Originally posted by AndrewDod
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Yes, hypothetically, the costs of running a leaseholder run management company should be covered by ground rents, or by passing a company resolution requiring shareholders to contribute to the all company costs (I would exclude fines due to directors failing to perform their duties properly from this, but would include insurance that covers directors for decisions that were made with the right intentions but ultimately turn out to be flawed - and yes, I realise that this is likely to also cover them for many less well intended decisions).
As you say yourself, the legislation covering RMC's (under some circumstances) is already not really fit for purpose, and if proposals to abolish ground rents, or fix them at low amounts, go ahead, leaseholder run management companies will need an alternative way to pay costs because otherwise no one will be willing to take on the role of director.
I really don't see any reason at all why it wouldn't be fair to pass legislation allowing reasonable costs to be included as part of the service charges. Even non-shareholder/non-member leaseholders benefit from having their building managed, and if unreasonable company costs were put through the service charges, these can be challenged in the same way as other service charge costs.
Once again, I am aware that management company costs are usually not allowed for by the terms of most leases (except perhaps leases that included a management company when they were written), but that doesn't mean that it shouldn't be considered reasonable these costs (which will usually be insignificant, especially when compared to the cost of 'professional' managing agents) to be recouped through the service charges.
I wonder how many of the people who refuse to pay a contribution to the costs of a management company, including D&O insurance, would be happy if no one was prepared to act as a director and consequently their building had no management at all?
In is possible for a course of action to be legally correct but, at the same time, to be the wrong course of action to take.
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