Funds handed over to RTM Company

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    Funds handed over to RTM Company

    I understand that once an RTM Company takes over, the current agent/freeholder has to hand over any unspent SCs.

    According to the latest accounts, there is a debt on the current managing agents books.

    The unallocated reserve minus amounts unpaid (as some owners are not paying) is a negative amount. (to the tune of -£19,000). (Turnover is £120,000).

    Would the RTM Company be responsible for paying this defecit or will the current agent be responsible for recovering their own debts?

    It is assumed nothing will be handed over to us as the amount is negative.

    #2
    This is something which confuses most.

    At date of RTM the landlord should pay all bills that are outstanding, and any due up to that date with the funds they have. What is left after that is handed over. Various bills such as utilities and regular servicing will have been terminated by notice for that date, and readings submitted, and it may take a few weeks for those bills to come in and be paid.

    To the extent that the landlord has bills still to pay, they must then pay them, not the RTM.

    The landlord then calculates the costs incurred and then, in accordance with the mechanics in the lease, bills them and recovers them.

    As to reserve funds that money should be used for the purposes spelt out in the lease, and even if the day to day service charge account is in arrears, that must still be handed over, less any monies due to be paid out, e.g. a final certificate or fee.

    If it has been used as a loan, then it must be repaid to the reserve,out of landlords funds, and handed over.

    If there is dispute over this the LVT can determine the amounts.

    While the RTM therefore does not pay anything, individual leaseholders will have to pay for the deficit, as above, but subject to any challenge they may make, or that may arise out of any referral to the LVT by the RTM, on amounts to be handed over ( and by implication the inclusion and recoverability of any charges in that amount)
    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


      #3
      Even if there is no cash to hand over, the old agent must handover all the set of past audited accounts, bank account statement , insurance policy and claims record and commissions taken - all items which were paid from the service charge account and list of arrears of service charge.

      Comment


        #4
        Having just scoured my lease again, there is no mention of a reserve fund yet there is one in the SC breakdown. The lease says that any overpayments by any leaseholder must be refunded at the end of each accounting year (as we pay on account). Last year's excess SC credit was £0.01 - a pretty astounding estimate at the start of the year as to what their exact expenditure would be, if you ask me - especially with variables like electricity, water & maintenance.

        The mgmt company seem to be making it up as they go along. In 2009 the reserve fund contirubtions appeared on their invoice separate to the SCs. Since 2010 they are muddled within the SC as a single sum.

        Comment


          #5
          Originally posted by Gordon999 View Post
          Even if there is no cash to hand over, the old agent must handover all the set of past audited accounts, bank account statement , insurance policy and claims record and commissions taken - all items which were paid from the service charge account and list of arrears of service charge.
          Gordon we have been through this before, and they don't.

          RTM is plainly the right to start over, the contracts and records are the landlords, and cannot, even if for some bizarre reason they would want to, recover any arrears prior to RTM. None of these have great relevance to an RTM who start with their own contracts, accounts, banks and funds ( plus anything left over of course).

          Individual leaseholders might exercise their right to inspect records or have documents sent to them, perhaps as part of disclosure/discovery in formal action relating to past expenses or the RTM in confirming what is to be handed over in terms of funds, but they have no simple right to the information to be just handed over as you state, whatsoever.

          The whole point of RTM is to start with a clean page...and to the extent that some of the documents might be useful, they could be in an uphill battle to assert those rights.

          A claims history if refused would require the RTM to rule.

          Accounts- bar section 21 rights and any unfulfilled contractual rights they would most likely have to pay or apply to the LVT and show why they need them.

          Insurance commissions not required to declare them- full stop.

          Bank statements/Arrears ( but only in total form) as part of establishing the amount due/held, or in a dispute they might require sight of them, but that need not be handed over, and I would and do refuse any to be copied that have the a/c no sort code or personal information on them ( as that's what the auditor certifies).
          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


            #6
            Originally posted by Milhouse View Post
            Having just scoured my lease again, ......... Since 2010 they are muddled within the SC as a single sum.
            The code of practice and good practice is to keep these separate. Sometimes if the software separates RF, they might put off one off large projects into that category so the accounts goblins* don't use the money to pay off insurance and the cleaners instead of the roofers.

            Do check the lease to see if the SC list includes any amount which can be billed for items of a reoccurring nature in future years, they are often quite subtle and not clearly "labelled" RF !

            (* Note to self - must not refer to the clients accounts payable triumvirate as Gringots..again)
            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


              #7
              Originally posted by leaseholdanswers View Post
              The code of practice and good practice is to keep these separate. Sometimes if the software separates RF, they might put off one off large projects into that category so the accounts goblins* don't use the money to pay off insurance and the cleaners instead of the the roofers.

              Do check the lease to see if the SC list includes any amount which can be billed for items of a reoccurring nature in future years, they are often quite subtle and not clearly "labelled" RF !

              (* Note to self - must not refer to the clients accounts payable triumvirate as Gringots..again)
              "...

              Without prejudice to the generality of the Tenants covenants to pay the SC the meaning of the SC shall be deemed to include reasonable provision for the future in respect of...

              Periodically recurring items whether recurring at regular or irregular intervals and the the replacement or renewal of items the expenditure on which would fall within the SC

              ..."

              That be it?

              Additional note the lease is very watery - there are no covenants as to what Services the MC can provide - just anything they deem necessary. For example, they provide a caretaker that we all have to pay for (20k a year) who is never here and has no mention in the lease. But that's another topic I think.

              Comment


                #8
                Originally posted by Milhouse View Post
                Additional note the lease is very watery - there are no covenants as to what Services the MC can provide - just anything they deem necessary. For example, they provide a caretaker that we all have to pay for (20k a year) who is never here and has no mention in the lease. But that's another topic I think.
                But one you must address BEFORE RTM, otherwise you are saddled with the consequences. Just because people want services doesn't mean they won't challenge their inclusion, and then the members of the RTM have to pick up the bill for what they cant recharge in the SC....
                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


                  #9
                  Originally posted by Milhouse View Post
                  "..
                  ..."

                  That be it?
                  In the absence of further wording allowing this sum to be retained then if it's not spent or committed in the year eg a project that spans two accounting years, then it has to be given back as the lease requires.
                  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

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