Can other shared freeholders set up management company without my consent?

rhunt1062

I own a flat with a share of freehold in a block of three flats. We are currently in dispute about funding maintenance works to the property and unfortunately it's getting nasty. One of the other freeholders is chucking about legal threats, including the following paragraph:

" One of those options is for the majority, in this case two thirds, of the leaseholders to setup a right-to-manage company under the Commonhold and Leasehold Reform Act 2002. There are several other routes but you should be aware that in each, impetus usually lies with the majority."

Is this true or is he talking crap? Anyone with legal knowledge please help!

AdrianC

Short answer: Yes.
http://en.wikipedia.org/wiki/Right_to_Manage#What_is_the_Qualification_for_Right_to_Manage.3F

From your question, it's 2:1, and you're the odd one out?

Perhaps if you outlined the situation, some advice might help you defuse it?

rhunt1062

But I would still have the right to be represented on that management company, surely, as a freeholder/leaseholder?

The issue is that after many years of a very relaxed attitude to the shared freehold, one sold up and a new guy moved in. He has come up with a list of repairs, all of which affect his property. I suggested that it might be fairer to get a survey done of the entire property to help us identify and prioritise works across the entire block. He refused. I therefore went ahead and got a survey done on my property, identified a number of areas which ought to receive our attention as freeholders in addition to his jobs and got costs for them. He doesn't like that, only wants to pay for the jobs he has identified affecting his flat. I have offered the option that he fixes his issues, I fix mine (which far outweigh his in cost terms), but he insists I must pay for these jobs and is now threatening legal action.

The third freeholder is trying to keep well out of it (don't blame her) but he's a bully and would probably get her on side if needs be.

I am not really sure how to resolve this but I want to understand the legal position if the right to manage issue goes ahead and whether I still have representation on that company.

AdrianC

So the three of you own a third each of the shares in the freehold?

You both need to remember that you each have two hats. You have a hat as a leaseholder, and you have a hat as a shareholder in the freehold. With his freehold hat on, your new neighbour has one-third of the say in the management of the block, as do you with yours on. With your leaseholder hats on, you both have a list of gripes and problems you need the freeholder to address.

RTM is intended to replace an absent or ineffective freeholder with an active management. You already have that active, effective management. He merely disagrees with the way it's being managed. Such is his right, but that management has to treat all leaseholders equitably, and has to address the property as a whole, not just individual slices. If the "very relaxed attitude" has led to a backlog of maintenance and repairs, then he's probably doing you all a favour in the long run by bringing it to a head.

In the mean time, though, he's proving the old adage about a little knowledge, and trying to solve the wrong problem. The freehold company needs to get a survey done of the whole property, and hold a formal meeting of the freehold company to discuss the way forward. Treating the individual properties separately is just playing his game, instead of the one you should be playing. The freeholder doesn't have any "your jobs" or "his jobs", but has a lot of "our jobs".

One way or another, you've probably got an expensive few years ahead, but should going to all end up with a better property at the end - or you can let it go legal, be just as expensive, and get nothing out of it but animosity...

G_M

As said, with your freeholder hat you have a 1/3rd vote. If the other 2 collude, they can outvote you. On the other hand, since you have reason on your side, surely you can persuade the 3rd freeholder to vote with you?

With your leaseholder hat, of course, you can demand that the freeholder comply with their responsibility under your lease. If they do not, you can go to court (still as leaseholder) and get a court to order the freeholder to comply with their obligations (irrespective of how the 3 of you vote with your freeholder hats on).

stator

Have you seen this website?
http://www.lease-advice.org/publications/documents/document.asp?item=21

The Notice Inviting Participation All qualifying leaseholders are entitled to become members of the RTM company; no-one may be excluded for any reason. This is not a matter of choice - the legislation opens the membership to all qualifying leaseholders.
It is also important to remember that, once the right to manage has been acquired, the landlord is also entitled to membership of the company.
The Notice Inviting Participation must be in writing and in the prescribed form and must be served on all qualifying leaseholders who are not, at the time of service, members of the RTM company or who have not already agreed to be members. It must:

• state that the RTM company intends to acquire the right to manage;
• state the names of the members of the RTM company;
• invite the recipient to become a member of the RTM company;
• provide other information required by regulations:
  • the RTM company's registered number and the address of its registered office;
  • the names of its directors and, if applicable, the secretary;
  • the name of the landlord, plus the name of any other person who is party to the lease other than the leaseholders.

rhunt1062

Thanks for all the input, very helpful. I want to try to sell the property next year so the key is getting through this disagreement. I have already suggested to the other freeholders that once I sell they create a lot more structure around the freehold management. And from the beginning I suggested a full survey of the entire building to create a schedule of agreed works and cost. So I feel like I have done the right thing and it's not getting me anywhere.

Does anyone know how long it would take for him to move forward with Right to Manage?

I'm also concerned that when I come to sell he won't agree to sign over the lease to a new freeholder, although I guess he'll be keen to get rid of me and get a potentially more malleable person.