As some of you will remember, back in 2004 I moved to a new development where there is a sewage treatment plant specific to the houses on the development. A management company was set up by the developer, then handed over to the residents. Since then there has been a number of acrimonious disputes about bill paying, responsibilities etc. No one now wants to be a director. We are already on our second set of directors and they have announced that they are resigning.
What happens in situations like this? Who can arbitrate?
Do what me mums road did to maintian their road. Charge em a standing order once a year to cover maintennance *plus*, and drink the profits up at christmas...
Some chartered surveyors offer a property management and arbitration service. Alternatively, the residents /might/ be able to ditch the management company and appoint a factor, or the management company might be able to appoint a factor to carry out its day to day work.
There may be initial legal costs in appointing a factor as well as ongoing factoring fees *in addition* to whatever you are paying now for actual maintenance.
It depends what you are asking the directors to do - what is the actual work involved? Almost anything can be contracted out, but at a cost.
The bottom line is that your owners will have a legal liability to maintain the communal parts of the estate, and the value of the properties will plummet far below the costs 'saved' if the estate falls into disrepair or disrepute.
According to Companies House webcheck it is a Private Limited Company. Nature of Business: 9800 - Residents Property Management
No idea.
Who pays for that though? Who starts the ball rolling?
I shall see what happens this evening, but I am now totally disillusioned. This matter - of a residents' management company and possible problems - was only briefly touched upon during my final discussions with my solicitor in preparation for signing the contract of sale and exchange. He said there was "nothing onerous" in any of the related documentation to be concerned about. I even made anonymous enquiries of several residents prior to exchanging and the word was that there were no problems at all.
OK. It's actually very easy to get a limited company. There are agencies where you can buy them off the shelf very quickly. People at the agency are the initial director and company secretary normally, and are then replaced by the intended ones. There are simple forms to do this with Companies House. Possibly the developer will have done this and has then turned the whole thing over to the residents getting two people to agree to become director and company secretary or perhaps more directors are appointed.
There will also be shareholders. These might be the directors and ownership of the shares transfers if directors change, or it might be that each of the residents owns a share of the company.
A director is reasonably well protected as long as he acts honestly, does not allow the company to trade if insolvent and ensures that specific statutory filings etc. are done. Obviously there is a lot of legislation behind all of that, but those are the major points.
It isn't something that somebody should take on lightly or without having the implications explained to them. Unfortunately the law does not accept ignorance as an excuse, although heavier books are thrown if there is evidence of deliberate wrongdoing.
The Company Secretary should have these. However, they are often quite generic documents and may not be terribly specific about the situation.
Finding out who the shareholders are is important. Legally, you have to have a director and a company secretary.
You may be able to get this information from the Companies House on line service, but there are two issues. One is that the information could be quite out of date on file. The second is that this will almost be in the smallest category of company and only very minimal information needs to be filed.
There have to be an annual company return filed plus limited accounts, but this is done some months after the financial year end of the company.
You could download all the records for a tenner or so, which is worth doing to get the information about directors, shareholders, assets (probably the sewage plant). However, it may be that if the development has been around for less than a couple of years that there will not be the first meaningful filing there but just a firm of nominees of the shelf company. Nevertheless it is a useful starting point from where you can track the rest of the story.
Are the directors of the company responsible for collecting maintenance money from the residents and organising repair and maintenance of the plant or does the company pay a third party to do the day to day stuff?
Well.... you have an unsatisfactory situation. Are the residents who are not paying not paying because they don't want to for some reason or can't, or think that the directors are incompetent or ??
Do the directors not wish to continue because the whole thing has become a rather unpleasant affair or because they understand their legal responsibilities and it's all unsatisfactory?
In a way, it's a bad idea to have a company run like this because it's going to be fuel for neighbour disputes. You have all the ingredients of money and power to create that.
Perhaps it's time to restructure in some way that will work better - perhaps a third party company that manages the thing under contract or something like that.
It seems to me that as a group you have to decide what you are unhappy about and then agree a mutually acceptable way to proceed. Then as a group you will have to fund any legal work if it's needed.
Possibly the solicitor wasn't aware of all of the details, although I would have thought that something owned and run by the residents themselves would warrant some "what if" analysis.
I think that you have to start with who owns what, who is supposed to doing what and why people aren't paying.
I would add that if the number of residents exceed 20-ish then you will probably find it simpler to have professional management (usually found at a well established local estate agents). Although this will typically cost 10% of turnover + VAT you will have things done. They will be done somewhat slowly and somewhat badly but at least things will get sorted, everyone will whinge about the crappy management but it will be _adequate_.
And this is what tonight's meeting of the residents voted overwhelmingly for. The managing agent in question, recommended by a well respected local farm estate agent/land surveyor, will charge 15% of the annual maintenance charge, and if the non-payers whinge about that, then it's their own fault for not paying. For piece of mind I reckon it's the best solution, at least for a year to see how things pan out. The current directors also approached Anglian Water with a view to their taking the sewage treatment plant over, but they would insist on erecting an aerial for some kind of wireless remote sensing device, which would costs thousands, not hundreds.
Going back to Andy's points, especially on the matter of non-payment and why the people concerned thought they could just keep on postponing payment, it seems that there are plenty of people in this world who put bills in the drawer and think that the problem of paying will go away.
Anyway, thanks for all the input. As soon (?) as the market picks up and I can cover my moving costs, I'll be off. The whole palaver has left a bad taste and I will never be happy here now.
Presumably your management company owns the common parts, the right to manage them, and the right to be paid for same. From a quick look at the Companies House web site if all the directors resign and no one fills in any forms CH can strike the company off and its assets revert to the Crown. Her Maj then presumably sells it to a mean and nasty management outfit who take you for every penny they legally can.
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