Responsibilities of being a director of a freehold

textbook

So still considering buying freehold for our leasehold block of flats, still worth it with new legislation?

Regarding directors, we need two.  What are the responsibilities of the role?

eddddy

textbook said:

So still considering buying freehold for our leasehold block of flats, still worth it with new legislation?

Which new legislation are you referring to?

textbook said:
Regarding directors, we need two.  What are the responsibilities of the role?

I'm guessing you mean the leaseholders will form a company that will own the freehold.

So the company will take over all the responsibilities of the freeholder (or landlord or lessor) as documented in the leases (plus relevant legal responsibilities).

Many leases say the freeholder is responsible for things like buildings insurance, plus maintenance of the building and common parts, but some leases say the freeholder isn't really responsible for anything.

The Freehold company's articles of association will say how the company reaches decisions. With 2 directors, I guess both directors would need to agree.


You should think about what should happen if the 2 directors can't agree on things - e.g. one director insists that the window frames need repainting, but the other insists they don't.

Plus how the leaseholders can 'kick out' directors, if they don't agree with the directors decisions (e.g. the 2 directors decide to paint the window frames purple.)

Bookworm105

you want simple facts, have you tried using a search engine?
Right to Manage Services | Take Control of Your Building | Innovus

Right To Manage | Leasehold Advice Centre

5 Right To Manage Company Directors Responsibilities | Scanlans

Block Management & RTM Companies: What Are The Legal Duties?

Understanding Right to Manage Company Directors Responsibilities

What are your responsibilities and duties as a Director of the landlord or management company? – KDL Law

right to manage company directors' responsibilities - Google Search

RTM Company Directorship: Roles, Risks, and Best Practices - Deacon

there are many more answers to your question, why not read them yourself...

gm0

Easy.  Onerous and thankless and unpaid. That's got you briefed.  Successful candidate requires tolerance for whinging, thick skin, commercial skills to handle a managing agent business and getting them to perform to contract and a bit better for retention, a working ability with financials, spreadsheets and accounts.  Background in construction whole lifecycle building maintenance is highly desirable.

Seriously - it can be helpful to have control  - as  a group of leaseholder owners creating a SOF. 

No external freeholder.  No agent appointed by them (or need for RTM process to hire one but still report back to some level to them per their responsibilities).  Your own show.  But you need articles of association which embed "democracy" for stormy weather and conflict - not sunny days of happy consensus.  Even appointing and recontracting your own agent and swapping them out when they become complacent and extractive - is a level of work to do it right.   When a block has a major event.  Failed roof is a classic.  Not an insured event.  Very early EOL but out of warrranty a long way.  Big cost. No easy way to pass it off to others. Leaseholders furious.  And some (who can't really afford to live there - given they have taken this liability on) cannot afford it so the "how" of getting work done includes additional finance and debt and charges on property etc etc.  

You need to force yourselves to have enough directors with day to day delegated authority i.e. min 2-3.  (but ideally not too many) constantly via the formals.  So that it is "normal" that they be relected/elected at AGM and all understand that it is the case.  Far too common is the "chairperson" who has done it for 2-3 years who wants to now stop addressing a meeting where due to general level of apathy 20%-30% turned up.  And NOBODY wants to volunteer to take it on.  Too busy. Too uninterested. Too old. Too abroad (UK base but not around much).

For good or ill. You own the problem of looking after the estate - land, boundaries, buildings disputes.  Saving up for roofs, lifts, gates - or not saving up but making sure people KNOW that and chunky Section20s will arrive sporadically.  You probably (mostly) own all these costs already under the leases but without full and independent control.  This being true does not mean getting agreement or "long term focus" on pennywise poundfoolish from lessees is easy.  People don't want higher charges now.  And the future - well  - I might have sold or be dead. 

So when there is a major issue which is going to cost leaseholders money - the process has to be "by the book".  So they can't wriggle out.  Everyone has two hats.  Lease.  And SOF share.  Not everyone understands that. Nor do they always understand their obligations under the lease. Nor much like the formalities of doing things in a business like manner.  All of which makes being a director dealing with your neighbours challenging diplomaticallly.  In some odd ways - the common enemy (external corporate freeholder) has a benefit in this one aspect.

It is - to be clear usually - for larger sites especially - the company that owns the freehold and the shareholders (ltd by share capital) or members of the company (ltd by guarantee) own the company.  And need to proceed democratically - according to the articles of association of the company.  And then elect and reappoint directors to act on behalf of shareholders - insured for public indemnity while acting.

Landlords and owner occupiers may have differing priorities.  People looking to sell soon will have different priorities on short term maintenance (looking nice) and cost profiles (not going up)

Finding people to act as directors and sustain a larger estate this way is not easy. 

The role invites constant whinging.  Everything is too slow.  Too expensive.  The wrong priority thing.  The wrong trader.  Unsupervised. We should have sued the builder/the neighbour/the former managing agent not avoided legal expense and risk and just absorbed it.  etc. etc., etc.

Not many people want to do it for long.  Lessees tend to forget that the role is unpaid for time spent.  And the director of the RTM or Share of Freehold is not their servant. 

But in general apathy rules.  Until there is an issue.

When there is a crisis and the tide goes out - and you have a big communal bill looking for a home and some real world urgency to act.  That sorts them out.  The companies who are well run.  And the ones that have let it slide and have a big mess to sort before they can make decisions (that will stick) at all.

eddddy

Bookworm105 said:

you want simple facts, have you tried using a search engine?
Right to Manage Services | Take Control of Your Building | Innovus

Right To Manage | Leasehold Advice Centre

5 Right To Manage Company Directors Responsibilities | Scanlans

Block Management & RTM Companies: What Are The Legal Duties?

Understanding Right to Manage Company Directors Responsibilities

What are your responsibilities and duties as a Director of the landlord or management company? – KDL Law

right to manage company directors' responsibilities - Google Search

RTM Company Directorship: Roles, Risks, and Best Practices - Deacon

there are many more answers to your question, why not read them yourself...

The OP is talking about buying the freehold - probably through 'collective enfranchisement'.

Your links all seem to be about 'Right To Manage' (RTM) companies. 

There are some very important differences.

It would be better to search for 'Shared Freehold' or 'collective enfranchisement', rather than 'Right To Manage'.

gwynlas

You can of course still appoint a managing agent paid for from service charges whilst you still have the legal responsibilities of being a dtrector they take on the day to day role and you ontinue to benefit as having a share of freehold.

eddddy

I expect you have checked this out - but just to emphasise (because I've seen a few people caught out by this) ...

Buying the freehold doesn't necessarily mean you take over management of the building.


If you have a tripartite lease, you would become the owners of the freehold, but the existing management company would continue to manage the building - and you probably wouldn't have much control over them.

So the first step is reading the lease, to find out the freeholder's responsibilities.