Q&A - Residents Association

Do managing agents have to belong to any professional body to ensure accountability?  If not, why not? This is not a question about the right to manage.

RESPONSE:

Whether a Residents' Association allows a non flat owner to be a director will depend on the rules or constitution of that Association. Assuming the Residents' Association is a company, rather than an unincorporated entity, it is usual for the articles of association to say who may or may not be a director.

In order to appoint a director who does not own a flat in the building and where the articles preclude non flat owning directors then the company's articles would need to be amended requiring approval of at least 75% of members or shareholders. Even where there is no such restriction, the appointment of directors is a matter which requires consent from at least 75% of members or shareholders. In larger buildings this is potentially cumbersome and onerous.

Often the best boards of Residents' Associations comprise some non flat owners and some articles permit owners, particularly where they are a company, to nominate someone to act as a director on their behalf.  To ensure the most efficient management each applicant for directorship should be considered on a case by case basis and it is key that their personality and strategy for the building operate well with the rest of the Board. 

Presently it is not compulsory for managing agents to belong to a professional regulatory body because the government has not legislated to provide for this.

There are indications that reform would be welcomed with open arms by the industry as more and more agents voluntarily opt to become members of self regulating bodies such as ARMA. This enables the efficient reputable agents to distinguish themselves from the many bad managing agents currently tarnishing the industry's reputation.

There are also murmurings within the government about reform of this area. Frustratingly the draft bill presented late last year to Parliament to introduce regulation of private sector managing agents amongst other things, did not get the necessary support.

What we need is more impetus from public bodies and hopefully the announcement in December 2013 by the Office of Fair Trading to investigate the property management industry will be the beginning of a long awaited journey to help landlords and tenants alike stamp out those tired managing agents giving the industry its poor reputation.

In the meantime the self regulatory bodies continue to fill the government's gaps and are the forum to look to in order to distinguish the good from the bad.

Amy Chance, Solicitor at Pemberton Greenish