RTM company losing control due to underletting

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    RTM company losing control due to underletting

    Landlords of Landlords but we have lost control.


    We are a RTM management company for past 25 years of a victorian house split up into 5 Flats, and we administer the property, via Owners management company run from the premises.

    Last 3 years 3 out of 5 owners have rented out their flats, using letting/ estate agents.

    The Management company ( comprises the 5 owners ) leases the flats to the owners, therfore the Management company is the landlord of the 5 flats ( which are bought as a self contained Flat.)

    If the owners rent out their flat, they then become landlords.

    So we have a situation where we have 2 landlords ---- The Management company, and the owner renting out his flat.

    The problem is, Estate agents refuse to give us any information about incoming tenants ( as stipulated in the Management lease ) the owners live hundreds of miles away ( and some are not bothered.)

    The tenants now can do as they like ( an over exageration ) and we feel we have lost control, as we dont always know who the letting agents are, and they quote the Data Protection act, and refuse to let us know who the new tenants are, coming in.

    The question is, ( part 1 ) as the Managing agent is us, and is the Landlord of the owners flat ( no rent is paid to us, as the flats are bought ) and the owner is effectively subletting, then can we insist on the conditions of the first Landlord ( the managing agent ) that all owners must agree a "no objection" to new or replacement tenants

    The Management / owners lease states that all owners to be informed and have to agree to new owners or tenants, but estate agents refuse to tell us, or even tell us -when- they are coming or leaving.

    Question, ( part 2 )
    Can we insist that we are told of new tenants details, as we are the Landlord of their Landlord client, ?? so we can advise the other 4 owners if they have any objection to incoming tenants.

    I don't want to insist, if this is a complicated setup, and or upset the owner renting out their flat.

    Thanks

    #2
    Correct me where necessary.
    The freeholder is a management company. You are managing agents employed by the management company. Some lessees have let their flats to tenants thereby becoming landlords. You feel out of control.
    My situation.
    When one of my lessees lets out their flat I ask minimally for:
    • Tenants' names
    • A copy of the signed agreement with the tenant
    • Lessee's address and phone number
    • Agent's contact details (if lessee not personally managing)
    I would say to you as managing agents write to the lessees in question in a professional yet friendly manner requesting information about their letting. If an unsatisfactory response is received after a reasonable amount of time, assess whether the lessee has breached any of the lease's covenants. Report to the management company to gauge how they want to deal with the situation. Act according to the management company's direction - you answer to them.

    If a tenant is behaving in a manner that you feel is a breach of the lease, again write to the lessee and request they remedy that perceived breach. Do not write directly to the tenant. Report to the management company to gauge how they want to deal with the situation. Act according to the management company's direction - you answer to them.

    Unless the lease says that the management company can object to incoming tenants, then don't. Don’t come at the lessee with attitudes such as "object" or "insist". Instead identify perceived contraventions of the lease and ask the lessee to address these.

    (Notice I use words such as "perceive", "assess", "request" - only a court can definitively decide whether a lessee is truly in contravention of the lease and you don't want things to get that far.)

    Simply and always abide by the lease.

    (WARNING! If you start employing methods such as changing communal locks without reasonable prior notice thereby locking out residents as mentioned on another thread - YOU are the ones in breach. It's plain wrong, don't do it or even think of doing it. Be professional.)

    Comment


      #3
      QUOTE=Poppy.
      reply italics = Ram
      [INDENT]The freeholder is a management company. You are managing agents employed by the management company.

      Ram = Incorrect, there are 5 owners, I am one of them, and the 5 owners ARE the Managing company. I am the Company secretary. We do not employ a Managing agent

      When one of my lessees lets out their flat I ask minimally for:
      • Tenants' names
      • A copy of the signed agreement with the tenant
      • Lessee's address and phone number
      • Agent's contact details (if lessee not personally managing)


      Tenants names are never given, as they move in before the owners knows.
      The estate agents wont give me a copy of lease, as they work for the owner of the flat.
      Lessee's address = same as last sentence



      assess whether the lessee has breached any of the lease's covenants. Report to the management company

      The Management company are the owners renting out the flats !!!! so if they don't want to conform, they won't, and as 3 out of 5 flats are rented out, the owners renting out over rule logic and do what they want.

