Disorganised management company

Vbking7

We own a house that is part of a small development.  The house is leasehold, with the freehold owned by the management company, which all property owners are directors of.

It quickly became clear that there was not much activity from the management company, so I tried to do my bit by taking on the treasurer role, organised regular maintenance to the grounds, tried to facilitate meetings etc.  Despite my best efforts it's fair to say I am not making much progress.  Recent examples of apathy include not getting any response when I issued our annual accounts and people seemingly unwilling to make themselves available for an AGM (or any other meeting).

There are some pressing issue that need discussing, like reviewing the level of the service charge given the impact of current levels of inflation on our costs, and some capital works that need to be done, but without any engagement or clear decision making process I am uncertain how I can move things forward.

Until now I have tried to conduct things cordially in the hope that with a bit of encouragement people would start to engage but given the lack of success to date I am exploring what other, more formal options, might be available to get owners to fulfil their responsibilities.

Has anyone had to deal with a similar situation or is able to share any insights on potential routes to look at?

Thanks in advance.

Brie

Do you mean that the land the house is on is leasehold?

What are you doing with regards to maintenance?  Do you mean you are hiring someone to cut the grass etc on the common areas?  How is this being paid for?

I can't imagine any management company will engage at any point if they don't need to do things because you're doing them instead.  But they will still want their monthly/annual payments.   The only way I can see to force action on their part is to get everyone to agree not to pay them until they do their bit according to what is in the leasehold agreements.

eddddy

Vbking7 said:

There are some pressing issue that need discussing, like reviewing the level of the service charge given the impact of current levels of inflation on our costs, and some capital works that need to be done, but without any engagement or clear decision making process I am uncertain how I can move things forward.

I know this isn't the fundamental question you're asking, but...

A management company wouldn't normally "review" the level of service charge, as such. Normally, they would prepare a budget (or estimate) at the start of the year. 

The budget (or estimate) would be based on a list of things the lease says the freeholder must do. There shouldn't need to be any discussion about what goes on the list - the leases should tell you that.

So maybe you could just prepare the budget, and send out the bills - if nobody else is interested. (But I can understand that maybe you don't want to have to do all that work!)


The list might look something like this:

• Weekly Grass cutting £750
• Tree Pruning £500
• Footpath repairs £1200
• Replace broken sign £200
• etc, etc

Then add up the total - then divide the total between the leaseholders (according to the leases). And then send out service charge bills. (The leases probably specify when in the year to do this, etc.)



And more generally, if you get 10 leaseholders in a meeting, and you ask them their opinion on what repairs and maintenance should be done - you're likely to get 11 different opinions.

It's probably much more efficient to just send out the bills with your list - and see if anyone challenges anything on the list.

Vbking7

Many thanks for your responses.  To add some clarification, we're not paying a third party management company to take care of the site on our behalf.  The owner of each property is also a director of the management company, so the property owners (leaseholders) and the management company are the same group of people.  Each leaseholder pays an annual charge to the management company which provides the budget for maintenance etc.

I think you may be right about sending out bills based on estimates for the year and seeing if anyone challenges, and I will re-familiarise myself with the lease to see what it covers.  What concerns me is if people did not then pay and action needed to be taken that would be quite a significant escalation, but if these are obligations then they need to be met.

Where I feel less clear concerns works that don't obviously fall into the maintenance category - things which could be seen more as adding or improving an amenity, for example preparation of the communal parking area for electric vehicles or reorganising the car park to improve ingress/egress for larger modern vehicles.  These are areas where there may not be unanimous agreement but the lack of agreed decision making process and what constitutes a quorum makes it challenging for any progress to be made at all.

Brie

Well in those circumstances it looks like you can pretty much do as you please as long as everyone coughs up.  The problem will be if/when someone decides not to pay.   

As for major works I guess they simply won't happen.  Things will tick along until someone gets a right bee in their bonnet and then they will do all the heavy lifting.

eddddy

Vbking7 said:

What concerns me is if people did not then pay and action needed to be taken that would be quite a significant escalation, but if these are obligations then they need to be met.

That's part of the challenges a company has to face up to. 

You'd have to follow standard debt enforcement procedures... for example:

• Reminder letters - potentially with a fee added to the non-payer's bill for each letter sent
• Instructing a solicitor - with the solicitor's fee added to the non-payer's bill
• Instructing debt collectors - with their fee added to the non-payer's bill
• Making a court claim - with costs added to the non-payer's bill
• Sending in bailiffs - with costs added to the non-payer's bill

(If you don't like that idea, a lawyer would probably say that you shouldn't have bought a property with set-up like that.)

