Management company problem

cherryblossomzel

I own a flat in a converted building with 7 flats in total. It is a shared freehold. When I moved in, the owner of one of the other flats had taken over responsibility of managing the management company finances etc. I've just discovered that the management company was dissolved by companies house. I don't know why, I assume it's because he didn't file returns on time. I also assume we don't have active buildings insurance now which is if course a big concern. 

The guy who had taken responsibility for this is claiming that he doesn't know what the problem is, and he will sort it out, but I don't want to just trust that he will get on with it. To be clear I don't think that he is guilty of any deliberate mismanagement, just ineptitude. This is partly everyone's fault as all the other owners just left him to get on with it, but I do wish that he'd have just said that he needed help ☹

Any advice on what steps will need to be taken? 

pinkshoes

Ask him if he would like help, arrange a meeting between the two of you, then sort it out?

gwynlas

You are correct in that it is presumably a case of accounts not being filed. There is often a problem with small management projects that freeholders do noy want to take on the role of directors and at least two are generally needed. It is in all of your interests to resurrect the company to manage your assests and joint responsibilities. You should at the minimum convene a general meeting to discuss whether to retain building management in house or appoint an external agent either way you need working directors. The building needs to be insured and you need to decide whether you all contribute to a sinking fund to manage communal areas and pay for repairs and on going maintenance such as painting etc. At these times of increasing costs for everyone my suggestions will be unpopular but what happens when somebody tries to sell their flat regarding management packs and accounts?

TripleH

Did the limited company own the freehold?

Did it have a bank account?

Or was it setup to just sort buildings insurance and repairs?

If the latter, it might just be easier to setup a new limited company.

cherryblossomzel

TripleH said:

Did the limited company own the freehold?

Did it have a bank account?

Or was it setup to just sort buildings insurance and repairs?

If the latter, it might just be easier to setup a new limited company.

Embarrassingly I am now not sure if it owned the freehold. I'll have to go check my certificate. I think it did, actually. It definitely had a bank account.

The chap assures me that he will call Companies House tomorrow. I think I'm going to have to chase him repeatedly to do this.

An then just become a director myself so I don't have to trust that someone else will do it. May look at how much it will cost to just pay some property management company to deal with it for us.

gwynlas

Be very cautious about engaging an external properrty company, the larger i.e. national ones are mostly faceless businesses who appear to do the minimum whilst still charging a lot. I have had good experiences with a small company local to the area who grew their business and took interest in their leaseholders and built up a reputation with individual trades for maintenance issues etc. Perhaps you can seek recommendations from others in a similar situation to yourselves. 

cherryblossomzel

gwynlas said:

Be very cautious about engaging an external properrty company, the larger i.e. national ones are mostly faceless businesses who appear to do the minimum whilst still charging a lot. I have had good experiences with a small company local to the area who grew their business and took interest in their leaseholders and built up a reputation with individual trades for maintenance issues etc. Perhaps you can seek recommendations from others in a similar situation to yourselves. 

Thanks, that's helpful. I'll see what the options are. Most of the other shareholders do not live in the property, so I assume that they are investors. It may be that one of them has a good contact. Might be worth asking

TripleH

If the limited company owned the freehold, you need to get it resurrected as the state now owns your freehold.

Harsh but I don't think you can force the person who managed the company to pay to do this. A company being struck off by Compsnies House not a quick process and it will be said that all directors had a responsibility to avoid this happening.

It may be that you need to take full or joint control alongside this other person to avoid it happening again, hut you need to contact all shareholders and Directors to advise this has happened and there will be a bill to pay.

cherryblossomzel

TripleH said:

... and it will be said that all directors had a responsibility to avoid this happening.

Him and his wife were the only directors. When I moved in he made a point of telling me how the previous director, another shareholder, did a poor job of managing it and he decided to take over. And then did a poor job of it himself. That said, if it eases the process of getting this sorted out I may just swallow my share of the cost

TripleH

Ah, then if you are not a director then you can quite reasonably ask he pay because the company being struck off is his fault (he would have had several warnings).

Sorry, its usually the case that all shareholders become directors in companies like this. As a Shareholder you can ask to be a director as well.

eddddy

cherryblossomzel said:

I also assume we don't have active buildings insurance now which is if course a big concern. 

Getting buildings insurance arranged is probably the top priority. (The Crown probably owns the building at the moment, but you have an insurable interest. So you should discuss options with a broker.)

Obviously, it's a remote possibility, but if the building burns down, it could cost tens of thousands or hundreds of thousands to rebuild - and you and your neighbours probably don't have the funds to pay for that.