Management Company - Service Charge Agreement

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    Management Company - Service Charge Agreement

    Hi All,

    This post could be in the wrong section or even the wrong website for that matter, if so perhaps you could point me in the right direction.

    I moved into a new house about six months ago in a development of 9 houses. We have all become shareholders of the management company and are diligently running it ourselves. We have appointed accountants, opened a bank account and have just finalised our budget for the next year.

    Now we have our budget agree'd we now know what the service charge will be for each unit per year. We want each house to sign a document agreeing to pay the service charge and that they are happy how it will be spent.

    How do you best advise we construct such a document? Would any of you have a template I could use?

    Many Thanks
    Simon

    #2
    Should be in this forum: http://www.landlordzone.co.uk/forums...cing-Questions. I expect someone will move it.

    Not really wise to go for DIY on this. You need to cover all the angles, have regard to the constitution of the company and what the conveyancing documents say. The document needs to be tightly drawn and in such a way as to ensure that no one sells without imposing an obligation on the purchaser to be bound by the obligations.

    Comment


      #3
      Originally posted by simonjohnson View Post

      I moved into a new house about six months ago in a development of 9 houses. ...........
      How do you best advise we construct such a document? Would any of you have a template I could use?

      Many Thanks
      Simon
      Are your houses freehold or long leases?

      I ask as there are specific procedures to be followed for accounting and managing expenses/works for leasehold houses.

      Either the lease or in the case of the hose the estate rent clause or the deed of covenant setting out the obligation to pay is the document that requires payment,and on which you pay.

      In both cases the calculation share and timing of when demands are issued, and in the case of leasehold the statutory information requited to go in and with demands must be followed if they are to be enforced if unpaid.

      So if you wanted to enter into agreement between the ManCo and each owner, it would have to be specifically drafted to ensure it did not conflict with, or be over-ridden by the title, and obligations therein, to the property and the legislation that surrounds it.

      So, no

      But do reply to the freehold/ leasehold question as if the latter there are a number of hoops to jump through.
      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


        #4
        Morning Guys,

        I appreciate the feedback. The development is made up of six freehold properties and three leasehold properties (999Yr Lease).

        I am a leaseholder and have a fairly lengthly lease document which outlines the rules and reg's of living in the development, i have asked for one of the freeholders to have a look to see if they have something similar. They mentioned they have a covenant or something similar outlining the same rules.

        While im all for the spirit of DIY, im no legal expert and if you guys reckon employing someones services for a modest fee would be money well spent them im all for it.

        Am i right in thinking that if the lease agreement etc documents state that the service charge is £100.00 a year (not confirmed) then we will struggle to collect £400/year which is what we feel we need to collect from each unit to establish a "slush fund" for the long term stability of the company.

        Thank you.

        Comment


          #5
          If there are six freehold and three leasehold that complicates things further. It needs someone to look at all the titles. It is quite possible that what you have is adequate.

          It is important to bear in mind that tying everything up legally is no guarantee that everyone will comply with their obligations. If someone fails to comply with his obligations it is all very well having well-drafted documentation, but quite another enforcing the obligations since that involves not only time but expense. In practice ad hoc arrangements can work quite well, though the more properties involved the better it is to have everything set out nicely - ideally that should all be done by the developer (or rather their conveyancer) and not left to the owners to sort out.

          Up to a point the same sort of documentation should apply whether the development consists of three properties or a hundred, but in practice you do not want to get carried away. The arrangements need to be tailored to take account of not only the number of properties involved, but also how much maintenance is involved and the likely level of expenditure.

          Comment

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