Bank account needed for service charge monies

richard6868

I need to open a bank account to hold the service charge funds for a block of flats.  The account needs to be compatible with Section 42 of the Landlord and Tenant Act.

None of the banks I have tried have any idea what I am talking about and I cannot find a single one if I search on Google.

There are thousands of blocks of flats in the UK so I ask where are they depositing their money?

Can anyone help me jump over this hurdle?

jonesMUFCforever

1 A club/society account or 2 a Bank business account.
I think the S42 is to do more with who can sign and make withdrawals on the account rather than the account itself.
Why would any bank know what S42 is? It is up to you to tell them your requirements.

Thrugelmir

The funds need to be held in a trust account. What's your legal status, have you formed a management company? 

richard6868

Yes, we have been a residential management company for 37 years.  We have a business bank account which is not held in trust.

jonesMUFCforever

richard6868 said:

Yes, we have been a residential management company for 37 years.  We have a business bank account which is not held in trust.

It should therefore be reasonably easy for the account to be retitled as soon as you have drafted and signed the trust agreement.
You will probably have to get a new bank mandate signed to go with the trust deed.

richard6868

I would have thought that if thousands of prospective clients were asking for this (as thousands must have done already), the banks would know what S42 of the L&T Act was.  I cannot explain to them precisely what type of account is the right one because I have no knowledge of banking.  If I suggest different types of account, the answer is always 'no' because I do not know what's on offer or precisely what to ask for.  It's all hit and miss, trial and error and I am getting nowhere so far.

jonesMUFCforever

If you have had a business account for 37 years you have the right type of account. There is no special accounts for S42.
Business accounts can be opened for any legitimate purpose but banks do not have knowledge about every legislative law regarding business law.
You did not respond to whether you already have a trust or something that somebody has told you that you need going forward.
My suggestion - see a solicitor who will put you right with the legalities then approach your bankers to either do as I posted earlier - change the title of the account with all account details remaining the same or opening a brand new business account.

richard6868

To open a club/society account, you have to form a club/society with a constitution and committee with some officers.  We are a not-for-profit company with a board of 2 directors and articles of association so count as a business, it would seem, rather than a club or society.

jonesMUFCforever

richard6868 said:

To open a club/society account, you have to form a club/society with a constitution and committee with some officers.  We are a not-for-profit company with a board of 2 directors and articles of association so count as a business, it would seem, rather than a club or society.

Yes I agree - same principle as my other posts.

richard6868

Are you saying we have to set ourselves up as an actual trust?
My understanding was that 'a trust' with a board of trustees and money being held 'in trust' are two completely different things.
Also, I do not want to retitle the company's bank account: the company continues to need its own bank account separate from the service charges.  The company and the service charges have separate sets of annual accounts and need separate bank accounts.

richard6868

Also, banks seem to know all about statutory periodic tenancy deposit protection where the money is kept at arms' length from the landlord's own funds which is a similar principle.