A Section 20 Notice, derived from Section 20 of the Landlord & Tenant Act 1985 (modified by the Commonhold & Leasehold Reform Act 2002), outlines a three-stage consultation process for implementing qualifying works or long-term agreements in a building or development. This consultation is obligatory when the contribution from any individual lessee surpasses £250 for works or £100 for agreements in a financial year. The entity responsible for issuing this notice, typically the Freeholder or Property Management Company, must engage in consultation with all lessees and involve any Recognised Tenants' or Residents' Association if present. In urgent situations, a quicker consultation may occur, with possible dispensation from a Tribunal to expedite the works.
The purpose of this consultation isn't to seek approval from leaseholders for the proposed works or services but rather to provide them with an opportunity to comment on the proposals and suggest contractors for estimates. Major works, which can encompass various maintenance, refurbishment, or regulatory projects, are usually the trigger for Section 20 consultation. These works fall into categories such as exterior decorations, major repairs, or improvement projects like adding amenities.
While the Freeholder or appointed Management Company is responsible for facilitating major works, the costs are often recovered from leaseholders through service charges. The consultation process involves three stages: the Notice of Intent, Notice of Estimates, and Notice of Reasons if necessary. Additionally, for long-term agreements, the process is similar, with Stage 2 referred to as a Notice of Proposals. Observations from leaseholders are solicited at each stage to ensure transparency and fairness.
Though there's no specific duration for a Section 20 notice, delays in the consultation process could impact the recovery of costs. If the consultation procedure isn't correctly adhered to and the Freeholder is challenged successfully, the maximum recoverable amount from lessees is limited to £250 for major works and £100 for long-term agreements.
