of Award of Contract
This notice is to be given out if the lowest quotation was not chosen. The notice must state why the chosen contractor was awarded.
This notice must be served within 21 days of entering any contract.
What if a Section 20 notice was not issued?
If the responsible party failed to deliver a Section 20 notice before the works were carried out or any contractors were instructed, then they would only be able to a specified amount from the leaseholders: A maximum of £250 or £100 in line with the instances above.
If the responsible party were to have already instructed a contractor to undertake expensive works without issuing the due notices, it could place a building under considerable financial strain.
The responsible party has the option to apply to the First-tier Tribunal for dispensation from the Section 20 requirements, which can be refused if the leaseholders can prove that the works and costs involved would have been different were the proper steps and processes followed.
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