£12,000 missing Property management company

superflygal

Hi all,


My BF lives in an apartment in a converted period home. Another homeowner in the same building noticed that £12,000 was missing from the accounts. He and my BF challenged one of the resident Directors who gave ambiguous replies and said it was a 'paper error' without providing evidence as to where this error lies.


Meanwhile, my BF has been given a bill for £220 as the service charges were undercharged according to the Directors.


I wondered if anyone knows:


How to go about a challenge regarding the missing £12,000 and how to instigate an investigation to demonstrate where this money is?


Can my BF withhold the £220 until the missing £12,000 is recovered/explained?


The resident meetings that should take place several times a year do not take place as often as agreed, and when this is raised as an issue with the two Directors, they simply say the meetings are not needed.


No minutes are provided for meetings to residents and very little information is disclosed. The information that is provided is generally ambiguous and sketchy.


Is it generally acceptable to write a letter of complaint to both Directors and the Property management company raising these concerns and requesting information and answers?


My boyfriend has been in an ongoing dispute by text message with one Director, whereby he has raised the issue of the missing £12,000 and stated he didn't want to pay the £220 until the missing £12,000 was located. The Director became threatening in response and told my BF if he didn't pay the £220, they would sue him and charge him legal costs.




Thanks for reading!


Any advice would be most welcome.


SFG x

jammerr

Hi,

Is your boyfriend a renter or homeowner? Usually a renter has little say in these matters though guessing owner as he has a bill.

You can write to the managment co for the full accounts from the year last/year. You should be recieving these anyway. I would pay the £220. Under/overcharging happens fairly often though £220 is quite an oversight. Again, he can find out why there has been overcharge from the management co.

I don't think directors have to provide minutes to lesees as there can be private info. Though they should be having an AGM once a year at least where residents can meet with directors/managment co to provide feedback.

If you are not happy with directors you could always apply to be on the board by wiriting to the management co. Each homeowner should get a 'vote' at the AGM where they can vote you in either by proxy or there themselves. Again, the management co. can advise on this.

Yor first port of call should be the accounts though and you and someone else should look through these. Any concerns you can address with the directors and/or managment co.

00ec25

until your BF understands his legal position he won't know what he can do so your BF's first action should be to get out his lease and read the section explaining how the leaseholders appoint the management company and its directors, since your BF is a "customer" of the company and possibly also a shareholder of it

then your BF has some concrete knowledge on which to approach the management company with demands

depending on who owns the management company they certainly have the power to appoint directors and probably remove directors against the latter's will. It all comes down to whatever rules apply to the management company and at the moment your BF has no idea what those are

for example, assuming the leaseholders are shareholders of the management company, they may well have the right per the company's articles of association to demand an independent audit is performed of the company accounts. Naturally that will cost the company (and so ultimately your BF) money, but it would be the most certain method of confirming if there is an error on the accounts. The basis of any error would be identified as part of the audit and , if applicable, the auditor could then recommend whether fraud had taken place and what the next course of action should be, for example, ultimately reporting to the police.

Jenniefour

He needs to pay the service charge.

Is this a set up where the leaseholders/residents in the converted house run their own internal management committee? Or is there an external company involved?

AlexMac

The simple answer is that you have every right to require answers, but do some homework first,

Do as posts #3 and #4 say, but note that you should not confuse the "Freeholder" with the "Management Company".

The two might be one and the same; in other words, the Freeholder (who owns the building, and is usually organised as a Freehold Company) might manage the property themselves; or the Freeholder or Freehold Company might delegate this work (collecting Service Charges, insuring and maintaining the building, preparing Accounts and submitting Accounts and Annual Returns to Companies House...) to a third party Mangement Company, usually for a fee.

Assuming your BF is a "Leaseholder", start with the lease which he would have been given by his solicitor when he bought the flat, and first clarify the legal status;
- who the freeholder is (e.g who is the building owned by; some remote third party, or is it owned by one or more of the residents or is effectively a shared freehold, jointly owned by all of the leaseholders (sometimes leaseholders, confusingly, are referred to as "Tenants" in Leases)
-if the latter; is your BF a Member, or shareholder or even potentially as Director of the Freehold Company?
- What, if anything, does the lease say about numbers of/selection of Directors; in effect- who controls the Company?

If that's not clear in the lease, is there anything in the Conveyancing Pack from his Solicitor like a copy of the Company's "Articles of Association", "Incorporation", "Rules" or "Memorandum & Articles (Mem & Arts)" which should clarify these arrangements?

Also, look up the Freehold Company on the Companies House Website; (Google the Company Name and Companies House) this will let you look at whether Statutory Accounts are being filed as they should be, who the Directors are and (if it's anything like the last three shared freeholds I've owned) may also have a downloadable PDF of the Mem & Arts or Incorporation document; the Company rules.

Note also that Companies House does not require independent audits for small Freehold Companies or Freehols Management Companies; I've done these Accounts myself as an amateur and filed them online with Companies House as Treasurer for my last two shared Freeholds, where we saved money by taking a DIY approach. Assuming the Company has been filing Accounts, these may just be a few lines of summary, so not much help, however,

A lot depends on trust, and your BF has to live with the Freeholder or the Directors of the Freehold Company. But if there really is 12 grand missing, that's a criminal offence; google Company Fraud, Misappropriation, etc.

But it might me more innocent than that, so do ask questions courteously, albeit formally in writing, before using words like Complaint or Crime. It might be that, even if it is a Shared Freehold, the few active Director(s) have been left to do all the work themselves for years and will resent a gobby newbie trying to rock the boat!

mailmannz

You need to get your bf to speak to the person who thought they noticed money missing to get them to double check and then double check again!

Could be the person your bf was speaking to doesn't actually know what the heck he is on about?

Secondly, who is the management company? If you are dealing with a Resident Director its quite possible they have outsourced the running of the estate to an outside estate management company. Usually talking to them directly is much better than going through the Resident Director.

It could very well be that the estate was under charged previously, which they then have every right to come back to recover that under charge.

But yeah, just double check everything. If there is an outside estate management company involved then deal directly with them instead.

Regards

Mailman