Gathering support for Right To Manage
In order for the Right to Manage Company (RTM Co) to be effective in its purpose, at least 50% of the qualifying leaseholders in the building must become members. This will require a concerted and determined effort on behalf of one or more qualifying tenants in order to create a groundswell of support for the RTM Co. By law, all qualifying flat-owners must be invited to become members of the RTM Co (see Section 78 of CLARA 2002). There is a prescribed form of notice inviting participation which must be served on all qualifying flat-owners containing:
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a statement that the RTM Co intends to acquire the right-to-manage;
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the names of the members of the RTM Co;
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the purpose of the RTM Co;
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an invitation to qualifying flat-owners to become members of the RTM Co, and the implications of joining;
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the names of the directors and company secretary of the RTM Co;
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the names of the landlord and any other person who is party to the lease other than the lessees;
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the registered number of the RTM Co;
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the address of the registered office of the RTM Co;
- a copy of the Memorandum and Articles of Association or a statement explaining where these documents can be located.
The purpose of the RTM Co will be to acquire the ability to determine the management functions of the building from the landlord (except for any flats owned by the landlord or any commercial space). As a consequence, the RTM Co can then decide:
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to keep the current managing agent;
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to replace the current managing agent with another professional managing agent;
- to self-manage the building (in which case, management experience of the members of the company should be explained);
In addition, although it is not compulsory, it is useful to provide a draft plan/budget to show prospective members how the RTM Co intends to manage the building after the right has been exercised.
Because each member of the company will be liable for the landlord’s costs from the time the initial notice is served until the right is exercised, it is important that participation in the company is carefully considered and, where appropriate, the flat-owner receives independent legal advice (see Section 88–89 of the 2002 Act). Once a flat-owner has decided to become a member, they should respond to the notice inviting participation, whereupon they will be inscribed in the company’s records and be issued with appropriate corporate certification.
Unless the notice inviting participation is carefully drafted to include the above information and served properly, it may be considered to be invalid. Therefore, it is prudent for the company itself to obtain its own legal advice at the earliest opportunity, since this will avoid any later potential challenge by the landlord.
This is an edited extract from the book, Being a Leaseholder - the essential guide to owning a flat by Nicolas Shulman. The book is available on Amazon in print or Kindle edition or directly from News On The Block - email support@newsontheblock.com to purchase your copy.
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