Agent / RMC obligation to consult on contract with members

[Fred22]

Hi, can anyone advise if there is a legal obligation or expectation for a RMC board to consult with its members (lease holders) on the contract renewal of its chosen managing agent before it is renewed? should it be communicated out to the members? not withstanding anything within its own AoA.

[Macromia]

From a leasehold law perspective there is no need to consult, unless the contract will be for longer than one year.

I suppose that it's possible that the company articles, or a resolution that has previously been passed, might mean that there is an obligation to consult, but it is unlikely.

[AndrewDod]

There is no such obligation, sadly.

[fos333]

There is no such obligation, sadly.

Why sadly?

As members they surely have the opportunity to be part of the decision making board, if they choose not to be then they have presumably voted in favour of those willing to volunteer!

[AndrewDod]

As members they surely have the opportunity to be part of the decision making board, if they choose not to be then they have presumably voted in favour of those willing to volunteer!

Yes but it very often doesn't work that way, e.g. in a block of 5 flats where one person owns three, the remaining two have no say whatever, and effectively cannot vote for anything. Indeed they are in a far far worse position than they would ever been with a non-RMC external freeholder. Not only have they no say, but they also cannot easily get legal redress for anything at all without having to pay to sue themselves whether they win or lose.

Directors are not often there because they are philanthropic volunteers.... (well sometimes they are).

[Fred22]

Cheers, so how would a board who doesn't ever consult or review the service of anything it signs off on with it members, later defend themselves against rising costs of services or being pursued for finacial loss in such an event? 'well, you voted for me to be appointed' seems a bit of a dictatorial and limited defence? AoA may grant full powers to a board as long as a quorum is present, and there may be a difference between taking advantage of apathy to making the best go despite of it, but if contracts are only ever reviewed in camera and never a deliberate agenda item, how does that not encourage apathy from members? it feels an unneccessary risk, especially if the contract is not available for viewing by anyone other than the board of directors also. Cheers guys

[AndrewDod]

Cheers, so how would a board who doesn't ever consult or review the service of anything it signs off on with it members, later defend themselves against rising costs of services or being pursued for finacial loss in such an event? 'well, you voted for me to be appointed' seems a bit of a dictatorial and limited defence? AoA may grant full powers to a board as long as a quorum is present, and there may be a difference between taking advantage of apathy to making the best go despite of it, but if contracts are only ever reviewed in camera and never a deliberate agenda item, how does that not encourage apathy from members? it feels an unneccessary risk, especially if the contract is not available for viewing by anyone other than the board of directors also. Cheers guys

You have summarised the very purpose of a Company - which is non-accountability. If only Directors could be held personally accountable in practical reality...

[fos333]

Yes but it very often doesn't work that way, e.g. in a block of 5 flats where one person owns three, the remaining two have no say whatever, and effectively cannot vote for anything. Indeed they are in a far far worse position than they would ever been with a non-RMC external freeholder. Not only have they no say, but they also cannot easily get legal redress for anything at all without having to pay to sue themselves whether they win or lose.

Directors are not often there because they are philanthropic volunteers.... (well sometimes they are).

I respect your answer and would say in that position the only way forward would be through the leaseholder hat and if the lease or current legislation was not being followed to the letter that is the route I would follow, i.e., if self managing through FtT or if managing agents involved through the redress scheme (however a waste of time that is), followed by FtT.

Fred22 are you in a position to get yourself elected to the board or is it that you do not want the responsibility?

If you garner the support of your fellow leaseholders then you can be part of the decision making process!

[fos333]

......especially if the contract is not available for viewing by anyone other than the board of directors also. Cheers guys

From RICS Code of Practice 3rd Edition section 3.2 as a leaseholder you should be able to view a basic summary of the terms and duties, including all fees of the MA.

Note the use of the word 'should', you'll probably find you don't receive it and RICS will not help in any way in support of complaints concerning their own Code of Practice!

[Gordon999]

Use the rules under the Companies Act, 5%-10% of company members can call a meeting subject to 21 days notice, to discuss any issues such as why the agent is giving bad service and make a proposal for change of the agent. Make sure you have a few supporters to act a seconders for any [proposal . Just remember to have someone on your side write up the minutes of meeting.