RMC who decides annual budget

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

  • scot22
    replied
    Thanks everyone who has contributed to the thread. Mr.S I feel your pain. If the therapy works can you share it please.

    Leave a comment:


  • MrSoffit
    replied
    Originally posted by eagle2 View Post
    Many of the problems which exist with leasehold properties today are due to some individuals considering that they are not answerable to the members.
    Agreed. As a jaded director self, I battle "maverick" directors and members all the time who want to spend the service charge to their own benefit and think the lease is a boring guidance note they never read. Yes, members control the company. In the real world company members want their company to succeed. Members can, as you say, remove the directors if they call a special notice meeting and have a quorum and a simple majority and somebody to replace the directors (that last point is the kicker bit I find). Then the members all go home until next year.

    In my experience people turn up at AGMs to air grievances and even though they get the budget before it is implemented and can comment, it doesn't mean they bother paying their share or volunteer to help make the company work. I originally argued all chickens in the coop should get to vote on everything. That was before I got the blood stained teeshirt.

    I agree the managing agent should never be allowed to set the budget. Not what I argue. You have active directors who make the decisions knowing the facts because they are active directors managing the managing agent as they must. You can delegate but not abdicate. Active well informed directors keep the managing agent in line. If the agent runs amok, they go and find another agent.

    You can't drive a car from the rear seat. But I accept I bear emotional scars after too many years, so I will go now and get therapy.



    Leave a comment:


  • ram
    replied
    I may have shares in B.T. so can I object to their spending of £ millions on below ? which are not needed, as there are plenty of other firms doing it ?

    https://www.ispreview.co.uk/index.ph...low-spots.html

    I feel it is a waste of money, so can i request a meeting of the shareholders to discuss stopping this spending ?

    Leave a comment:


  • eagle2
    replied
    The agent should never be allowed the freedom to set the budget, it should recommend expenditure but it should never be the one to set it. Otherwise, a substantial part of the expenditure is likely to end up in the hands of that agent and its connected contractors,

    The agent should always be controlled by the RMC and usually that is the responsibility of the directors.

    In my experience, whenever members have been involved, they have always acted responsibly and they have approved budgets when the expenditure has been properly explained to them.

    There is no question that only a simple majority vote is required by members voting on the day, why should a special resolution be required? Members can remove directors or the agent with an ordinary resolution.

    Leave a comment:


  • MrSoffit
    replied
    Originally posted by scot22 View Post
    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 ?
    As already said, company directors are responsible to manage. If the directors do not table a resolution invited members to vote on a budget (and they would be fools to do so), the members must use a special resolution to force the directors to a different outcome. Unless the articles of the RMC say something different.

    It takes only a few years' managing even a Dad's Army platoon to learn that the ideal of its members gathering once a year to vote on the platoon's operating budget is a farce. They 'receive' the budget. Otherwise members with no legal liability to manage the platoon can set a budget that the captain cannot work within. Not enough funds for ammunition because its gone on woolly hats.

    Dad's Army platoons don't get to give orders. What would Capt Manwaring say?

    Leave a comment:


  • Section20z
    replied
    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.

    Leave a comment:


  • ram
    replied
    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.



    Leave a comment:


  • eagle2
    replied
    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.

    Leave a comment:


  • Starlane
    replied
    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.

    Leave a comment:


  • ram
    replied
    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.


    Leave a comment:


  • eagle2
    replied
    Directors should always read the terms of a contract before agreeing to it,

    Leave a comment:


  • eagle2
    replied
    No, there is no special resolution required,

    Leave a comment:


  • scot22
    replied
    Thanks. Am I right to understand that with a 75% vote on a special resolution shareholders would be entitled to overturn budget ?

    Leave a comment:


  • MrSoffit
    replied
    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'...

    Leave a comment:


  • MrSoffit
    replied
    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...

    Leave a comment:

Latest Activity

Collapse

Working...
X