By Steve Roulstone
In part two of this Blog having explained the possible Management structures your property could be controlled through, I now move on to the reasons why the situation can cause confusion.
Different rules for different schools.
This is at the hub of this Blog because of my experience with so many sites from Management Company controlled to sites where the Freeholder still appoints the Managing Agent and the site is therefore not run by a Management Company Limited. So until you know the way in which the site you are considering is run you will not be able to understand for yourself. Not that any decision should be made to buy or not, rather by being aware, you will better understand how your property and your responsibilities fit in with the site.
Residents Committees.
What bought this matter to mind at present and the reason I stated I would return to Freeholder managed with site participation, is because we have become involved with a site where the Freeholder allowed communication with the Residents through a Residents committee. The problem that occurred on this site was a lack of trust between one half of the residents of the site and the other half containing the committee. In this case the Freeholder has stepped in and instructed us how to manage the site which will allow us to look after our Clients interest as Managing Agents. This kind of scenario is unusual and would never be explained by the questions asked by your Legal Representative.
Legal position.
More importantly to me is the total lack of explanation of the legal position surrounding the obligations the Leaseholder now holds. Of course those that ask do not understand. Conversely, those who do not ask probably do understand. So we only hear from those who do not, but that is still too many. The Lease that they have entered in to explains fully their financial obligation and rights surrounding the charges they must now pay. As these include buildings insurance, grounds and internal area maintenance, as well as any funds being held in reserve for costly requirements that may be required at a later date, explains why these obligations should be explained in full prior to completing any purchase.
Speak to those who know.
What never happens is the purchaser phoning and speaking to the existing Managing Agent to enquire about the site and how it is run and to have the financial idiosyncrasies of the particular site explained yet the legal representative of the purchaser does ask a series of set questions surrounding this very subject, including current and past accounts. For me it is a simple step from this position to that of speaking with us and of course what could be better than an introduction and explanation of the manner in which the site is currently run.
Conclusion.
What I believe all of this misunderstanding dictates is that as a potential buyer of a leasehold property, it is right and correct that you not only rely upon the information gathered by your legal representative, but also ask to speak to the Managing Agent, because whichever side we work for and to be able to do both is not straight forward, we can at least ensure you understand how the site is run and that you fully understand what you pay and more importantly why. We will also be able to point you in the direction of the lease, which is designed to be the rule book for the way in which all parties must operate, but that is probably for another Blog!
In managing structures to your property there are a lot of things to consider and still you have to consider the legal position on it.