Commentary on Sections Rule 4 – scheme costs: liability and apportionment
161.Rule 4 explains who is to pay for costs incurred as a result of scheme decisions by the owners of a majority of the flats - unless the title deeds provide that the entire liability for those costs is to be met by one or more of the owners. These costs are called “scheme costs” and rule 4.1 lists the type of cost which would fall into this category.
162.Rule 4.2 sets out liability for the maintenance of and running costs related to scheme property. Where rule 4 applies (because the tenement burdens do not apportion the entire liability for a cost) liability for the cost of maintenance of common property of two or more owners (ie scheme property under rule 1.2(a)), then the maintenance costs are shared among those owners in proportion to their ownership in the property (rule 4.2(a)).
163.The cost of maintaining other scheme property is shared equally among the owners of all the other flats, except where the floor area of the largest flat is more than one and a half times the size of that of the smallest flat. Then the costs are allocated according to the floor area (rule 4.2(b)).
164.Rule 4.3 provides that all of the owners in a tenement are liable for the upkeep of the roof where all or part of the roof is the common property by virtue of section 3(1)(a). This is to make the calculation of apportionment of the cost of roof repairs easier where sections 1to 3 apply, as in this case the roof over the common stair would be common property but the rest of the roof would not be. The owners of main door flats may not have access to the close and, if the title deeds are silent on ownership, they will not have a right of common property to the close under section 3(1)(a) of the Act. Under the normal rules for liability set out in rule 4.2 the owners of main door flats would therefore not be liable to pay a share of the cost of maintaining the roof over the close. They would, however, be responsible for a share of the cost of maintaining the rest of the roof. Rule 4.3 ensures that the whole roof is treated the same under the default rules for liability contained in rule 4.
165.Under rule 3.1(e) owners may make a scheme decision to arrange a common policy of insurance for the tenement. Rule 4.4 provides that owners may decide on an equitable basis the contribution of each owner to the premium (as set out in rule 3.1(e)). If the common insurance policy is arranged in order to comply with one of the title provisions then, in the absence of title provision to the contrary, they will pay equal shares of the premium.
166.Rule 4.5 makes it clear that any scheme costs relating to the remuneration of the manager, the installation of a system enabling entry to the tenement to be controlled from each flat, the cost of calculating the floor area of each flat and any other costs relating to the management of scheme property are to be shared equally among the flats and owners are liable accordingly.