Vbking7 said:

Where I feel less clear concerns works that don't obviously fall into the maintenance category - things which could be seen more as adding or improving an amenity, for example preparation of the communal parking area for electric vehicles or reorganising the car park to improve ingress/egress for larger modern vehicles.  These are areas where there may not be unanimous agreement but the lack of agreed decision making process and what constitutes a quorum makes it challenging for any progress to be made at all.

Potentially, it's not just the cost of making these "improvements" - it's the ongoing costs of repairs and maintenance. (e.g. If you install a communal electric charging point and it needs annual testing, and/or needs repairing in future.)

And will there be new rules? e.g. only electric cars can park in electric charging spaces? (And will petrol car owners object to being excluded from some existing spaces?)

• If you want everyone to contribute to the cost of the improvements, realistically, you'll have to get 100% agreement from everyone.

• If you want the leases varied (changed) to cover future maintenance of the improved facilities and/or changed parking rules - again, realistically you'll need 100% agreement from everyone

Varying the leases will probably cost thousands in legal fees - which the leaseholders will have to cover the cost of.

ve210

Hi Vbking7,

Apologies in advance that I don't have any advice for you, I think I might be about to enter into a similar situation as you, and I was hoping you could give me some advice if it's not too much trouble please?

I own a leasehold flat. I am a director with Right To Manage, alongside the 3 other owners of the flats in the building. So we are all Directors. However we have a third party management company, and we are not happy with their service charges. We are considering setting up our own management company (which it sounds like you did?). Did you originally have a third party management company too? If so, how did you go about firing them to then take it on yourselves? Can anyone that is a Director, has RTM and has set up a company do that? I just don't want to do anything that upsets the freeholder and gets us into a worse situation.

Any advice you can share would be so helpful as I'm feeling a bit lost and confused by it all!

Thank you!

eddddy

ve210 said:

I own a leasehold flat. I am a director with Right To Manage, alongside the 3 other owners of the flats in the building. So we are all Directors. However we have a third party management company, and we are not happy with their service charges. We are considering setting up our own management company (which it sounds like you did?). Did you originally have a third party management company too? If so, how did you go about firing them to then take it on yourselves? Can anyone that is a Director, has RTM and has set up a company do that? I just don't want to do anything that upsets the freeholder and gets us into a worse situation.

As I suggested in your other thread, rather than setting up your own management company - it might be better to sack your current management company, and find another who you can work with better.

There's quite a bit of complexity involved in managing a building, dealing with finances, dealing with contractors, dealing with difficult leaseholders, taking legal action, and understanding all the laws, the leases, etc, 

There are a lot of posts on this board about nightmare situations that result from not having a 'professional' management company running things.

propertyrental

My understanding is that the 'management company' IS the freeholder, so cannot be sacked. The MC/freeholder does not employ another (professional) company to manage the estate. Correct?

You are the treasurer. Who are the other officers? If he Directors/home-owners don't get involved, then provided the officers do you can make the necessary decisions (depending on your Articles of Association of course).

eddddy

propertyrental said:

My understanding is that the 'management company' IS the freeholder, so cannot be sacked. The MC/freeholder does not employ another (professional) company to manage the estate. Correct?

I was commenting on @ve210 's post - the one I quoted at the top of my comment.

(Perhaps you thought I was commenting on @Vbking7 's original post?)



@ve210 says they have a 'Right To Manage' company.

Therefore...

• The leaseholders have formed a 'Right To Manage' company.
• The leaseholders have taken over the freeholder's responsibility for managing the building (using the RTM company)
• It seems that the leaseholders have hired a management company to work for them
• It seems that the leaseholders don't like the way the management company they hired is working

So it probably makes sense for @ve210 (and the other leaseholders) to consider sacking the management company that they hired, and finding another one that they can work with better.

propertyrental

eddddy said:

propertyrental said:

My understanding is that the 'management company' IS the freeholder, so cannot be sacked. The MC/freeholder does not employ another (professional) company to manage the estate. Correct?

I was commenting on @ve210 's post - the one I quoted at the top of my comment.

(Perhaps you thought I was commenting on @Vbking7 's original post?)

Sorry - yes.

That's the trouble with new topics being introduced into an existing thread.