[Leasehold] RTM Company won't acknowledge my membership

h2g2

For reasons not relevant here, I haven't been happy with the job the management agent appointed by the Right-To-Manage RTM company are doing.

So I want to join the RTM and exercise my voice as a member, as intended.

The RTM Company is a party to the leasehold, and was set up before the leases were created and sold. According to Companies House they have a sole director, who is also the sole director of the company who held the original freehold. The freeholding company has since sold their freehold.

So far as I can tell the only thing the sole director has ever done is to file the required documents at Company's House, and to appoint an agent to handle the actual management duties.

In the Articles of Incorporation for the RTM Company there is a section on becoming a member. This gives a form letter to send to the company (the company's registered address is also on Company's House), and on receipt the directors shall, on being satisfied with the application, register the applicant as a member.

I sent my application in May, and have had no response. Three months later I sent a follow up with a stamped, self-addressed envelope and an index card asking after the application - all that was needed was a tick "yes" or "no". Again, no response.

I don't know what to do in this situation. I've attempted to trace an e-mail address or phone number for the RTM Company or the person named as director, with no success, though I do know he exists (I found court filings in his name, and records he'd sued a developer unsuccessfully).

It appears that he has no requirement to do anything under the articles of incorporation - only members have any standing to take action over those and I'm not a member until he registers my application. However, my right to membership does exist in law (Commonhold & Leasehold Reform Act 2002 S74 & S75).

One wrinkle in this is that I would much rather have a membership on an active RTM Company than no RTM Company at all. Apart from anything, if the sole director resigns or is disqualified and there are members of the RTM Company it's bad. The RTM Company disappears and we won't be allowed to set up a new one for four years without an (expensive) application to the tribunal for special permission.

I feel this situation - an RTM Company - not adding qualifying members properly must have happened before. Does anyone know how it was resolved or can anyone suggest what I might be able to do?

eddddy

h2g2 said:

The RTM Company is a party to the leasehold, and was set up before the leases were created and sold. 

That doesn't sound like an RTM (Right To Manage) company. That sounds more like an RMC (Residents Management Company).

In which case, s74 of the Commonhold and Leasehold Reform Act 2002 wouldn't apply.

But I guess that wouldn't explain why the director isn't replying to you.

h2g2

eddddy said:

h2g2 said:

The RTM Company is a party to the leasehold, and was set up before the leases were created and sold. 

That doesn't sound like an RTM (Right To Manage) company. That sounds more like an RMC (Residents Management Company).

In which case, s74 of the Commonhold and Leasehold Reform Act 2002 wouldn't apply.

But I guess that wouldn't explain why the director isn't replying to you.

I'm quite sure they are an RTM Company.

The formal name is [Redacted] RTM Company Ltd and the articles of incorporation invoke the 2002 Act by name, clearly identifying themselves as an RTM Company.

eddddy

OK

It's just that you say the company was set up by the developer and is party to the lease - that's a description of how a RMC could be set up.

A RTM company wouldn't be party to the lease. An RTM company would be set up by the leaseholders after they've bought their leasehold properties. RTM is a process for leaseholders to take over the management of a building, if they are dissatisfied with its management.

Where a residents management company exists, they will usually be written into the leases for each flat as a party to the lease and may or may not own the freehold interest. Their obligations and responsibilities will be defined in the lease along with other parties (usually the “leaseholder” and “landlord”)

Where a right to manage company is formed, they will NOT be a party to the lease but will take over the landlords obligations and responsibilities as defined in the leases.

Link: https://www.commongroundestates.co.uk/leasehold-library/residents-management-company-vs-right-to-manage-company/

An RMC is usually a party to the lease (along with the freeholder), with the leaseholders as shareholders in the company.

https://www.bradysolicitors.com/brady-blog/what-is-the-difference-between-rtm-rmc-and-collective-enfranchisement/

Here are some details of how a RTM company would be set up:

https://www.lease-advice.org/fact-sheet/right-to-manage/

h2g2

As far as I'm aware a RMC is owned by leaseholders,  who each hold one share. This is very much not the case.

The management company very clearly identifies themselves as an RTM Company, and has articles of incorporation to match. I don't know if the fact that they were set up differently actually makes a difference.

I've got a redacted version of the articles of incorporation so you you can see that, regardless of the odd circumstances, they are certainly an RTM Company and not an RMC.

https://www.dropbox.com/scl/fi/nottz9x9ru5ciz5hajr4n/rtm_aoi-Copy.pdf?rlkey=4kt8g31dr9oolcfj1iz4o8mrv&st=vs69rn5l&dl=0

h2g2

I wrote again to the director at all the addresses he has on companies house, enclosing a copy of the original letter and sending recorded delivery. I'll see how it goes, but I'd still love some advice on what to do if he continues to not respond.

h2g2

This situation gets rather strange.

The management company identifies as an RTM company both by its name and its articles of incorporation, and it is limited by guarantee and has neither shares nor shareholders.

However, the director (who is also the original developer) is adamant that I must already have a share in this company, despite the fact that the company clearly does not have any shares or shareholders based on its Companies House page.

At least I've had some dialogue with the director now, though not the dialogue I would hope for. And he still won't respond to complaints about the RTM Company breaching the leasehold agreement, even after receiving a formal letter from a solicitor about that.

h2g2

With it mind that, while it looks like it should be an RMC, it is very definitively an RTM company, what are my options if the director is refusing to register my membership?

gm0

This confusion on Ltd by Share Capital and Ltd by Guarantee comes up with conveyancers (and some buyers) a lot.  Where they are ignorant of Ltd by Guarantee even existing as an option.

In some cases I have known ManCo directors "run off a quick certificate" in word - just to shut up a "wrong" but insistent lawyer with an impatient for progress client.  Who then happily attaches the attachment to an email, passes it on and the lease assignment transaction proceeds - albeit the "certificate" is junk (where a member register is maintained - post lease assignment - and there are no shares for certificates (and no share capital records to keep at CH either - a good thing).

Admin staff at a developer getting this detail wrong about a particular site does not surprise me

In our (templated) articles for our Ltd (by guarantee). 

The duty to maintain a formal member register falls upon the directors of the Ltd. And the article annex typically describes majorities and how entitlement to membership arises and ends (lease assignment etc).

A lawyer reviewing our arrangement opined that the act of entitlement starting (lease assignment) and the act of being added (by the directors maintaining the register) were separate steps.  We have just done a clean up exercise reconfirming the nominated name (from the possibly multiple names of lessees of all units and any proxy for voting (for corporate, overseas, and other inability to do it scenarios). Cleaned ours up in other words.

Whether our lawyer opinion is correct.  I know not. It sounds plausible.  2 lawyers - 3 opinions.

Options for lack of co-operation

1 more specific request re adding to the register of ltd by guarantee on the basis of being the lessee.
2 options based on the articles - AGM/eAGM/Motions, voting, electing new directors etc.
3 legal

eddddy

h2g2 said:

With it mind that, while it looks like it should be an RMC, it is very definitively an RTM company, what are my options if the director is refusing to register my membership?

Assuming you have the legal right to membership (which I can't comment on) - I guess you would work towards getting a court order instructing the director to register your membership.

The first steps might be letters from your solicitor threatening a court order. (Maybe that would be enough.)

If you successfully get a court order, and the director still refuses to register your membership, they would be in contempt of court. (So then they could be fined, or very ultimately, imprisoned.)


Obviously, you would incur a chunk of legal fees - and you probably wouldn't be able to recover them.