I own the whole building freehold but a management company exists, Who has control?

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  • I own the whole building freehold but a management company exists, Who has control?

    I own the whole buildings freehold and one of the 4 flats.
    There is a management company which the 4 leaseholders are members but the building is not being managed properly.
    Items such as repairs and communal areas are in poor condition and the other leaseholders are not very cooperative.
    As the freeholder what rights do I have to enforce repairs and cleaning and recover the costs from the other leaseholders?

    It is not the usual situation where all leaseholders might own an equal share of the freehold.

  • eagle2
    replied
    I don't think that non resident leaseholders should be excluded from being directors, ideally you would have a balance of residents and non residents. Non residents are interested in protecting their investments. In my experience, non residents tend not to volunteer on the grounds that meetings would take place at the property and would involve time and expense but that does not apply these days when meetings can be arranged without having to step from your own home.

    I think that agents should have no say in the composition of the board of directors, all too often they interfere in order to retain their position. I have seen them deliberately not invite volunteers to become directors and then appoint one of their own employees as a director, choose the weakest person to act as a director, control the board of directors by ensuring that only persons who support the agent are appointed and others who may oppose their appointment are rejected.

    Leave a comment:


  • TruthLedger
    replied
    Originally posted by leaseholder64 View Post

    Unfortunately, that would often leave you with no-one capable of being a director, or with sub-tenants as directors.

    At least in outer London the remaining owner occupiers are mainly those too old and poor to move out. Based on my experience, one or two of those will have dementia and most will simply not have the skills to understand how to run a block.

    Although, for some purposes, sub-tenants are considered an acceptable alternative to leaseholders, in determining whether there is mutual control of the company, in general sub-tenants have no financial stake and there would be concern that they would be too willing to spend money.

    It actually looks to me as though there was a deliberate decision not to restrict the directors of RTMs, even though some RMC restrict them to be members of the company. Also, it seems that some RMCs allow leaseholders to nominate an external director per leaseholder. I presume the intent is that a more competent family member could be the director, as external professionals won't want to take on unpaid directorships, unless they have a conflict of interest.

    I would note that RMCs have no specific legislation, other than that which gives theme the SIC 98000 code for Companies House returns. As such, you would first have to define how to identify one, before imposing rules on them.

    RMCs are not special in terms of how directors are appointed, although some do restrict directors to be members of the company. Other directors can appoint directors, as well as the members. It would be unusual for any company to permit someone who was neither a director or member be involved in appointing directors.

    Although fully owner occupied blocks can be dysfunctional, I think ones with high levels of non-resident leaseholders tend to be worst, as they tend to be interested in their personal wealth and not the community.

    The typical reason that agents are able to hijack companies are that there are no owner occupiers both willing and able, and there are no absentee landlords willing, to become directors.

    The Law Commission report on RTMs actually points out new RTMs tend to have a lot of enthusiasm, but, in older ones, all those with enthusiasm have moved on.
    Thanks for the detailed insight leaseholder64. Now it clicks why the agents asked me if I was planning to reside at the property. I thought it was an odd question at the time, but after this post it makes total sense.

    Leave a comment:


  • leaseholder64
    replied
    Originally posted by TruthLedger View Post

    I take it, this also applies to RCMs? Why not make directors required to reside in the building? Would this not eliminate the possibility of managing agents becoming directors of the building?
    Unfortunately, that would often leave you with no-one capable of being a director, or with sub-tenants as directors.

    At least in outer London the remaining owner occupiers are mainly those too old and poor to move out. Based on my experience, one or two of those will have dementia and most will simply not have the skills to understand how to run a block.

    Although, for some purposes, sub-tenants are considered an acceptable alternative to leaseholders, in determining whether there is mutual control of the company, in general sub-tenants have no financial stake and there would be concern that they would be too willing to spend money.

    It actually looks to me as though there was a deliberate decision not to restrict the directors of RTMs, even though some RMC restrict them to be members of the company. Also, it seems that some RMCs allow leaseholders to nominate an external director per leaseholder. I presume the intent is that a more competent family member could be the director, as external professionals won't want to take on unpaid directorships, unless they have a conflict of interest.

    I would note that RMCs have no specific legislation, other than that which gives theme the SIC 98000 code for Companies House returns. As such, you would first have to define how to identify one, before imposing rules on them.

