TSEM5715 - Trusts for particular purposes: flat management companies - scope of S42 Landlord and Tenant Act 1987

The LTA 1987 applies only to England and Wales. Section 42 LTA 1987 applies where the tenants of two or more dwellings are required under the terms of their lease to contribute to the same costs by the payment of service charges (as defined in Section (18)(1) LTA 1985). Such sums paid, or the investments representing those sums, or income accruing thereon, are held by the 바카라 사이트˜payee바카라 사이트™ on trust to defray any expenses incurred in connection with service charge expenditure. Subject to such payments of service charge expenditure the funds are held on trust for the tenants for the time being. The 바카라 사이트˜payee바카라 사이트™ can be the landlord or any other person to whom the service charges are payable by the tenants under the terms of the lease. Section (18)(1) LTA 1985 states that 바카라 사이트˜service charge바카라 사이트™ means - 바카라 사이트˜an amount payable by a tenant of a dwelling as part of or in addition to rent

  1. which is payable, directly or indirectly, for services, repairs, maintenance or insurance or the landlord바카라 사이트™s costs of management, and
  2. the whole or part of which varies or may vary according to the relevant costs바카라 사이트™.

The 바카라 사이트˜relevant costs바카라 사이트™ are the costs or estimated costs incurred or to be incurred by or on behalf of the landlord, or a superior landlord, in connection with the matters for which the service charges are payable (Section (18(2) LTA 1985).

If the landlord is an 바카라 사이트˜exempt landlord바카라 사이트™ (as defined in Section 58(1) LTA 1987) then Section 42 LTA 1987 does not apply. (See below.)

Therefore for Section 42 LTA 1987 to apply

  • the landlord must not be an 바카라 사이트˜exempt landlord바카라 사이트™, and
  • tenants of two or more dwellings,
  • under the terms of the lease,
  • must be required to contribute directly or indirectly for repairs, maintenance, etc., and
  • those charges, or part of them, must be variable.

If any of those elements are missing then Section 42 LTA 1987 does not apply.