      If a tenant is behaving in a manner, Report to the management company to gauge how they want to deal with the situation.
      Example -- a 3rd person was "living" at a rented out flat, and 2 visits to the owner ( as one member of the management company to another ) to ask who it was, and 4 letters to his letting agent came up with ZERO in 6 months, and 2 complaints were made about this 3rd person, and again -- zilch

      (WARNING! If you start employing methods such as changing communal locks without reasonable prior notice thereby locking out residents as mentioned on another thread - YOU are the ones in breach.

      Locks were changed, and all owners and tenants were given ample warning, and reasons for changing, with no complaints..
      The only two Directors of the managing company living on the premises are at the mercy of the other owners renting out property

      Me thinks costly and unafordable legal action to make the other owners conform is the only way, but one owner of the Management company "sueing" the 3 owners renting, so force them to comply to the rules and regulations, is out of the question. or is it ?

      Should we sell up and move ???

      Comment


        #4
        Now I'm no expert, but you are all still leaseholders whether you own the freehold or not.
        This means they have to comply with the terms of the lease, as would any other leaseholder.

        Dolly
        Doing our landlord's job for free, just for the fun of it.

        Comment


          #5
          Some detail pls...

          ok, a few quick questions -

          1) Does the block have a leasehold contract that references a freehold? (i.e. the block landlord).

          2) What does this contract say about tenants? are the tenants in that contract the owners or the tenants of the owners (this is a critical distinction)?

          3) Is the RTM company the freehold owner (i.e. the landowner and landlord of the block)? or just a managing company that meets the landlord's obligations under the lease (i.e. obtains buildings insurance, maintenance, etc...)?

          Thanks,

          Schocca.

          Comment


            #6
            Details

            1) Does the block have a leasehold contract that references a freehold? ( you ask ).

            Answer= somewhere, but see below

            2) What does this contract say about tenants? are the tenants in that contract the owners or the tenants of the owners

            Answer= Legaly, the owners are the tenants, as the company leases the flats to the owners. The owners must apply to the Management company for permission to rent out the Flat, and even to sell the flat ( re-assignment of lease to new owners )
            The owners ARE the management company. The Management company leases the flats to the owners ( no money changers hands, and no rent is due -- it's to protect the owners,) and we ( the owners ) can prevent a sale if we dont like the proposed new owners

            ABOUT THE LEASE . . . 1982, the house was owned by one man, who made it into 5 flats. He was getting nowwherere with solicitors, so he marched in, took his documents, and compiled a lease himself ( looking at his own ) then had one drawn up.

            But there is nothing about tenants in the lease, as all he wanted to do was sell his own flat and the 4 others, so was not concerned with the complexities of owners letting, so no reference to owners renting out their flat is in the lease.

            3) Is the RTM company the freehold owner (i.e. the landowner and landlord of the block)?

            answer = RTM company is a none profit making Limited company of which the 5 owners are directors of that company, and the company is the landowner and landlord of the block, and is run from the premises by one owner in that block.
            3 out of 5 owners rent out, and will block any suggestions of enhancing the place, so we are in a no win situation, although moves are afoot to redress the balance of 3 against five, to 2 against 5 -- ( Hard work by me buttering up the others on my side )


            The problem is, estate agents wont talk to us, letting agents wont talk to us, and the only way to address the apathy of some owners, is to sue them for not complying to the lease ( or as Directors, for not looking after the interests of the company )

            Hope this helps.

            Comment


              #7
              Additional question...

              Ram, you mention that there is no clause in the lease about rental tenants, but then you talk about "preventing" sales if you don't like the proposed owner?

              Is this a specific clause in the lease? or is this just the view of the block mgmt company?

              To be honest, the response either way has limited actions - here's some things to consider:

              1) As a managing agent for the block (which the RTM company is acting as), you are required to meeting the maintenance requirements for the block and meet the landlord responsibilities for buildings insurance etc... These companies have very little responsibilities in regards to owner behavior or rental tenant behavior. To be really precise here, the managing agent is responsible for the areas as dictated in the leasehold agreement.

              2) As a landlord, you are responsible for the areas and functions as described in the leasehold agreement between the landlord and the leaseholders (i.e. flat owners). Additionally, the lease may describe items that the landlord is responsible for, but requires the leaseholders to pay for (i.e. buildings insurance). Again, it all depends of the wording in the leasehold agreement. The landlord can also demand that owners meet terms of the lease if the owner is in breach - BUT - action here is restricted and additionally, some of the outcomes have been limited via the housing acts and court decisions.

