When is an RTM company not an RTM company?

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    When is an RTM company not an RTM company?

    Good afternoon everybody. I wonder if I might request some observations on a matter which relate to my apartment block (although my description of the matter may appear lengthy).

    I purchased the leasehold on my apartment, one of a block of 6, 10 years ago. In the subsequent year, the freehold was taken over by a company formed by four of the leaseholders of the other apartments.
    The company thus formed had asked if I wished to join, at a cost of one-sixth of the total purchase price of the freehold, but sadly at the time I was unable to amass the several thousand pounds that was required so did not join.

    In a subsequent year, some 7 years ago, the management of the block was taken on by an agent appointed by the company - and not conincidentally, the managing agent is a property management company owned by one of the members of the aforesaid freeholding company who is also a leaseholder in my block (although the other members of the freehold company are not members of the managing agent's company).

    On checking at Companies House, the freehold company is listed as a "Dormant Company" managed by an agent (although the agent is unnamed), and the accounts for the most recent period state that the freehold company has "the right to manage" the property we all live in.

    I have never been offered a further opportunity to join the freeholding company, but what I would like to know (based on my understanding that if a Right-to-Manage company exists then all tenants are eligible by law to be members) where I stand as regards right-to-manage for my block? I asked the managing agent if there was a right-to-manage company set up and he said "No"; and of course as the existing freeholding company consists of 5 of the 6 leaseholders, means that I would be very unlikely to get the required quorum of 50% of the leaseholders to form one!

    So, is the existing freehold company, which is incorporated with the "right to manage" my block a "Right-to-Manage" company under the relevant leasehold acts?
    Further, the assets of the freeholding company are listed as Zero; should this not in fact be listed as the value of the freehold?

    #2
    Reading your post there is no RTM company. 5 of the 6 leaseholders, through a limited company, have acquired the freehold and are undertaking the freeholders covenants, one of which is to manage the building, albeit using a managing agent, for the day to day running.

    If the freeholders wish to state the value as zero, they are in error, however as you have no shares in the freeholding company it makes no odds to you.

    This company can register as a dormant company a; because the service charges are held in trust for the 6 leaseholders and b: other than perhaps ground rent there are no significant transactions.

    Sections 21 and 22 of the landlrod and tenant act 1985 as amended cover accounting for service charges, and in fact are far more helpful to a leaseholder than even a full set of company accounts. see lease advice .org

    Even if an RTM company had been set up to remove the powers of management from the freeholder as soon as it acquires the freehold it is no longer an RTM company.
    Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

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      #3
      That's interesting, thank you, and makes a lot of sense.
      Although it rather looks like it's a stage-managed stitch-up by the managing agent in order to prevent the chance of a 'proper' RTM company being formed.

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        #4
        Originally posted by Neville View Post
        That's interesting, thank you, and makes a lot of sense.
        Although it rather looks like it's a stage-managed stitch-up by the managing agent in order to prevent the chance of a 'proper' RTM company being formed.
        Well no its not. If the long leaseholders by a majority of 5 of the 6 have purchased the freehold then this is perfectly reasonable. An RTM puts the responsiblity of management into the hands of the flat owners.

        Buying the freehold does exactly the same thing. Why would 5 of 6 flat owners who have purchased the freehold want to take management out of their own hands?
        Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

        Comment


          #5
          I agree. RTMC (statutory) is used only when lessees want management powers but not to buy f/r.
          JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
          1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
          2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
          3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
          4. *- Contact info: click on my name (blue-highlight link).

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