    RMCs are not special in terms of how directors are appointed, although some do restrict directors to be members of the company. Other directors can appoint directors, as well as the members. It would be unusual for any company to permit someone who was neither a director or member be involved in appointing directors.

    Although fully owner occupied blocks can be dysfunctional, I think ones with high levels of non-resident leaseholders tend to be worst, as they tend to be interested in their personal wealth and not the community.

    The typical reason that agents are able to hijack companies are that there are no owner occupiers both willing and able, and there are no absentee landlords willing, to become directors.

    The Law Commission report on RTMs actually points out new RTMs tend to have a lot of enthusiasm, but, in older ones, all those with enthusiasm have moved on.

    Leave a comment:


  • eagle2
    replied
    I have not found any proposals directly relating to RMCs presumably because the members appoint the directors. The agents will be required to comply with a code of practice and that should exclude them from becoming directors of the client company.

    Leave a comment:


  • TruthLedger
    replied
    Originally posted by eagle2 View Post
    The Law Commission is considering whether it should be mandatory for RTMs to appoint a professional managing agent and whether RTM directors should be required to meet training requirements.
    I take it, this also applies to RCMs? Why not make directors required to reside in the building? Would this not eliminate the possibility of managing agents becoming directors of the building?

    Leave a comment:


  • megaspooner1
    replied
    thanks for your inputs
    I am currently looking into the next step to take

    Leave a comment:


  • eagle2
    replied
    The Law Commission is considering whether it should be mandatory for RTMs to appoint a professional managing agent and whether RTM directors should be required to meet training requirements.

    Leave a comment:


  • leaseholder64
    replied
    Originally posted by Section20z View Post
    Hi megaspooner, i am the freeholder from the other thread and I think you need to look to replace the directors of the RTM with people with more of a responsible attitude to maintenance. Check the articles of association of the RTM (from companies house) for details of how directors should be appointed...
    All RTMs have to have essentially the same articles: http://www.legislation.gov.uk/uksi/2...ulation/2/made The actual articles are in the schedule. Even companies formed before this SI must now use the articles it contains.

    Leave a comment:


  • Section20z
    replied
    Hi megaspooner, i am the freeholder from the other thread and I think you need to look to replace the directors of the RTM with people with more of a responsible attitude to maintenance. Check the articles of association of the RTM (from companies house) for details of how directors should be appointed...

    Leave a comment:


  • vmart
    replied
    You stated you arrange insurance. Usually, the RTM is responsible for insurance as all day-to-day management responsibilities pass to the RTM. Do the others pay their respective share of insurance?

    What are lease terms re insurance?

    You may like to read the other thread referred to post #7 as there may be useful information and signposting; see:
    https://forums.landlordzone.co.uk/fo...failing-rtm-co

    Leave a comment:


  • leaseholder64
    replied
    It would probably be advisable for you to obtain a copy of the tribunal ruling appointing the RTM. It really should have been given to you.

    However, I think it will completely remove maintenance responsibility from you.

    Leave a comment:


  • leaseholder64
    replied
    Only the RTM can appoint the cleaner. (Well you could appoint the cleaner, but you would have to pay out of your own funds.)

    In the clause you quote, you need to replace Lessor by RTM to incorporate the effects of creating the RTM.

    It's unfortunate that there is no provision for inflation in the lease, but I would consider that, morally at least, this is one annual contract for £600, rather than twelve contracts for £25. The RTM might get away with this subterfuge, but I don't think that is the intent of the lease.

    Leave a comment:


  • megaspooner1
    replied
    Thanks for your input I will read that with interest.
    My first job is to instruct a cleaner for the communal areas at a sum of £25/month shared and as that is below the £50 limit in the lease before estimates need to be obtained .
    Can this be enforced on the leaseholders with no waiting 4 weeks for their approvals?

    The lease states that if not unanimously agreed then the Lessor`s decision is final and binding for works costing more than £50.so I assume works under £50 can just be carried out and leaseholders billed.
    I just want to make the building a better place for all !

    Leave a comment:


  • leaseholder64
    replied
    The clause you quote doesn't override the RTM's rights; rather it imposes obligations on the RTM, as they take on the maintenance duties that previously fell on the freeholder.

    Leave a comment:

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