Creation of Residents Management Company - Insight sought

RMCWaterside

Hi everyone, I’m looking for some insight from anyone who has set up or taken over a Residents' Management Company (RMC) specifically for a small private road.

Our developer is ready to hand over the freehold of the road to us. I’m stepping up as a Director, but I want to make sure we aren’t being taken for a ride on the setup. I’d love to hear your experiences on a few points:

1. Solicitors & Land Transfer: Did you instruct your own solicitor to review the transfer from the developer? More importantly did the developer pay any legal fees? .
2. Setup Costs: What were your 'Day 1' costs (incorporation, Land Registry fees, initial insurance)? Did you get the developer to provide a 'handover fund' (commuted sum) to cover these?
3. Managing Agents: Did you bother hiring a managing agent for just a road, or do you self-manage? If you self-manage, how do you handle the annual accounts and Companies House filings without it becoming a part-time job?
4. The 'One Neighbor' Problem: Has anyone had issues with a neighbor refusing to pay the rentcharge/service charge for the road? How did your RMC handle it?

Thanks

monkey-fingers

Weirdly, our small private road doesn't have an RMC and it's never been a problem.

Although at some point, it's going to need resurfacing, because apparently the surface is now over 30 years old.

But like with your one neighbour problem, I guess we'll just have to suck it up.

Road is 80 years old.

MyRealNameToo

Do you have any contracts or mentions in the deeds or anything about maintenance?

Dont know how long my cousin has lived where they have but it's a private road and they have been there 40+ years at least. Theirs has never been resurfaced because there is no overall agreement on how the costs should be divided and over the years there have been multiple people who have refused a simple equal share. Theirs is a long cul-de-sac so those at the entrance have argued that those at the end should pay more because they use their portion of the road but the entrance people never use the rest of the road.

These days you need a 4x4/ high clearance vehicle to drive down it because the potholes are over 12" deep and full road width in places. They are at about the 2/3rds down the road. There are also frequent arguments because visitors often park further up the road and walk down rather than risk tyres/suspension in the holes but then the owners of those properties claim they are parking in "their" space.

Dustyevsky

The management of a small development I share a private road with have zero understanding of the legal situation, having lost the documentation drawn-up when the road was sold to them and first tarmacked in the late 80s. This came to light when they attempted to limit my independent property's access to and use of the road, using hearsay 'evidence.'

I've found a copy of the legal agreement they're missing, and it's well-drawn up. However, having cost me a few £ thousand and a year of my time, I'm loath to offer it freely to these people. If and when the matter of repair comes up, I'll use the agreement as a basis for making sensible suggestions. The 'managers' are not sensible, so goodness knows what will happen then!

In other matters, where there are clear charges for maintenance laid out, the management have encountered non-payers. As I understand it, after protracted negotiations, the worst offenders have had a charge placed against their property, which must be cleared when it is sold. Whether this takes account of inflation, I cannot say.

Personally, I'd not wish to be involved with amateur managers in this kind of situation again.

hjd

I also live in a small private road. 16 houses built in 2007. We moved in in 2013 so can't say about setting up the management company. We have used various management companies all of which have been pretty useless - we have had one great manager in that time but sadly he moved away.

We insisted that the managing agents set up a road fund where we accumulate funds specifically to pay for any repairs to the road or larger expenditure. That was not at the agent's suggestion. This avoids unexpected large bills where newer residents may not want to pay and those who have just moved out get away without paying anything. Each property contributes an amount to the road fund each year.

I don't think the accounting/Companies House requirements are particularly onerous but then I am an accountant. However, the main reason we have managing agents is to stop other residents expecting the directors to sort everything out themselves. It is also so that directors don't have to chase non-payers. We have had one persistent non-payer and they have had to issue court summons. Eventually they put a charge on the house so when she moved out the money plus additional costs were settled in full.

Most of the managing agents seem to be set up to deal with blocks of flats which come with challenges (and communal parts) not applicable to a small road only of houses.

NordicNoir

https://forums.moneysavingexpert.com/discussion/comment/81892073#Comment_81892073

Was the road fund mentioned in the TP1’s or have you amended them at the Land Registry with a Deed of Variation? Just wondering what you have that is legally binding to pay towards the road fund that makes it enforceable?

hjd

https://forums.moneysavingexpert.com/discussion/comment/81892873#Comment_81892873

The road fund was not mentioned as far as I know and nothing at the Land Registry. Just part of the general pot of money but is separately earmarked in the accounts.