Process for adding Freeholder as a RTM Member

[MrT2014]

Hi,

Myself and the only two other flat owners in our block set up a RTM company last year (each of us are directors) and we have recently received a letter from the Freeholder who wishes to become a member. I just want to understand what admin is required to add him as a member - do we just update the Company Register ourselves and list him as a member & let him know it is done? Does this register then need to be sent anywhere? Or is there another process?

Finally we were just about to do our first year annual tax return but HMRC have written to us and stated that as the account is inactive they don't require it. Although I'm not complaining about not having to do a tax return my understanding was that most RTM companies file their first year tax return and then tell HMRC they are inactive/dormant. Any thoughts on if we should do this or should we just stick to what HMRC have told us?

Thanks in advance

[Gordon999]

All companies have a obligation to submit company accounts and members list by annual return before the due date ( see company listing at Companies House website ). Failure to complain will result in hefty fines being charged for late returns. So don't ignore the company's obligations to Companies House..

The RTM company is a company with legal powers to allow leaseholders to take over the service charge administration from any managing agent appointed by the freeholder. It does not trade with outside parties to make profit and is recognised due to company name containing RTM by HMRC Tax Office . So if HMRC give exemption and you hold their letter and tax ref no. then you don't have to submit a tax return.

Is your RTM company limited by Guarantee ( not by shares ) ? Not sure if there is annual registration of membership ?? Is you freeholder a person or a company ? I suggest you check up the freeholder's identity and if any past history record at LVT / FTT ?

[ram]

Beware of your suggested actions, and don't do it.

An R.T.M. -- Right to manage -- is initiated 99.9 % of the time because the freeholder wont do anything, nothing gets done and the place starts to fall apart.

In no way shape or form, allow a freeholder to become a member of the R.T.M. company, as RTM companies are started because the freeholder does not give a dam.

Tell him, NO, go away, you are not to be a made a member of our RTM company that was made to take away the running of the premises FROM the freeholder TO the leaseholders.

[Gordon999]

Can Mr T2014 legally refuse the Freeholder's application for membership of RTM ?

The wording of the C&LRA 2002 , Clause 74 says :

74 RTM companies: membership and regulations

(1)The persons who are entitled to be members of a company which is a RTM company in relation to premises are—

(a)qualifying tenants of flats contained in the premises, and

(b)from the date on which it acquires the right to manage (referred to in this Chapter as the “acquisition date”), landlords under leases of the whole or any part of the premises.

So if you want to refuse , you must find some excuse for not allowing the freeholder to become a member of the RTM.

[ram]

The conditions are

"Myself and the only two other flat owners in our block set up a RTM company"

Therefore the landlord does not live at the property or have a lease, therefore as they don't live there, they can't be part of the RTM.

[Section20z]

The conditions are

"Myself and the only two other flat owners in our block set up a RTM company"

Therefore the landlord does not live at the property or have a lease, therefore as they don't live there, they can't be part of the RTM.

Sorry just found this one as I am in the position as a freeholder being refused membership.
The wording refers to "Landlord" and so the Freeholder most definitely is entitled to membership of the RTM.

[vmart]

The RTM are legally obliged to invite the landlord to become a member of the company. It is the freeholder's right irrespective of whether they own a lease or live at the premises.

[leaseholder64]

Also note (looking back at the fossilised responses) that RTMs are limited by guarantee, and limited by guarantee companies don't have to submit lists of members to Companies House, although they still need to keep a register of members and honour requests to examine it.

[Section20z]

The RTM are legally obliged to invite the landlord to become a member of the company. It is the freeholder's right irrespective of whether they own a lease or live at the premises.

There is no obligation to invite him and sadly it seems no method of compelling the RTM to accept him as a member either

[leaseholder64]

There is no obligation to invite him and sadly it seems no method of compelling the RTM to accept him as a member either

Article 26 of the AoA for all RTMs requires the company to accept the freeholder as a member, if he applies and in the approved manner. It says that the board shall make people who qualify members. Shall generally means they have no choice in the matter.

[ram]

I stand corrected on my replies above.

But if the freeholder wishes to become a Member of the R.T.M. company, and if legally he can become one, then I see no problem, as he wont be a Director, he will just be a member.
He probably wont have a vote, as voting rights are ( in leasehold ) usually, predominantly only for leaseholders, therefore if not a leaseholder, he just gets info.
You can't have people voting who are not leaseholders

[leaseholder64]

The freeholder has voting rights. Anyone can be a director.

The Articles for RTM companies are fixed by statute and actually have quite a large section (article 33), on the rights to vote, but it basically comes down to all the freeholders combined (in most cases there is only one) have voting rights equivalent to those of one leaseholder.

Directors can be anyone allowed by UK company law to be a director.

Note the freeholders can't become members until RTM actually happens, so they can't influence the initial choice of directors.

[ram]

Ref post 12.
I said. voting rights are ( in leasehold ) usually, predominantly only for leaseholders, but now clarified as freeholder must be allowed to join R.T.M's and have a vote.

Thoughts.....
So you take the running of the place off the freeholder, so he / she does not interfere with the legal process, but is allowed to be at meetings and vote for or against R.T.M's proposals.. Hmmmm,
So you now have the chance to watch a disgruntled freeholder, who is livid about R.T.M. taking away his "power", then you better be prepared for nasty letters, as a now new member, and possible verbal stand offs , bitching, and verbal abuse that some freeholders will engage in at meetings.

[leaseholder64]

There have been recent threads where a (in at least one case, new) freeholder, has wanted to take back power from a dysfunctional RTM, but the only real option they had was the appoint a manager procedure. As the Law Commission's report says, RTMs often start with a enthusiastic directors, but as they move on they can become dysfunctional.

[ram]

There have been recent threads where a (in at least one case, new) freeholder, has wanted to take back power from a dysfunctional RTM, but the only real option they had was the appoint a manager procedure. As the Law Commission's report says, RTMs often start with a enthusiastic directors, but as they move on they can become dysfunctional.

~There is one member on here that said very recently he approached the F.T.T. and they refused to allow him to apply for a Manager.

Just saying ..