Agent going bust?

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    Agent going bust?

    Our 15 flats use an outside block management company. Their website has disappeared. They haven’t provided any financial updates for 6 months, but have made demands for services going back 4 years suddenly claiming that they are extras outside their normal services. We fear that they are in financial difficulty. If a block management company goes bust and in doing so uses up the service charges already paid, where does that leave the flat owners?

    #2
    Any service charge funds should be held on trust for you in a client account but if they've spent everything illegally your only recourse would be taking recovery proceedings which is probably pointless if they've gone bust. Have you checked their financial status at Companies House ?

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      #3
      You should set up RTM company to take over administration of the lease for your building and appoint another management company.

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        #4
        We already own the freehold via the Man Co.. An RTM for single building ( 1 of 3) problematical because not fully detached, and breaking up a bigger estate into multiple RTMs leaves problems over shared roads and services.
        Actively looking for a new agent, but worried about everyone having to pay twice if funds have been spent.
        They are still on Companies House.

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          #5
          An agent should hold professional indemnity insurance, so you may be able to make a claim if monies go missing. I recommend that you ask to see the bank statements.on a regular basis. You are right to seek another agent,

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            #6
            Originally posted by Granger View Post
            outside block management company ... website has disappeared ... haven’t provided any financial updates for 6 months ... have made demands for services going back 4 years suddenly claiming that they are extras outside their normal services.
            If it is an RMC employing a managing agent, what does the agency contract say? ARMA Charter (2015) requires ARMA members to specify their fixed fee services clearly when signing up with clients. The RMC made sure of this, right?

            Members of the RMC can ask to see such pivotal company documents as the agency contract. Does the agent have freedom to make a budget as it sees fit? Surely not?

            "Extras"? Normally an agency contract will require client requests to do X or Y extras as listed in the non-regular items in the contract and the RICs code explains this as well as the ARMA Charter.

            Asking for more money for "extras" still falls under the famous s20B 18 month deadline as well as evidence.

            Whatever the facts, I'd suggest time for RMC to move on to a new agent. Presumably the contract provides a termination clause.

            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.

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              #7
              The RMC can insist the managing agent holds the service charge funds in a separate "client account" , separate from the managing agents own bank account.

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                #8
                Seeing a potential new agent next week. Ref to S20B above very helpful re extras. Thanks.

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