Case Law on Reserve Funds

By | 03.10.2018

This section of our Case Law Library looks at cases related to:

  • The circumstances under which a Landlord may collect contributions to a reserve or sinking fund.
  • The administration and use of reserve or sinking funds.

Entitlement to Collect Contributions:

Leicester City Council v Masters – LRX/175/2007

In this case the Lands Tribunal decided that the Local Authority Landlord was permitted to collect contributions to a Reserve Fund even though the Lease did not contain clear wording as to its entitlement to demand payment of these contributions. The Tribunal decided that it could interpret the wording of the Lease in relation to the factual background of the case. Please Note: Part of this Judgement may conflict with the principles established in the Supreme Court case of Arnold v Britton and therefore caution should be exercised in relying upon this case as a legal authority.

Redendale Limited v Modi [2010] UKUT 346 (LC)

Decision by the Upper Tribunal of the Lands Chamber that the lease did not allow the Landlord to transfer surpluses resulting from an overpayment of an on account service charge demand to the reserve fund.

Administration and Use of funds:

Solitaire Property Management v Holden and others [2012] UKUT 86 (LC)

Decision of the Upper Tribunal about the use of Reserve Funds and the Jurisdiction of the Leasehold Valuation Tribunal to rule on disputes relating to Reserve Funds.

Caribax Ltd and Starclass (Hinde House) V Hinde House Management Company Limited [2015] UKUT 0234 (LC)

In this Upper Tribunal case the leases included requirements that a designated trust fund was established and that such funds must be used to pay for the costs of repairs and maintenance. The Upper Tribunal decided that the failure of the landlord to establish a designated trust fund did not mean that the landlord was relieved of the obligation to use the contributions collected for purposes prescribed in the lease: namely those of meeting the costs of repair and maintenance works.