The RTM Claim has landed: What next?

• There are not enough “qualifying tenants”
• There is already an RTM company in existence
• The RTM does not represent at least 50% of qualifying tenants

The requirements for a counter-notice are contained in Section 84 and the 2003 Regulations with a prescribed form annexed at Schedule 3 to the 2003 Regulations.

The scope for dispute is limited and hopefully landlords react in a professional manner. If there is no basis for challenging eligibility, obstruction is only likely to delay matters by a few months and incur irrecoverable costs.  

Other considerations: Existing Contracts: It is the landlord’s obligation to ensure all parties are aware of the relevant contracts through service of “the contractor notice”.

When RTM is exercised, the landlord is likely to have a number of contracts in place relating to the block. Under the 2002 Act all responsibility for management under the terms of the leases transfer to the RTM Company. The landlord will therefore no longer be in a position to fulfil any contractual duties and the RTM will need to decide whether to renew the contracts or look elsewhere for the provision of those services.

• Contractor Notice: The contractor notice must be served by the landlord on all contractors appointed by the landlord and must include the following information:
• Identity of the relevant contract
• Statement that the RTM is to be acquired by an RTM company;
• The name and address of the RTM Company
• The Acquisition Date
• Statement advising a contractor who wishes to continue to provide services to the building to contact the RTM company

Where any of the services are sub-contracted the contractor who receives the contractor notice must send a copy of the notice to the sub-contractor.

Duty to Provide Information: The RTM Company will not be able to manage the building without detailed information and the company can request whatever it “reasonably requires in connection with the exercise of the RTM” by issuing the landlord with a duty to provide information notice. The landlord must supply the information requested within 28 days.

Duty to transfer funds: Where a landlord has collected service charges in advance but not yet spent them, he is under a statutory obligation to hand the money to the RTM without notice on or as soon after the Acquisition date as reasonably practicable.

Conclusion

Regardless of potential technical objections, Landlords should consider whether to object and the extent to incur costs which may be irrecoverable. It may be more pragmatic to accept the claim.  After all, a landlord will surely be concerned only with maintaining proper management of his freehold interest?

Yashmin Mistry is a Partner at JPC Law