              3) Also, the landlord is responsible for the block under UK law (i.e. health and safety + fire precautions, etc...).

              So from this point, you can only consider item 2 as an area to action from, but your rights are restricted to a) what the lease says and b) what laws/court decisions have appeared that reduce the enforceability of the lease terms (i.e. the leasehold agreement cannot override this).

              So far this is all very woolly and vague - let’s focus on some of the questions you have raised:

              1) Can the managing agent/landlord receive names, contract details of rental tenants?
              - The regular answer here is no. Here's why:
              a) The landlord of the block has a legal relationship with the owners.
              b) The owners have a legal relationship with the rental tenants
              c) The estate agents/letting agents have a legal relationship with the owners.

              Because b) and c) have no legal relationship with the block landlord, the block landlord often has no legal rights to this information (due to contract privacy). The owner IS responsible to the block landlord to make sure that the rental tenant acts within the block leasehold agreement (i.e. noises late at night, rubbish removal, etc...).

              If the rental tenant does breach terms of the leasehold agreement, you may have rights to chase down and resolve the breach, but again this is restricted by law/court decisions. Often, if it’s a public nuisance breach, the local council has more teeth to resolve some of these issues.

              Talk to a solicitor here - this is the best way to identify if the landlord has paths for action or not.

              2) In regards to "preventing sales or tenants living in the property" - I doubt that this view is legally enforceable and I would be very concerned about legal liability if a decision WAS made to prevent a sale/rental (i.e. DON'T DO THIS - think instead about the £00000's of damages you could be sued for - and yes, the number of zeros is relevant).

              Overall, I doubt that the landlord has "lost control" here as
              a) The landlord may not have the rights anyway.
              b) Unless there are law changes or the leasehold contract is re-negotiated, then the terms of the leasehold are valid until the contract expires (assuming the terms are applicable/reasonable under UK law).

              Either way, talk to a solicitor if you plan to move this further and be very careful about restricting an owners right to "enjoy their property"...

              If you want free confidential advice - talk to LEASE at http://www.lease-advice.org/ for more advice on your options (but please note, they are only human and make mistakes as well).

              I hope this helps,

              Schocca.

              Disclaimer - I'm not a legal person, but have been "bloodied on the battlefields" in the following areas -> Director for a block mgmt company that also owns the freehold. Director of an RTM company for another block (including setting up the RTM company). Experience of LVT actions (mixed results) and "having fun" with Party Wall acts.

              Comment


                #8
                Sell up and leave

                "preventing" sales if you don't like the proposed owner?

                Our Head lease states that all owners must agree to the sale of a Flat, and seek permision from The Managing company ( us ) for permision to assign their lease to the new owners, and the only way to disagree is to know about the persons buying.
                As the company IS the 5 owners, then the other 4 must give permission.

                I have read the rest of your information and noted it - thank you.

                It apears that the managing company ( us ) - and not employiong a managing agent, has no rights whatsoever regarding tenants.

                3 of the 5 owners wont do anything about tenants, and if they do, all the letting agents do is write a letter, and after 4 months, nothing changes.

                To sue or take to court an owner for not controlling his tenants, we need the authorisation of the 5 owners to spend money to sue them, and as 3 of the 5 owners are renting out their flats, a majority "no" vote will be passed, not to sue, and one of the owners will be voting for -him- not to be sued.

                You say - talk to a solicitor - but i don't have £ 170 per hour to talk to a solicitor, - i don't work ( as opposed to unemployed ).

                Well. best to put up the "for sale" sign, and this Company Secretary will be glad to get out of this hell hole, and watch the state of the place deteriorate, and no one checks the grounds or asks the other residents if there are any unresolved tenant isssues when a tenant leaves, as no one tells us when they leave.

                Ram

                Comment


                  #9
                  Pissing into the wind

                  Your opinion that three out of five freeholders are in breach of the lease.

                  My opinion is that you and the remaining freeholder should take legal action to remedy any perceived breaches.

                  But you don't want to spend the time and money, especially being in a minority. That's your decision.

                  I must tell you though, if I was one of the gang of three I would buy you out and give you your wish.

