RTM handover - arrears

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    RTM handover - arrears


    We have an RTM company that begins managing next week.
    There are three flats in the block. Two (including mine) owe some arrears under the previous management, which ceased back in December 2015 and there is currently no management.

    As a result of these arrears, the service charge fund that will be handed over is less than it otherwise would be.

    I believe the RTM cannot collect these arrears, it would be down to the landlord unless the RTM agrees to collect them is that correct?

    What are the pitfalls of agreeing to collect the arrears. I'm happy to pay mine, but if the other leaseholder refuses to pay them then where does that leave us? Can we hand the problem back to the landlord? The apportionment is split 3 equal ways so we all need to have paid the same at the end of the day.

    If we don't collect them and they don't get paid then I don't know how to account for them.


    Pretty certain the rtm can collect the arrears why do you think otherwise ? Certainly there are lvt/FTT cases that involve manage companies (but not rtm) where the new manage co chases debts previously incurred under an old manage co. But any money you (as rtm) recover would need to be handed over to the landlord ?

    Although why would it bother you (as an rtm), you havnt incurred any cost ?

    Perhaps you could just leave it to the landlord if he wants to chase the debt it's upto him, but you (as rtm) just concentrate on recovering amounts you have actually incurred.
    Advice given is based on my experience representing myself as a leaseholder both in the County Court and at Leasehold Valuation Tribunals.

    I do not accept any liability to you in relation to the advice given.

    It is always recommended you seek further advice from a solicitor or legal expert.

    Always read your lease first, it is the legally binding contract between leaseholder and freeholder.



      From what I have read elsewhere on this forum and elsewhere online the RTM company is only responsible for collection of the service charges it raises itself. collection of prior charges remain the landlord's responsibility.

      As an RTM we have not incurred any cost, but our service charge fund contains less money than it should because of these arrears.

      I don't see there is much incentive for the landlord to collect these arrears themselves as they would have to pass it on to us anyway. They are not out of pocket.

      We all need to have paid the same amount. It's not fair for any one leaseholder to get away with not paying.


        I work on the principal, and others do, that servive charges are kept with the flat, not the leaseholder, although the leaseholder is responsible for paying the service charges.

        In my capacity of a RMC, as opposed to your RTM, and for example, permission to assign a lease upon sale of lease ( sale of flat ) will not be authorised until any arreas are paid in full.

        The RTM company is responsible to ensure all service charges are paid, as if the money does not come in, the place cannot be maintained.

        Others, and even you may not agree with the folllowing.........

        As stated, service charges are allocated to a flat, and are still owing, no matter who is running the place ( if a firm sends you an invoice, and the firm changes hands, and still operates, your invoice is still payable, and does not disapear just because of a change over )
        The landlord / freeholder is under an obligation to enforce the lease for none payment of servive charges, and you could, if it gets that far, insist the freeholder enforce the lease to recover unpaid service charges.
        The freeholder could even authorise the RTM Co. to act on the freeholders behalf in recovering the money, which may suit the freeholder to just write a letter to you instead of him doing all the solicitos / RTM letters / court to recover the monies.

        Look at your lease and it will say that each flat "must" pay service charges when asked for, and tell the offending leaseholders that they are in breach of the lease and action will be taken against them if they do not pay the arrears within 30 days.

        And, to be fair, if one leaseholder refuses to pay, you could- return all the services charges ( to the amount not paid by the other ) that so that everyone has paid the same, then issue your service charges again.


          The period before RTM commencing date is under the current managing agent or freeholder . The current managing agent is responsible for all bills up to handover date including final electricty bill with reading taken at handover date.

          The current managing agent is responsible for collecting the arrears and arrange for audited accounts for last period and to hand over the surplus in bank account to RTM.


            Originally posted by Gordon999 View Post
            The period before RTM commencing date is under the current managing agent or freeholder . The current managing agent is responsible for all bills up to handover date including final electricty bill with reading taken at handover date.

            The current managing agent is responsible for collecting the arrears and arrange for audited accounts for last period and to hand over the surplus in bank account to RTM.
            I have first hand experience of this.

            The outgoing managing agent is responsible for collecting their arrears up to handover date. They must hand over any bank surplus to the new RTM Company, however if the account is in arrears it is for the outgoing managing agent to collect the arrears, not the RTM Co, unless the RTM Co agrees to collect them 'on their behalf'. Our outgoing managing agent tried to tell us that the RTM Company owed them the 20k of arrears they had built up - WRONG - it's not our fault they were rubbish at debt collection. The RTM Co starts at zero. It's a fresh start. The outgoing managing agent should have ensured their accounts were up to date.

            Note if they start to collect their arrears after handover and there becomes a bank surplus - it gets handed over to the RTM.

            Ensure they send you an accurate breakdown of accounts so you know when they should start paying it to you.

            You can, if you all agree, take on the debts and collect the arrears as a separate matter through debt collection, you're effectivevely acting as the old managing agent's debt collection agent however,


              This guide may help to understand the handover to RTM :



                Thank you everyone for your input.

                My concern is that all the flat's should have contributed the same amount. Because in the last accounting periods not all the flats paid the full amount (one paid nothing), the managing agent overspent and took it out of the reserve fund instead, so these monies that are owed should be in the reserve fund.

                If we offer to "collect" them for the landlord then they will go into the reserve fund and in theory everyone should be happy. However if the person concerned then refuses to pay them, then are we responsible suddenly for debt collection of these funds? Is this a one-way street? If we can't collect them, then can we just go back to the freeholder and say "can't recover them, you need to sort it out"? This is the part I don't get.

                Probably I should just get the agreement of the non-paying leaseholder (and RTM member) concerned that they are OK with us collecting them and that they will be paid before taking them on.

                The alternative that was suggested of issuing refunds to the lessees that have paid in and then issuing new charges for reserve fund contributions I would prefer not to do as I want to maximise the reserve fund at this point as we have works that need doing. (nothing has been done for years!)



                  You don't have to issue refunds , you produce a RTM budget to include new reserve funds and those who paid to previous agent , you give credit from the handover money on their service charge bill.


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