Managing Agents: Terms of Appointment

Without terms of appointment, you are effectively acting as an agent, contracting on behalf of the RMC - but without formal evidence of authority. This exposes you to significant liability should anything go wrong. Let alone recovering your fees if you lose the block, what about unpaid contractor bills? Who picks up the tab for these?

Yes, you may be able to argue that you have an ‘implied contract’ but, in our experience, this is harder to argue when a block management dispute escalates.

While the risk management element is clearly important, a solid set of terms and conditions also offers a far more immediate and tangible benefit by enabling you to set out an agreed level of expectations with your RMC client.

When you take on a new block there is the inevitable pressure on fees and it can be tempting to overpromise. A basic fee of £150 per apartment will soon disappear after a few calls from a difficult leaseholder. And, should a leaseholder dispute end up in court, you will either find yourself heavily out of pocket or facing a disgruntled RMC with an unexpected bill.

The best time to establish your terms and conditions is at the outset of the RMC relationship, yet sometimes it can feel awkward to raise the topic - particularly if you feel there may be a sticking point.

You should bite the bullet and get an agreement in place at an early stage, to ensure that both parties have an agreed level of expectations in terms of service standards and charges. 

Set out your charging structure and clearly identify what is included within the basic fee, and which items will incur an extra cost.

This also gives the RMC more certainty over their expenditure, ensuring they understand how any ‘extras’ will be charged.

Terms of appointment are valuable at the outset of a new RMC relationship but they are arguably even more important at the end of it, enabling you to minimise your liability and hand over the block in an orderly fashion.

Set out how your fees will be paid and whether these can be recouped from service charge funds. Ensure there is a clear position in terms of liability for contractors’ fees and bills so that they don’t ‘go with you’ as the departing managing agent.

And remember - these terms of appointment may well be seen one day by the court or at tribunal should a dispute arise. A well-drafted set of terms and conditions can be invaluable should a dispute arise.

Amy Hope-Smith is Head of Litigation and Director at Brady Solicitors