New(ish) home - limited liability for management company

Miri_J

I'm trying to buy a home. The home is 3 years old and the estate is just being completed.

I wasn't told at the viewing that there would be a service charge to cover maintenance of 'managed land' on the estate. I've had copies of the title deeds etc & read through them. 

My solicitor included this paragraph in her email, but I really don't understand the implications - specifically of having limited liability. Can anyone tell me more? 

Please note that all residents on the development become a member of the management company, which has been set up to manage the Managed Land as defined in the 2021 Transfer.  Upon the end of the construction of the development, the Managed Land will be transferred to the management company, and as such, you will have limited liability in relation to the obligations as imposed on the management company in the 2021 Transfer.  I will set this out in further detail in my later report, but wanted to bring this to your attention now, in case this affects your decision to continue at this point.

I know there can be issues with these management companies that they can have the right to take back the leasehold if the service charge isn't paid on time. The deeds in this particular case do include a paragraph saying they "covenant with the transferree not to enforce" these powers. I have asked my solicitor to confirm that this is sufficient protection for me for the future.

BonaDea

I believe this means that once the development is completed, the management company will be a company limited by guarantee and owned by all the residents.  So the residents will collectively own the managed parts of the estate through this company, and will have control over spending and so on.  You may be asked to serve as a director on the committee that runs the company.  Given the covenant it looks as though you are protected from forfeiture under Section 121 of the Law of Property Act 1925, but even if you weren't, it wouldn't be some external entity enforcing it but would be the company that you are a constituent member of.