                  Have you asked the existing owners if they would like to purchase your flat?

                  Whatever you do don't get into a dispute, if you decide to sell to someone other than an existing owner you will have to declare the dispute.

                  Comment


                    #10
                    Wrists slit.

                    Poppy; your opinion that three out of five freeholders are in breach of the lease.

                    Ram: No -- 3 out of 5 owners dig their heels in, wont agree spends, wont act in the best interests of the property

                    Poppy; But you don't want to spend the time and money to take legal action, especially being in a minority. That's your decision.

                    Ram: Sorry, I don't have the quoted £ 2500 the Solicitors said it would cost - on any action.

                    Poppy; Have you asked the existing owners if they would like to purchase your flat?

                    Ram : -- Don't be silly They are private owners, who have moved away to their respective boyfriends and Girlfriends, re- mortgaged one flat, and one flat was inherited when the owner died. They are normal ? people with no spare cash.

                    They are happy that they are immune, and don't have to clear up outside when tenants leave, they do nothing, as slack letting agents rule here.
                    No point in having a Managing Company if the tenants rule, + the letting agents rule. ( see schocca's reply of 24-06-2008, 02:22 PM


                    Poppy; Whatever you do, don't get into a dispute, if you decide to sell to someone other than an existing owner you will have to declare the dispute.

                    Ram. - there are many - be it minor disputes, all about parking / blocking the only garage, failure of tenants to pick up free newspapers ( as i said, minor complaints but constant.)

                    Thank you all for your time, but it is obvious that Flats with owners who rent out, and are in the majority, is to be avoided at all costs.

                    R.a.M.

                    Comment


                      #11
                      My thoughts on rubbish...

                      Ram - One answer to the rubbish issue with tenants is to charge ALL the owners for somebody to pick it up... (no such thing as a free lunch...).

                      You will find out very quickly that the owners do care - esp when it comes out of their own pocket...

                      Ongoing rubbish removal is the bane of both the mgmt companies that I help manage - The only real mechanism is get this stuff moved and kept clear - even if this costs £50-90 per qtr for the odd large item that needs sorting. Additionally, we put up signs on a regular basis explaining the waste management rules/limitations (each council is different).

                      I should also point out that unless the rubbish is removed, the council can get very difficult and this can be used as a lever to get all the owners to agee to the cash spending (and you could say that this is a mandatory requirement if it's food rubbish to keep rodents at bay...). Once the money starts to get charged, then the owners start to realise that their tenants are causing the problem and then they start chasing their agents to do their jobs.

                      My favorite "people management" trick that I would use in this situation is this - Tell the owners that they WILL be jointly charged for extra rubbish removal unless you hear otherwise. (i.e. the assumption is that this IS going ahead...) (I've heard that this is called "boxing" - I've used this for many years and it's very effective).

                      Note - you can only do this for small costs/issues - big costs could require a proper statutory notice (but if you look at these notices, they are still using the "boxing" approach - i.e. assumption is that the work is going ahead unless people reply...).

                      That's my 10 cents...

                      Schocca.

                      Comment


                        #12
                        only my opinion

                        I have read this post over and over again. Seek proper legal advice and stop messing about.
                        Mrs Dingle

                        Comment


                          #13
                          opinion

                          Originally posted by Mrs Dingle View Post
                          I have read this post over and over again. Seek proper legal advice and stop messing about.
                          Legal advice is always advisable, and i have sort it previously, but solicitors at £ 170 per hour is not possible for me at present, hence gaining valuable advice on here, for which i am grateful to all concerned.

                          Comment


                            #14
                            Yes this a fantastic site to seek help.A wealth of knowledge to be found here backed up by lots of experiences.Sorry to be a bit flippant with advice about seeking other help.Too many gins last night!

                            Too many chiefs and no indians is a problem.I don't think you can have any say in the matter of choice of tenants if they are found by a leaseholder or their agent.You can seek to enforce the conditions of the lease.IF, the tenants are breaking any of the agreements.If, they are, then approach the letting agent armed with a copy of the lease and a letter outling the breach/s and request that it is remedied.Speak to the other leaseholders/management who are "managing" first and agree the breaches to be tackled.

                            Just my opinion.I have no legal skills.
                            Mrs Dingle

                            Comment

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