Residential management company fees incorrectly used

tlbssl

Hello,

We live in a private road along with 17 other residents in recently built bungalows.

Sales of the properties started in 2018 when the developer formed a limited management company by installing two directors of the development company.

Each resident should pay £100/year to maintain the lawned area etc. and now, at the point of handing over the company to the residents, we should have approx £8000+ less bank and accountant charges for Companies House filing.

Land Registry problems and Covid resulted in only 60% of the fees being collected. No maintenance has been carried out so the residents have done this themselves.

Now the residents have seen the bank statements we realise £1684 has been paid to the developers solicitor for arranging the handover. We think this is the responsibility of the developer and not the residents in the day to day running of the company.

Any advice would be greatly appreciated.

MSE_ForumTeam5

We've moved this to a more appropriate board.

eddddy

tlbssl said:

Now the residents have seen the bank statements we realise £1684 has been paid to the developers solicitor for arranging the handover. We think this is the responsibility of the developer and not the residents in the day to day running of the company.

Are the properties leasehold or freehold?


If they're leasehold...

You need to read the terms of the lease to see if the service charge funds can be used to pay the developer's legal costs associated with managing the development. 

TBH, most (modern) leases would allow service charge funds to be used for legitimate legal fees.

The lease probably says that service charge funds can also be used to pay any general admin costs as well.



If they're freehold...

You probably signed a deed - promising to pay an estate management charge or service charge (which is currently £100 per year).

Again, you need to read the deed to see if the service charge funds can be used to pay the developer's legal costs associated with managing the development. (I expect they can)

Again, the deed probably says that the funds can also be used to pay any general admin costs as well.

tlbssl

Hi, thank you. The properties are freehold, and I’ll re-read the deeds

tlbssl

I’ve also asked where and what specifically informs the residents that their fees can be used to pay for transfer preparation.