Standard vs Special Conditions of Sale

Kyresa

1st_time_buyer said:

Thanks for everyone's response so far.

Turns out the management company is limited by guarantee, not by shares. Therefore freeholders on the estate will not become members/shareholders. Is this a normal setup?

If it's limited by shares you usually become a shareholder... 
If it's limited by guarantee you usually become a member... 

1st_time_buyer

Kyresa said:

1st_time_buyer said:

Thanks for everyone's response so far.

Turns out the management company is limited by guarantee, not by shares. Therefore freeholders on the estate will not become members/shareholders. Is this a normal setup?

If it's limited by shares you usually become a shareholder... 
If it's limited by guarantee you usually become a member... 

Thanks for this answer - this simple explanation has gone a long way to my understanding; my knowledge of businesses/companies isn't very strong!

It's good to know, that as a Member, there will be some connection to the management company by way of voting rights etc - seems legit after all.

AdrianC

1st_time_buyer said:

Background: I'm a first time buyer, new build, freehold house, small developer, Help to Buy equity loan. Have received the contract and made enquiries back to conveyancer - they don't seem very responsive and I don't find them entirely helpful. I know they have lots to do, but I have a busy job too and am managing to respond to anything asked from me pretty swiftly.

Lemme guess... The developer "recommended" your solicitor, and maybe even gave you a load of scare stories as to why the world would be an awful place if you actually dared to use somebody else...?

NewShadow

If the freeholders are not going to be part of the Management Company - then I would want to know what power/route I would have as a resident owner to challenge/object to inadequate management and future cost increases. 

The letter you quoted stated 'Two homeowners will be required to become directors' - have you clarified the content of this letter and how these/any directors would be selected?

Sachs

1st_time_buyer said:

Initially, I was advised that homeowners would be elected/offered to become directors of the management company, although I've very recently found out that this information is incorrect. Seems like quite an oversight on the conveyancer's part.

So it appears that us homeowners cannot become a director. Directorship remains solely with the developers. The managing agent they have appointed to look after the estate is a company limited by shares, one of the joint shareholders being the developer.

With this kind of set up, would that mean that the managing agent could increase their fees (because why not?), and the homeowners can do nothing about it? Even if unhappy with the service of the managing agent, homeowners wouldn't have the power to sack them, as surely this could only be done by the directors? And why would they want to essentially sack the company they're employing, when they have a financial interest?

Perhaps I'm reading too much into it, so apologies if these are unnecessary questions. It might be absolutely legitimate, as why would they risk doing something which could be so damaging to their reputation? Of course, I would love to have these answered by the conveyancer, but they've taken 3 weeks to reveal this small snippet of information and my faith in them is waning!

Yes, it sounds like you will have no control over the service charge you pay or the quality of the work undertaken in the estate. You will likely be legally obliged to pay the service charge at whatever rate they choose unless you're prepared to take them to court.