Residents' Association Fees - whose account are they in?

vivatifosi

Possibly not the right board, but seems the best option as this is an unusual question.

We have a resident's association that takes in say £10k per annum from tenants and has built up a sinking fund of about a further £10k that has been built up for estate repairs. The estate is freehold so we have no buildings to maintain, but we do have quite a lot of unadopted common parts.

Our managing agent has other associated companies in the property industry. While we have no reason to think there is anything wrong with them, their practices or own financial health, we were wondering how management companies keep our money separate from theirs. I know we have separate accounts, but hypothetically, if they run into problems would we have say FSA or legal protection from their dipping into our accounts to help stave off bankruptcy? They are the signatories on our cheques and maintain our accounts so it may not immediately be apparent.

Please put my mind at rest!

lawrie28

If they are seperate legel entities, the managmeent co for our last houe was a limited company, then it would be fraud if they used money with out declaring it. Of course, they could do an inter company loan, which would be declared on both sets of accounts. But then if one went under, the co could lose out. It would also be worth checking how much of a charge the management company receives for doing this. After we left the other house, I beleive the residents took over the managemnt themselves, as they felt they could do a better job, giving them more control, as they nominated in chairman, secretary, treasurer etc. multiple signaturies etc. for security.

I think they also started used some of the owners to do the maintenance on the site as a way of helping the local economy.....(mow a few lawns etc, for a few quid)

vivatifosi

Hi lawrie,

Thanks very much for that. Unfortunately our articles of association say we have to use a management company, which is a shame, we are only a freehold estate so we don't have a great deal to do. May be a good idea to have a second signatory on cheques though.

As I say, they seem a reputable company, but then so did Northern Rock. Just want to make sure that we're safe as it would be a lot of money to lose.