Part 2 of the Commonhold and Leasehold Reform Act 2002 makes provision for qualifying tenants to acquire and exercise rights of management of premises through the medium of a company (known as an 'RTM company') established for that purpose.
The appointment of a statutory manager in relation to residential leasehold premises under the Landlord and Tenant Act 1987 is sometimes, wrongly, thought of as purely a tenant’s remedy and an alternative to establishing an RTM but, as is apparent from the legislation, it is a remedy not only available to tenants and may be exercised whether or not an RTM is in existence.
This article looks at the appointment of a manager where there is an RTM.
Why might a manager be needed?
There may be other reasons but conflict and indifference can both prevent an RTM’s managing effectively.
The Appointment of a manager to take over RTM:
If an RTM company has the right to manage the building under the Commonhold and Leasehold Reform Act 2002, a tenant - or a landlord - can apply to the tribunal to appoint a manager if either is not satisfied with the way the RTM company is managing it.
There are slight variations to Part 2 of the 1987 Act which apply when an appointment of a manager is made in the circumstances where the Right to Manage is in place. The Commonhold and Leasehold Reform Act 2002 provides:
- References to the landlord in the 1987 Act are to the RTM company (sch 7 para 8).
- References to a tenant of a flat contained in the premises include a person who is landlord under a lease of the whole or any part of the premises.
- Any obligation owed by the RTM company to the tenant under his tenancy include any obligations of the RTM company under this Act.
- The FTT may make an order in which the RTM company no longer wishes the right to manage the premises to be exercisable by it.
- The power by the FTT to make an order that the right to manage the premises is to cease to be exercisable by the RTM company.
- And such an order may include provision with respect to incidental and ancillary matters (including, in particular, provision about contracts to which the RTM company is a party and the prosecution of claims in respect of causes of action, whether tortious or contractual, accruing before or after the right to manage ceases to be exercisable).
If the First-tier Tribunal (Property Chamber) (“tribunal”) agrees to appoint a manager, the RTM company’s right to manage ceases (s.105).
The Tribunal must be satisfied:
As long as the tribunal is satisfied it is necessary, it may make an order to transfer the RTM’s control and management arrangements to a manager. The manager so appointed does not have to be a managing agent and could be a leaseholder or other responsible person. The manager could delegate tasks to a managing agent, but would, nonetheless, remain responsible for managing the building.
Rawdon Crozier is a barrister and mediator at KBG chambers
Ibraheem Dulmeer is a barrister and mediator at Normanton Chambers