Block of flats: Management company, directors and the mess thereof

sudhirtz

We are a block of flats where we equally share the freehold.  A Ltd company was set up to manage the affairs of the block of flats and each flat has an equal share in this company.  We have a property management company to oversee the collection of service charges and look after cleanliness etc.

Only 30% of the owners live in the block of flats while the other 70% are absentee landlords.  Most of the absentee landlords couldn't care less about how the block of flats is run as they are receiving rent on a timely basis. 

50% of the owners are directors of the ltd company.  Only 20% live on the property.

The management company and the directors do whatever they want without informing the other shareholders and totally ignore one of the directors because of queries raised regarding expenses and the shabbiness of services provided.

Could anyone advise what could be done to overcome this horrible situation?

Thank you.

Report

AlexMac

While you await responses, RTFM (google RTFM- then look at the reams of context and helpful advice at)

https://companieshouse.blog.gov.uk/2020/11/12/becoming-a-director-or-member-of-a-residents-management-company/

“… All directors owe duties to their company to conduct themselves in a certain way.

In the context of freehold companies, it’s particularly important to bear in mind your duty to act in a way which ‘promotes the success of the company for the benefit of its members as a whole’. This requires you to consider the long-term impact of any decision you take, and the way it will affect the owners of other flats in your building, As a director, you're responsible for policing and enforcing these obligations if a leaseholder is not complying with the lease.

As a director of the management company, you should familiarise yourself with what the leases say….”

And the follow up blog about disputes and problems  at

https://companieshouse.blog.gov.uk/2020/11/17/freehold-management-companies-making-decisions-and-managing-disputes/

“…If you are still unhappy with a decision of the board, as a last resort there are various legal claims you might make against the company in your capacity as a member, or steps you might take to attempt to remove directors from their post…

but 

… in most cases, disputes are best resolved through private discussion to achieve an amicable resolution.

The lines can become blurred where the leaseholders involved in a private dispute are also directors of the company. In such circumstances, you should avoid using a board meeting as an arena for airing a private dispute….”

But bad luck in having 4r53holes as co-directors;  good luck with the resolution.  In my past three shared freeholds we've really worked at maintaining good relationships... and generally succeeded

 

princeofpounds

sudhirtz said:

We are a block of flats where we equally share the freehold.  A Ltd company was set up to manage the affairs of the block of flats and each flat has an equal share in this company.  We have a property management company to oversee the collection of service charges and look after cleanliness etc.

Only 30% of the owners live in the block of flats while the other 70% are absentee landlords.  Most of the absentee landlords couldn't care less about how the block of flats is run as they are receiving rent on a timely basis. 

50% of the owners are directors of the ltd company.  Only 20% live on the property.

The management company and the directors do whatever they want without informing the other shareholders and totally ignore one of the directors because of queries raised regarding expenses and the shabbiness of services provided.

Could anyone advise what could be done to overcome this horrible situation?

Thank you.

Report

You will basically need a majority of either the Directors and/or the shareholders to effect change. Do you think you have that?

sudhirtz

Thanks so much for your response. 

The Directors do as they want.  They get their houses fumigated at our expense (you hear of how rats came out and greeted their tenants in the common areas).  You have them pay for their out-of-town Dad's trips to visit them by saying he was required to fix something.  We have topped up their income by paying them for gardening work although we had a gardening contractor. 

While we were abroad and had a tenant and she used to get waylaid by a director who lives below because the director couldn't bear the "noise" from our flat.  This was "caused" by a toddler who had just learned to walk!  We were not aware of this and the tenant left after 6 months.  All this was aided and abated by the management company who kept on harassing her with letters.  She was "after all" a single mother who was of Eastern European origin.

Wife became a director so she could control expenses and get some sort of decent services for what we have paid.  Now they pass the budget without informing her because they "forgot" to inform her about the budget.  It was decided that she receive a copy of the bank statements but they stopped sending it to her.

We do not have the money to hire a lawyer to fight this.

How else can we put a stop to this?

Thank you

eddddy

sudhirtz said:

The Directors do as they want.  They get their houses fumigated at our expense (you hear of how rats came out and greeted their tenants in the common areas).  You have them pay for their out-of-town Dad's trips to visit them by saying he was required to fix something.  We have topped up their income by paying them for gardening work although we had a gardening contractor. 

Presumably, you are a leaseholder (as well as a joint freeholder) - there is a stack of legislation to protect leaseholders.

• Presumably these costs are being correctly demanded as Service Charges. (If they're not being correctly demanded as Service Charges, you probably don't have to pay them.)

• Ask the freeholders which clause in your lease allows them to include the cost of fumigation of their houses in your Service Charge? (It's unlikely that there is any such clause.) If there is no such clause, suggest that they cancel the charge or you will challenge it at tribunal

• If a local handyman could have fixed something more cheaply than an out-of-town dad, tell the freeholders that their charge is not reasonable. Offer to pay them a share of what a local handyman would charge instead, if they won't accept it, say you will challenge it at tribunal

• If the charge for gardening is not reasonable, propose a reasonable fee to the freeholders, and offer to pay your share of it. If they won't accept it, say you will challenge their charge at tribunal.  ('Reasonable' might mean what a local gardener would charge for doing a 'reasonable' amount of gardening - assuming your lease says you have to contribute to the cost of gardening.)

Some more info: https://www.lease-advice.org/advice-guide/service-charges-other-issues/

princeofpounds

sudhirtz said:

We do not have the money to hire a lawyer to fight this.

How else can we put a stop to this?

Thank you

It would help if you actually answered the question about the numbers involved both at Director level and shareholder level.