How do we remove a Management Company?

by Readers Question

11:42 AM, 25th July 2016
About 2 years ago

How do we remove a Management Company?

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How do we remove a Management Company?

Two years ago I bought the 999 year lease for one of 12 flats in a converted property. A Ltd company was in place, with 12 share certificates, and the developer as sole director. Trash

Once all 12 flats were sold the developer resigned his directorship and in February 2016 and passed the management to an ARMA registered agent without our express consent. They hold two corporate directorships.

None of us are yet directors, although at least 2 of us have completed AP01’s. The management company have not submitted these to Companies House. Essentially they control the freehold although we all have share certificates.

They sent us their initial invoice for the service charge along with what was headed up as an ‘annual budget forecast’, it seems to be calculated for a half year but then the invoice is for a quarter year. They put a management charge of 68% on top of those projected maintenance costs.

We, all 12 lessees, are not satisfied with the performance of the management agency thus far and wish to take back control of the management and the freehold.

How do we go about removing them without too much financial pain?

Liz



Comments

Neil Patterson

11:46 AM, 25th July 2016
About 2 years ago

Hi Liz,

This is not an area I have personal experience of but I am guessing you are looking to instigate a RTM (Right to Manage). I would check out the Leasehold Advisory Service first. Please see >> http://www.lease-advice.org/

Emsal Ahmet

14:00 PM, 25th July 2016
About 2 years ago

Hello Liz,
My my fellow leaseholders and I were in assimilar poison. I contacted The Right To Manage Federation smoothed our path for a minimal fee,
I hope this is of some help

Gary Nock

14:08 PM, 25th July 2016
About 2 years ago

Liz,

If you are shareholders in the freehold then you are entitled to be directors. Get sufficient numbers on the board and pass a resolution to kick the existing management out. If they won't sign you off as directors check the Memorandum and Articles of Association for the company which are obtainable free via Companies House Beta Service. See what it says about holding Extraordinary General Meetings of Shareholders where directors are appointed by shareholders. Appoint new directors and then pass a resolution kicking out the management company and appoint a new one. In planning this move do this discreetly as if the old management company get wind of it they may try and empty the company bank account with nefarious maintenance items at exorbitant fees. The first they should know about it is when they get a letter dispensing with their managing agent services.

On what you have said you do not need RTM as you already own a share of the freehold by being a shareholder. It is just a matter of getting rid of the corporate directors by using company instruments. Also check if there is any agreement between the company owning the freehold and the management company. If there is check the notice period. If not then give them a months notice and get someone else in. Just be careful you are not tied into a 3 month notice period or compensation in lieu of it. An agreement which goes over 12 months becomes a qualifying long term agreement and if the management fee is over £250 per flat it is subject to Section 20 consultation procedures which are very bureaucratic and have specific legal steps to follow. If they don't then service charges cannot legally be demanded.

A lot of information there. Follow Neil's advice and check out the lease website.

Douglas Barley

14:31 PM, 25th July 2016
About 2 years ago

Hi Liz, I am a property manager as well as being a B2L landlord. This should be quite straight forward, if all or most of the leaseholders agree - As mentioned by Neil above contact the lease advisory service, they have a good web site and go from there. The right to manage path is not too expensive between 12 flats but does need to be carried out correctly - are you sure you don't already have a RTM Co you mention a company and a 999 year lease - if that were the case just give the agent notice if you are all, or mostly all are agreed - you would need to call an EGM.There will probably be a contract signed somewhere and that will say how much notice you have to give the current agent, I would however advise that you do really need a trusted agent in place - if you can, go by recommendation, its helpful when any flats are sold and also to keep control of the building and its repair, it stops in fighting between the leaseholders when funds are requested!! A decent agent should cost about £200 to £250 per flat per year (except in London) on top of the maintenance costs + of course any large contract costs and a few smaller costs, legally required reports etc. Hope this helps

John Pettman

19:38 PM, 25th July 2016
About 2 years ago

Hi Firstly the amount for a long term agreement is only £100.00 its the major works that specify £250.00. You need to read your original contract AND the Company Memorandum and Articles. These may well specify that only the Leaseholders can be Shareholders . You mention two corporate directorships . Does the mem and Articles permit non shareholders to be directors ?????
What did your original contract say???? these documents should have all been sent to you by your lawyer when you purchased your property. I would suggest that you do NOT set up a RTM company yet . Do you want the Management co to be struck off which will cause problems when you come to sell Further as your Lease is for 999years there is not much value in the freehold interest . unless the ground rent is substantial. I would guess ( something that you should never do) that the management co also own the freehold estate. Shareholders have the right to convene an E.G.M, resolutions can be put to the meeting . Additional directors can be appointed and existing ones can be removed The preferred course of action is to contact the current directors in a polite and professional manner and say that the Leaseholders wish to be masters of their own destiny and would they please resign . It does work . HOWEVER it is essential that whoever continues the operation does so correctly
Regards n John Pettman L.L.B.(Hons)

Liz Buckland

11:14 AM, 29th July 2016
About 2 years ago

Reply to the comment left by "Gary Nock" at "25/07/2016 - 14:08":

Thank you for your excellent advice

Liz Buckland

11:16 AM, 29th July 2016
About 2 years ago

Reply to the comment left by "John Pettman" at "25/07/2016 - 19:38":

Thank you, we will have to look through the documents you mention.

Puzzler

16:57 PM, 29th July 2016
About 2 years ago

You need to call an AGM or EGM and vote the directors on who you wish to serve. You'll need a special resolution to remove the other directors, there's plenty of info on the internet but if you get the other shareholders on, you'll outvote them anyway. As there are only 12 flats, why not have a director from each one.


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