RMC who decides annual budget

  • Filter
  • Time
  • Show
Clear All
new posts

    RMC who decides annual budget

    Is the budget a board of directors decision or MUST it be ratified by shareholders at the A.G.M ?

    If so would it be an ordinary resolution or special requiring 75% to be ratified ?

    It is a decision the directors should be taking, I suspect however that all too often it is the agent who is making the decision. The agent should only advise the directors,


      Thanks, fortunately we've a good property manager. I think it is better to be ratified by shareholders but looking to see if any legal basis.


        There is nothing to stop the directors from calling a meeting of members and seeking approval from the members (in which case it would be a simple majority vote) but it rarely happens. In theory the members appoint directors to act and make decisions on their behalf.


          Appreciated. It has been custom and practice to have it approved at A.G.M
          It is a shame that more people are willing to be directors. Of course that would be another thread.


            Hi. as all these things there are codes of practice that are chocolate fireguards and there is the actual agency contract signed with the agent - usually provided by the agent and perhaps not understood that the RMC can insist on extra clauses to protect it.

            ARMA Charter IV: "Have written terms of business".

            4.2.1 "Must seek approval from the Client prior to demanding any service charges unless specific authority has been delegated to the Managing Agent for Service Charge Budgets".

            If the RMC has a contract with an ARMA agent, we all know here that this is bankable security...
            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.


              Sorry, forgot to mention AGM. Directors should approve budgets as they have to manage the agents manage the lease liabilities. Asking members to vote is likely to produce howls of anguish at the costs. They would need a special resolution to over-rule the directors and on such event all the directors should resign and say, 'you manage your budget then'...
              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.


                Thanks. Am I right to understand that with a 75% vote on a special resolution shareholders would be entitled to overturn budget ?


                  No, there is no special resolution required,


                    Directors should always read the terms of a contract before agreeing to it,


                      Once you get leaseholders who can over rule the Directors and managing agents, you are on a down hill slope, and if they can't afford it, the repairs, maintenence, preventative maintenence, it will never get done.
                      Directors must ACT like directors, and not strapped for cash leaseholders.
                      The lease will clearly state ( ususally ) "To keep the property ( building, driveway, boundary walls, garden Etc, Etc ) to keep the property well maintained, and in good order"

                      Anyone who does not wish to abide by the Lease and the R.I.C.S. code, should not even be asked to vote on maintenence, if fact, the lease and R.I.C.S. code is what has to be enforced, and no votes are required.( except directors to agree the annual expenditure - in acordance to all above.

                      The Directors and Agents Must enforce the lease, otherwise throwing it open to be varied by mere leaseholders, is a disaster waiting to happen.


                        I would say that the managing agent would pull the budget together based on the lease and after an inspection of the building..then I expect the managing agent to put the budget they have created to the directors who would then approve or disapprove of, amend it etc... then service charge demands are sent out according again to the times in.the lease.


                          It is important to remember that the members own the RMC and they have the power to change the budget, the agent and the directors.

                          The idea that the majority of members will not agree to spend any money has no validity, of course they will in order to maintain the value of their properties.

                          Many of the problems which exist with leasehold properties today are due to some individuals considering that they are not answerable to the members.


                            Originally posted by eagle2 View Post
                            The idea that the majority of members will not agree to spend any money has no validity.
                            Sorry, it's very valid. I deal with this problem every day.

                            There is one place where they have no excess money in the bank for repairs or next years insurance.
                            I keep stating that we need £ x in the bank 1) for emergencies 2) for forthcoming repairs / insuramce / etc etc etc.
                            I produce a budget, and it is just ignored. They even say, I am not handing over any money. Period.
                            But will shortly have to resign, as this cannot go on. And certain Health and safety items are being ignored, and me as an officer of the company, and I deal with the repairs, can be sued if someone gets hurt / dies.

                            Another place is similar, they decide which items to repair maintain / not maintain. and only by how much they want to spend and not by that which they Must spend. So the place is a now tip
                            I left them a while ago. walls fallen down, and too much to describe more here.
                            ( Oh but it costs too much, so we wont have it fixed.)

                            Sorry, so perfectly valid.


                              An RMC should employ a good managing agent to decide what works are required and prepare budget.
                              Lessees do not have the skills or experience and think running an RMC is an excuse to spend nothing.
                              It will cost them dearly in the long run
                              Like Ram, I see this all the time.


                              Latest Activity


                              • Right to Manage Costs
                                by Pariah81

                                I am part of a residents association that is exploring right to manage (RTM).

                                We are a 30 flat block in the Ealing area.

                                We want to get advice on the process so how much should we be expecting to pay for our legals?

                                I'm also aware we have to pay...
                                21-09-2021, 13:48 PM
                              • Reply to Right to Manage Costs
                                by lampshade
                                Interesting....I have one lease in a total of 3 blocks totalling 34 flats. All managed under one managing agent appointed by the FH.
                                But each block, whilst seemingly are all connected there are 3 separate blocks of about 11 flats in each. Each block has both front and back entrance, and unique...
                                23-09-2021, 15:29 PM
                              • Reply to Reasonable solicitor fees?
                                by eagle2
                                You can insist on a summarised time record showing the number of hours spent by each grade of solicitor on the different aspects of the work involved. You can then compare it with your own solicitor's time records in order to raise a specific complaint.

                                Intead though, I suggest that you...
                                23-09-2021, 14:42 PM
                              • Reasonable solicitor fees?
                                by LizLease
                                After six long and tedious months of negotiations to extend the lase on a flat, we are nearing completion and I have been sent the final balance.

                                I was shocked to be presented with a £2,700 bill for the freeholder's solicitor fees. When I first inquired about renewing the lease, the freeholder...
                                21-09-2021, 17:17 PM
                              • Reply to Negotiating a lease extension
                                by sgclacy
                                Does that include the surveyor fee ?...
                                23-09-2021, 14:36 PM
                              • Negotiating a lease extension
                                by LizLease
                                Hi all, I am new to the forum.
                                I am looking to extend the lease on a flat (currently under 70 years).
                                I received a quote from the freeholder and a valuation from a surveyor (£3k lower than the freeholder's figure).
                                I spoke to the leasehold Advisory Service who said to ask the surveyor...
                                21-01-2021, 12:44 PM
                              • Reply to Negotiating a lease extension
                                by LizLease
                                Thank you both

                                sgclacy, if you are talking about the "deed of surrender and regrant of lease", that is a 10 page document and as far as I am ware, there are no specific issues or complications with it. It's a flat in a 30 year-old small block of flats and there are no odd clauses...
                                23-09-2021, 12:17 PM
                              • Reply to Reasonable solicitor fees?
                                by LizLease
                                Thanks for the replies.
                                It has taken 6 months because the surveyor - who was dealing with the negotiations - was useless and not proactive / reactive. Add to that the fact that we had reached a deal I said OK to, then the freeholder and their solicitor turned around and said actually no, they...
                                23-09-2021, 12:09 PM
                              • Reply to Renewing the lease and sublet charges
                                by mpppen
                                Ooh interesting, thanks Gordon.

                                I'll do some research to see if I can dig it up.
                                If anyone else knows more about this though in the interim, please shout.

                                Many thanks...
                                23-09-2021, 10:21 AM
                              • Renewing the lease and sublet charges
                                by mpppen
                                I've just about finished the tortuous process of renewing the lease at a flat we own bringing it up to 170 years and no ground rent (yay).

                                It is rent out and I do keep getting sublet registration demands from an infamous mgm company on here.

                                I've read back through the forums...
                                21-09-2021, 18:47 PM