Your block needs you

Let's take the worst-case scenario. Lacking the proper complement of directors to watch over it, your company fails to file returns at Companies House, incurs fines of over £1,000 and finally gets struck off. The service charge account is immediately frozen, no matter how much you've paid in. And the company's assets, including your freehold if you've enfranchised, are forfeit to the Crown. Mortgage lenders do not look kindly upon struck off companies, so your flat will become very difficult to sell. And you could find some speculator has bought your freehold from the Treasury Solicitor. Yes, it does happen.

Of course, you've hired a managing agent, so it couldn't happen to you...could it? Well, your managing agent is just that, hired - an employee of the board. He can't be a board member in the absence of willing leaseholders, because that's a conflict of interest. And, from service charge estimates to major works, he can only act as the board instructs. So a board of at least two leaseholders is essential to a well-run block.

Sometimes it's fear of the responsibility that puts people off - "Will I be sued by a resident?" But all boards should be protected by directors indemnity insurance. More often, the real deterrent is the thought of sitting in marathon meetings while the block's "difficult" resident (we've all got one) obsesses about the garbage area. Firm chairing is the answer - one seasoned chairman I know bans alcohol till the meeting is over.

Four board meetings and an AGM are only ten hours out of your life a year. Not a huge price to pay for ensuring your living environment is pleasant and your investment secure. And who knows - it could even be fun.

Jane Barry
Associate Editor