Raising funds for Residents Management Company

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    Raising funds for Residents Management Company

    I am an equal shareholder in a (property) residents management company. The directors wanted to raise some funds to pay for a court case they lost. They simply demanded the shareholders pay £1000+ (each of the 26 leaseholders has a limited share of £1). Non payment of this demand was threatened with legal action (yes legal action threats are ​their go-to answer for everything!). 1. Were they legally able to raise funds in this way? 2. What are other accepted ways for a RMC to raise money, besides through service charges?

    #2
    It looks like you need to change the directors,

    If the Memorandum of Association states that your liability is limited to £1, that is all you need pay. Even that is sometimes stated to be only payable when the Company is liquidated.



    Comment


      #3
      Hi. Doesn't sound like a service charge but just to be logical: If the landlord under the lease (RMC in this case) believes there is a clause in the lease that permits it to claim back legal costs as admin fees or service charges it should be able to identify the clause(s). LLs in the past have tried to use 'sweeping clauses' that courts determined were not relevant. Legal charges are a well trod path in the courts.

      It also depends on why the legal costs arose. As one example, in UC(LC) Fairborn v Etal Court, an RMC was left with unclaimable legal debts of around £25K generated defending court action against it. (I don't know if the UT was overturned at higher court but that case may be worth reading if not).

      If the service charge is not available, then the RMC must turn to its members who may be the same people if all/most flats have shares.

      As said, if the articles put no liability on members, the RMC will be in a bind. No directors should incur debts without knowing they can pay them. If the legal costs are not paid, I imagine there will be some rather knowledgeable in law and equally rather miffed creditors.

      On the other hand, if nobody pays the debt off, all the lessees lose out. Shareholders should use their powers always to oversee and insist to have directors who act with reasonable care, skill and diligence.

      Do not read my offerings, based purely on my research or experience as a lessee, as legal advice. If you need legal advice please see a solicitor.

      Comment


        #4
        The RMC may have a claim against the directors, who in turn, may be able to make a corresponding claim under the directors and officers insurance policy, The directors ought to be educated not to use the monies belonging to the RMC to embark on legal action if there is a chance of losing the case and not to expect others to pick up the costs of their actions.

        Comment

        Latest Activity

        Collapse

        • Service charge debtor still collecting rent!
          by Codger
          In our block we have flat owners who let them out ,collect rent but do not pat gr or service charge.
          i am considering asking the tenant to pay the freeholder to pay off the debt and embarrass the flat owner. Any comments?
          06-09-2021, 18:47 PM
        • Reply to Service charge debtor still collecting rent!
          by Gordon999
          The rental tenant should give you the contact address of leaseholder or you can post the service charge demand to the letting agent which collects the rent money.
          17-09-2021, 16:37 PM
        • Service charges after freehold obtained on SO
          by Llaj
          I’m Staircasing to 100% of my shared ownership house on a private estate. I pay over £700 pa in service charges. There are no communal areas, apart from a small car park. I have found out that the other private freeholders pay around £200 pa estate charges. My solicitor thinks that when I obtain...
          15-09-2021, 07:11 AM
        • Reply to Service charges after freehold obtained on SO
          by Gordon999
          Under the shared ownership scheme , you pay "rent " on the housing association's share of property. . This "rent" payment should stop if you staircase to 100% of ownership scheme.

          If you purchase the freehold title from the housing association , then your...
          17-09-2021, 16:22 PM
        • Reply to Advice please director acting on their own
          by eagle2
          The directors do not have the power to remove another director, they are answerable to the members and only the members can remove a director, If the members do not vote him out, he remains a director regardless of what the other directors think, If a director steals money, it is theft and you report...
          17-09-2021, 14:20 PM
        • Advice please director acting on their own
          by thenunn
          Hi, after some advice on dealing with a situation. One of our directors took it upon himself to take a letter asking owners to vote on a company for works the company is his,and he actually wrote the letter from his company , but more importantly he did this without the knowledge of agreement of the...
          17-09-2021, 06:37 AM
        • Reply to Advice please director acting on their own
          by ram
          Trouble is, leaseholders are appathetic.
          Oh, he's such a nice man, this Director, lets keep him and forgive him

          Happend here.

          Board of directors can dismiss a director, so long as they have it ratified by the members shortly afterwards.
          ( E.G. Director steals money,
          ...
          17-09-2021, 10:39 AM
        • Reply to Advice please director acting on their own
          by eagle2
          The other directors should give the director a warning. Whether or not voting is permitted when there is a conflict of interests depends on the Articles, but good practice would require the director to abstain even if he is permitted to vote. If the director continues to fail to act according to the...
          17-09-2021, 10:02 AM
        • Reply to Service charges after freehold obtained on SO
          by ram
          You say it's a private estate, BUT There are no communal areas.
          Sorry, the road, pavements, road lighting, repairs to same ARE communal.

          drain clearance, weed removal, also.

          The HA adminiters the Estate, they are the Managing company for the "Private" estate,
          ...
          17-09-2021, 09:59 AM
        • Reply to Proxy
          by eagle2
          It is quite normal for members to appoint a proxy to vote on their behalf if they cannot attend the meeting themselves. The proxyholder is usually the chair of the meeting but it can be a non member, The proxyholder has a duty to vote as instructed by the member unless the member has not given any indication...
          17-09-2021, 09:53 AM
        Working...
        X