Handover fees demanded for return of Company Records

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    Handover fees demanded for return of Company Records

    I’m a director of a freehold company which has 6 leases. We have terminated the relationship with our property management company late last year. We have paid all outstanding service charges.

    I have requested that they return the company records, accounts and invoices. They have refused, citing that we need to provide them with £1200 as a handover fee. This is to be held on account while they prepare a handover package. We have no control over the spend. They stated that they will refund any monies not used.

    Additionally, we received notification earlier last year that we had approximately £4K as surplus and when I enquired about the amount they stated that it doesn’t exist due to payment of service charges and expenses. The breakdown is subject to payment of the above handover fee.

    My understanding that under the Companies Act, they cannot hold our Company records or accounts as lien for fees (is this correct and does this apply to future fees?). I’m at a loss as to what I can do and feel very uncomfortable that I need to hand over such a large amount, especially as some of the documents were handed to them when the relationship started. As an extra bit of information, the management company is not registered with any professional bodies.

    #2
    Ok well the SC money is yours, as are the supplier invoices and most of the records, the agent only has control over it.

    Does your contract have a minimum term that you are within or a handover fee in it?

    If not then it really is down to the contract that you have as if all their contractual fees are paid ( which may be part of the SC which includes electricity gardening insurance etc and their management fee ) then they have no basis to charge an additional hand over fee or exercise a lien.

    The package is really just bundling up the files and as their normal duties would require on a regular basis to reconcile the service charge account for your block. Its 1 or 2 hours work at most and should be £100 to £200 if a reasonable compromise were reached.

    So start with the contract.Ultimately if there is no contract it will come down to the courts to decide and that is what they are pinning their hopes on if the contract is silent, it will cost you £1200 to avoid £1200 if you use a solicitor.

    is there a contract?

    I might take the approach that do you need these records? Any company information is on line any way and the paper register is these days superfluous. Any old invoices are paid and you know who the contractors are and insurers are as well as the utility suppliers.

    It then comes down to the £4k surplus, and I would be tempted to respond that the money is held on trust under section 42 LTA 1987, and as it should have been long ago reconciled just send a cheque, failing which as it is criminal offence not to hold the monies on trust you will make an application in the local magistrates court , which you can do yourself for criminal proceedings against the named staff and owners.
    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
      Company records belong to the company. If it was employing a managing agent (note the word agent) but have terminated this relationship, then the company records need to be returned to the company and this would normally be free of charge (but as LHA says, check any contract you may have with them).

      What they should do is hand over the records, then bill you (or at least try to).

      As they're not registered with any professional body however, your only remedy may lie either in the Theft Act or the Companies Act (and so you go to the police - who won't understand) and try to convince them they are committing a criminal offence.

      Comment


        #4
        Many thanks for your swift and helpful responses. Just to answer some of the questions raised above.

        We did have a contract which allowed for 3 months’ notice for termination, though a fellow director actually issued the notice saying ‘with immediate effect’ which the management company then agreed to, waiving the notice but ‘charging on an hourly basis’, which we discovered some time after the event. Of course, there was no indication of charging rates but on seeing a lump sum in a ‘Contractors Report’ issued 18 days later, we contested the reasonableness of that amount (especially as their correspondence and reports were inaccurate and incomplete – omissions from Jan to March costs, forgetting to apply VAT, including an extra £1000 accidentally).

        There is no mention at all of a handover fee in the event of termination, either in the contract or in that email exchange with the other director. In fact, the management company stated it would reconcile and issue invoices to each leaseholder which it has since failed to do.

        Comment


          #5
          Originally posted by thevaliant View Post
          Company records belong to the company. If it was employing a managing agent (note the word agent) but have terminated this relationship, then the company records need to be returned to the company and this would normally be free of charge (but as LHA says, check any contract you may have with them).
          I remember talking to Jerry Fox when he was on the committee rewriting the code and saying that (for the unregulated members) we ought to add a handover clause in the code as it applies to any one in practice.
          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
            The company records and accounts legally belong to the company. So report the company records as being stolen at your local Police Station

            Comment


              #7
              Thank you for all your responses. You have given me reassuring advice. I'll keep you posted as to how i get on.

              Comment


                #8
                Your problem centres on the fees for the last 3 months which they were likely entitled to and having earned little and taken a hiding over the other figures have taken a stuff you approach.

                sadly it has been poorly handled but you are where you are and the next step is not to go to the Police as its silly ( you gave them the files and they are holding onto them until their disputed costs are paid), so you ask your solciotr to write as simple letter before action requiring handover of all the files, a reconciliation of all bank accounts and a cheque to balance, and all company records, for no fee as the contract does not provide for one in the event of termination nor was on agreed. You are however without prejudice prepared to make a payment of £x to meet the two hours work to collate the files and complete the last reconciliation.
                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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