QUESTION
We are long leaseholders 999 years and have a Managing Agent and Directors are working together.
They do not invite the leaseholders who pay service charges for the AGM and they are also controlling the Freehold Company. Although they only hold a unit the same as us. They have made themselves life Directors and control the building themselves. They have also made a Management Company where they are also Directors.
No election or AGM is called for. The building leaseholders are never invited, nor are the results published. They have also re wrote the companies article of association. What would you suggest?
ANSWERThe Leasehold Knowledge Partnership is frequently contacted by leaseholders who are being frustrated in taking control of the residents' management company that is supposed to manage the block.
It should, and often does, state in the lease that the leasehold owner is a shareholder in this residents' management company. Sometimes it doesn't, but the purpose of the company is explained in the articles and memoranda of association of the company.
It is quite surprising how casual housebuilders are in these matters, given that it is their reputation that will suffer if there is a major falling-out.
The property management company in control of the site has been appointed by the developer and is usually one of the larger, freeholder-friendly outfits.
Once the flats have been sold out, the RMC should pass to the residents and resident directors should take control.
But the property management company, which had directors on the board of the RMC while the site was being sold out, are frequently reluctant to hand over control to the leaseholders.
So are the developers. Developers want to delay handing over control until they are clear of their two-year warranty undertakings and, ideally, clear of the 10-year warranty undertakings of insurers such as the NHBC.
Far better that leaseholders bear the costs of building defects than the developers who were responsible for them.
The property managers' interest is slightly different: he wants to keep the developers' sweet – they are a principal source of his business – but they also want to continue managing the building.
Sometimes leaseholders are very dozy in taking control of the RMC; sometimes they are actively frustrated from doing so.
We intervene in these cases as follows:
We write to the CEO of the property management company; copy to the CEO of the housebuilder; copy to the local MP; copy to the MP patrons of LKP; and copy to the housing minister.
In these circumstances, property management companies hanging on to control of an RMC usually put up the white flag and go. Sometimes the developer that appointed them tells them to go.
This is more effective and quicker than legal proceedings.
Hope that helps,
Sebastian O'Kelly, Trustee, Leasehold Knowledge Partnership
