Q&A - Grievance with managing agent

QUESTION 

I am director of a leasehold property of 44 flats in Putney London. We are managed by a large, local management agent.

Recently my fellow Director and I discovered that the previous building manager made payments to contractors without informing the directors.  He also arranged an insurance claim from our block policy for an extraordinary amount for a leakage into another flat. He paid the excess from our funds, once again without informing the directors. 

...

The manager left the company in February this year, and we have made several complaints and demands for a full investigation into his conduct while he was managing the property.

We have not received any reply to our grievances to date, the new manager just keeps repeating she is looking into the matter.

They have not acknowledged emails in regards to our grievances which breaks their own rules. They are a member of ARMA so any grievances would have to go through them. Can you offer any advice?

ANSWER

Many thanks for your query relating to your previous managing agent. I am sorry to hear about the issues that you are having, obviously I have a limited amount of information to hand, but speaking generally I will make the following observations.

You need to check the terms of your management agreement with the previous agents, was there a specific clause within the agreement that meant that the agent was required to inform the board of directors for expenditure?

Often when a managing agent is instructed the board of directors want to leave it to them as the professional agents to simply get on and manage the development. It hoped that the managing agents will act in line with their agreement and have the best interests of their clients when arranging for works and contracts etc.

Likewise, where there is a hands on board of directors, they may leave standing instructions with the managing agent to run items of expenditure over a certain amount past the board before being authorised to proceed.

With regards to your situation whether or not action can be taken will be down to the terms of the managing agreement as per the above, if the agreement afforded the managing agent a wide discretion then it will not be uncommon for the managing agent to deal with insurance claims and instruct works without additional authority.  

You could also investigate whether or not the decisions made by the managing agents were reasonable and look into taking action for negligence, however this will be completely dependent on the facts and the actions taken.

Finally, this appears to be a task for a solicitor dealing with a breach of contract or possible action in negligence. Alternatively you could complain to the property ombudsman or ARMA and highlight to them the issues in light of you being ignored by your previous managing agents.

If you would like some more detailed advice then please feel free to contact LMP Law Ltd to discuss.

Peter Cornell, Director at LMP Law 

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