Has a lessee who is not a member of an RTM the right to call an EGM?

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    Has a lessee who is not a member of an RTM the right to call an EGM?

    When buying his property,a friend of mine was sold the flat with membership of a RTM. But the director has refused membership for no reason.

    Lack of membership seems to mean he has no say whatsoever over the running of the building or indeed over poor management. For example, during the recent bad weather, some serious leaks occurred in the lessee's flat and need urgently to be fixed. The director is refusing to deal with the matter and the lessee is dreading the next bout of rain. Does the lessee have the right to organise a builder to fix the problem? Although not a member of the RTM, can the lessee still demand a general meeting to address the management problems?

    #2
    No. However as a long leaseholder they automatically qualify and under article 26 should allow them to be a member. http://www.legislation.gov.uk/uksi/2...0092767_en.pdf

    The main problem is the roof and as long as that is the responsibility of the RTM, he has two main options:

    1: Contact the local environmental health officer
    2: start proceedings through the pre action protocol for repairs.
    http://www.justice.gov.uk/courts/pro...tocol/prot_hou

    It is the end of July, if the works will cost more than £250 for any flat, there has to be statutory consultation , and in most cases that will mean no works start until late September.

    So dont hang around.
    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
      Can a company limited by shares and made up of lessees who do not have share of freehold be anything but an RTM? Are their other possible business sets ups? I ask because I can't actually verify the company is an RTM.

      Comment


        #4
        Originally posted by crumpetsfortea View Post
        Can a company limited by shares and made up of lessees who do not have share of freehold be anything but an RTM? Are their other possible business sets ups? I ask because I can't actually verify the company is an RTM.
        RTM cannot be limited by shares, only by guarantee.

        You appear to have what is called an RMC residents man co,aka F(flat) MC, and O(0wners) MC. They are normally a party to the lease carrying out and meeting most of the obligations of the freeholder.

        Right to a share and transferability are set out in the Articles of Association and if they are not sent to you, get them at companies house.

        You should also contact your lawyer to approach the vendor for breach of contract.
        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
          Just to clarify, when you say "Right to share and transferability", is that to say that a lessee has an automatic right to become a member? Are the conditions for membership the same as those for an RTM where an applicant need only be a lessee and need only to fill out an application in a prescribed manner?

          Comment


            #6
            Originally posted by crumpetsfortea View Post
            Just to clarify, when you say "Right to share and transferability", is that to say that a lessee has an automatic right to become a member? Are the conditions for membership the same as those for an RTM where an applicant need only be a lessee and need only to fill out an application in a prescribed manner?
            As I hoped to explain, both rely on the Articles. RTM M & A are standard however those for non RTM types are unique, and each lease and set of articles the M & A have to be reviewed for the rules in your case.

            While it might be automatic as you suggest, and I hope so, it may not.

            Happy reading , let us know
            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
              I've obtained a copy of the articles held at CH. There is an article which states the directors have the right not to transfer a share if they so choose and without giving reason. Over the years since the articles were written, several member lessees have sold up and each time, the directors have refused to transfer the share. To make matters worse, the directors have control of a handful of additional shares in the company name. As such, the directors' shares now outnumber those of ordinary members and has given them absolute and permanent control. This does not appear to be a democratic set up. Can anything be done to overcome this hurdle?

              Comment


                #8
                Originally posted by crumpetsfortea View Post
                I've obtained a copy of the articles held at CH. There is an article which states the directors have the right not to transfer a share if they so choose and without giving reason. Furthermore, the directors have control of a handful of additional shares in the company name. Even more troubling is the effect of member lessees who sell up and move on. Each time a a member leaves, the directors refuse to transfer shares. As such, the directors' shares now outnumber ordinary shareholders and has given them absolute and permanent control. This does not appear to be a democratic set up. Can anything be done to get over this hurdle?
                Well these are not unusual especially where the freehold is purchased by a group of lessees, and not everyone.

                Assuming you have read all the articles and not just the first bit that appeared relevant...

                He may have recourse against their solcitor and the vendor for failing to declare and establish that a share in the company is not automatically transferred.

                Is there any clause in the lease that makes membership a requirement?

                If not then it is matter of buying in, or acting as a leaseholder, make their life difficult challenging all and any expenditure as fair and reasonable and exerting rights to information etc.
                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
                  I have sifted through all the conveyancing documents and came across a letter from the director. He does state very clearly that "shares are not transferable but that a share certificate can be issued if the buyer requests in writing". Given that the 'landlord' has since refused to issue a share, is his previous statement not misleading and can it be challenged in court?

                  Comment


                    #10
                    In addition to the above question for which I'm waiting for an answer, can lessees insist on an RTM setup over an RMC setup once the RMC contract has run out or has the RMC the right to extend its lease?

                    Comment


                      #11
                      As there is no right to join a limited company except on invitation or if the share is sold( assuming the articles allow that) then they can refuse. It means as posted to refer back to the solcitro and vendor as to what they sold you.

                      An RMC is most often a party to the lease and not under contract, and in this case is a company that owns a freehold and looks after it's properties itself.

                      Leaseholders can insist apply for RTM and can seek appointment of a manager.
                      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


                        #12
                        The lessees who are members don't own the freehold. The company's contract expires in less than 20 years time.

                        I just wanted to clarify the last sentence as there may be a typo. Can lessees insist on an RTM over all types of RMCs?

                        Comment


                          #13
                          Originally posted by crumpetsfortea View Post
                          The lessees who are members don't own the freehold. The company's contract expires in less than 20 years time.

                          I just wanted to clarify the last sentence as there may be a typo. Can lessees insist on an RTM over all types of RMCs?
                          It's !£"%$£! firefox's spell checker that red-lines a word, and if you don't alter it, it makes the change on saving.

                          If whoever has granted a management contract to a group, some of whom are lessees, they are not included in the common definition of an RMC.

                          That is however misframing the issue. RTM can be exercised over anyone, person(s) trustees firm or company, as long as the premises and tenants qualify, and that includes in your case, a company (regardless of its ownership) with a management contract from a superior landlord eg a freehold.
                          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


                            #14
                            If an RTM can be exercised over anyone or any company including an RMC, what would happen to the RMC? Is it forced to dissolve itself? Can its shareholders ask for compensation and if so from whom - the RTM or the Superior Landlord?

                            Comment


                              #15
                              Originally posted by crumpetsfortea View Post
                              If an RTM can be exercised over anyone or any company including an RMC, what would happen to the RMC? Is it forced to dissolve itself? Can its shareholders ask for compensation and if so from whom - the RTM or the Superior Landlord?
                              As your company is not an RMC, it would have to examine it's contract to see if it has any obligations or responsibilities not assumed by RTM. A topicality RMC is party to the lease and should match those obligations to RTM.

                              From your post it seems that you are dealing with a company that is better described as the landlord's agent, it is simply that the owners of the Agent happen to be residents of the block.

                              RTM would then be exercised over your landlord and the contract notice ( terminating their involvement after RTM) would be served on the Agent, and any compensation that they could claim from the landlord would be contractual. It is highly unlikely that if there were any , that the landlord could claim it under the lease as a service charge.
                              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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