Resident Management Company - Share Certificate Question

westv

Hello,
I'm currently going through with the purchase of a flat but there are a few questions that remain unresolved.

My question relates to the share certificate for the vendor's part of the resident run management company. The one provided to my solicitor by them is still in the name of the previous owner. My solicitor has asked for a new one to be drawn up in the name of the current owner so that it can then be transferred to me.

My question is this. How important is it that the share certificate is transferred to the current owner before being transferred to me? Is my solicitor just doing it for technical reasons or is it more than that? I'm assuming the share certificate can't just be transferred from the previous owner directly to me. Or can it? Can the management company not just issue me with a new share certificate?

Really I would like to know if I should be asking my solicitor to leave it and get it sorted out later or if I should accept their wiser judgement.

Edit: My solicitor is also still waiting to see sight of the management company memorandum and articles of association

Richard_Webster

Most residents management company memoranda and articles will allow the directors to issue a new certificate to anyone who owns a flat in the development. The people who run such companies don't necessarily know that and so may want the whole performance of transfer to the present seller and then to OP.

The practical problem will be for the solicitors involved to get through to those running the company that they (probably) can issue a new share certificate direct to OP.

westv

Richard_Webster wrote: »

Most residents management company memoranda and articles will allow the directors to issue a new certificate to anyone who owns a flat in the development. The people who run such companies don't necessarily know that and so may want the whole performance of transfer to the present seller and then to OP.

The practical problem will be for the solicitors involved to get through to those running the company that they (probably) can issue a new share certificate direct to OP.

This may seem a really silly question but does the share certificate have any real value? I mean does it really matter if it's not currently in the right name? Clearly the vendor's solicitors when he purchased didn't think it did!

G_M

Well clealry if you do not own a share in the company you have no say in how the company is run. The whole point about these owner-run companies is that the owners, who live there (unless they are BTL landlords) decide themselves what needs maintaining, when to do it, what contractors to employ, how much to pay them and how much to charge each other to cover the cost.

No share - no say.

westv

Isn't the share certificate just a technical piece of paper? Surely owning the property is the legal confirmation that the owner is a member of the management company? It's not like a "proper" share certificate that has real worth is it?

G_M

The Mgnmt Co.(if properly constituted) is a legal entity (prob a Ltd Co.), with Directors, Treasurer and audited annual accounts.

Shareholders have votes. Non-shareholders do not.

You may be right that in practice it is run informally, and if you turn up to a meeting and say "I own flat 32" they will let you vote, but if there are disagreements and people get formal, you'll have no vote.

westv

G_M wrote: »

The Mgnmt Co.(if properly constituted) is a legal entity (prob a Ltd Co.), with Directors, Treasurer and audited annual accounts.

Shareholders have votes. Non-shareholders do not.

You may be right that in practice it is run informally, and if you turn up to a meeting and say "I own flat 32" they will let you vote, but if there are disagreements and people get formal, you'll have no vote.

The management company is a legal entity and files annual accounts with the relevant people.

westv

Just to add that this question has taken almost 7 weeks so far and and there's still no sign of a resolution! :wall:

G_M

westv wrote: »

Just to add that this question has taken almost 7 weeks so far and and there's still no sign of a resolution! :wall:

As Richard says above, the trouble with these flat-owner owned Mgmt Cos is that they are amateurs, so don't really understand how things work.

The plus side is that they have lower running costs (so lower service charges usually) and more control than a professional managemnt company or professional Freeholder.

westv

G_M wrote: »

As Richard says above, the trouble with these flat-owner owned Mgmt Cos is that they are amateurs, so don't really understand how things work.

The plus side is that they have lower running costs (so lower service charges usually) and more control than a professional managemnt company or professional Freeholder.

Well I blame the vendor's solicitors for not sorting it out properly when he bought the place!

hanwellmike

I agree with waht G_M has said. The certificate is important. I own a leasehold flat with share of freehold and the Landlord is the Limited Company co-owned by all us Residents (via our shares). As G_M says, no share, no voice.
In our rules, the share certificate has to be transferred within 1 month of the sale. So the transfer occurs after the sale and does not get in the way of the sale.
It may be worth asking now how the flats are being run, given the apparent poor performance so far in sorting out this administrative problem. Are they using a solicitor to handle the issue of shares or are the Residents doing this themselves.