© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
The role of the managing agent is central to the management of a Residents Management Company (RMC) or Right To Manage (RTM) block. Often the role of director is taken by an unpaid volunteer with little or no prior knowledge of company law, their duties, responsibilities and potential personal liabilities. The board of directors will expect the agent to carry out its wishes and it is therefore imperative that the agent fully understands the relationship and also the company’s constitution.
Every company, whether limited by share or guarantee, is obliged to have a Memorandum and Articles of Association. For companies formed after October 2009, the objects of the company previously outlined in its memorandum were included in the articles in the new models arising from the Companies Act 2006.
The Memorandum outlines the external workings with the outside world in so far as the company name, place of registration, what the company can do, its powers and so forth.
The Articles prescribe the internal regulations and operations of the company on a day to day basis as well as containing the rules the company is to follow in relation to general meetings: a key part of the constitution of the company for the directors to understand. Each company will have a standard set of Articles but may be bespoke to that particular RMC or RTM. Depending on the size and scope of the RMC or RTM, Articles may vary for each and therefore as an agent you cannot assume standardisation.
The importance of the Articles of Association was highlighted in the recent Court of Appeal decision Morshead Mansions Ltd v Di Marco (2008). The company (Morshead) was formed to manage a block of flats and the lessees of the apartments were shareholders in Morshead. The company’s Articles of Association gave the directors the power to establish reserve funds to which members were obliged to contribute to in terms decided by an ordinary resolution of the members at a general meeting. Under this provision the company claimed over £4,000 from Di Marco who claimed that this was a service charge cost within S.18 of the Landlord and Tenant Act 1985 and therefore subject to statutory limits.
The Court of Appeal ruled that costs were recoverable from members under the Articles of Association and emphasised the legal distinction between a tenant’s liability to the landlord under the lease and that of the tenant’s liability as a member of the company. The Court of Appeal held that the monies claimed were payable by Di Marco in his capacity as a shareholder under the Articles of Association of the Company.
It is key that the directors understand these crucial documents, refer to them and use them when managing the company as they are the instruction manual to administering the company. As the agent, you have a responsibility of familiarise yourselves with the documents and know inside out what the procedures and processes are.
Helen Christie comes from a legal and property management background, currently Associate Director at Harrods Estates.