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Lawyers at Westminster City Council have been implicated in a chain of errors that cost the London borough £7.1m.
Two independent investigations commissioned by the London council have found that its legal department was partly responsible for failing to bill leaseholders for repairs and maintenance over a six-year period.
Under legislation introduced in 1988, lessees who are not notified of the cost of repairs within 18 months are not responsible for paying for any bill later sent out by the council.
Although the legal department had informed council officials of the change in the law, the independent reports found that the department had failed to stress its full implications.
By the time the full extent of the failure to send out bills was recognised in 1994, the estimated £7.1m owed could not legally be recouped.
Despite the huge financial loss, the reports say there is little to be gained from any legal or disciplinary action against the staff involved. "In overall terms this is a sorry tale of officers allowing events to overpower the organisation," one of the two reports states.
A council report agreed it would be "unjust" to blame the fiasco entirely on the legal department.
It said the council's directors of housing and finance should have ensured the law change was implemented.