Leasehold Right To Manage Claims: The Importance Of Getting It Right13th Jun 2022
Why More Leaseholders Want To Change Their Management Company
Our solicitors are seeing a big increase in the number of leaseholders who want to change the management company at their block.
There are three possible reasons for leaseholders wanting to change their block managers:
- Excessive service charges or a lack of maintenance – especially if the work isn’t being done properly and the communal areas, grounds and fabric of the block look neglected.
- Slow service – the managing agents take too long to respond to requests.
- Questionable major works – the managing agents instigate seemingly unnecessary and expensive projects.
The good news is you have the right to change your block management. And it’s an absolute right: you don’t have to prove fault on their part.
Exercising your Right To Manage is a complex process where attention to detail is paramount. It requires expert legal advice from specialist leasehold solicitors.
Is Your Freeholder/Landlord Or Management Company Failing In Their Duty?
Freeholders/landlords (or third party management companies, if applicable) are subject to various legal obligations as part of the lease. These covenants are there to ensure that the property is maintained correctly.
Examples of these covenants include:
- keeping the property insured under a suitable buildings insurance policy, compliant with UK legislation and the Finance Mortgage Lenders’ Handbook
- repairing and maintaining the wider building and any property associated with it
- cleaning and decorating the communal areas
- ensuring that services benefiting the property (such as gas, water and electricity) are adequate and in good working order
- collecting the ground rent and service charges in accordance with the terms of the leases.
But what if the landlord fails to adhere to these covenants?
You could pursue legal action for a breach of the lease. But this can often involve:
- Making a tribunal application to determine that there has indeed been a breach. The applicant leaseholders may have to foot the bill for this application.
- Serving a claim in the County Court for an enforcement order. But the cost of this could exceed the loss caused (and the burden of proof is on the leaseholders to prove the breach).
Hence the reason that most leaseholders instead choose to exercise their Right To Manage under the Commonhold and Leasehold Reform Act 2002.
Why DIY Attempts At Right To Manage Are A Costly False Economy
Attempting to organise a Right To Manage (RTM) application without proper legal advice is risky.
Getting it right relies on you ensuring that a myriad of legal details are correct for the notices that you must serve. Get one detail wrong for any of the flats or leaseholders in your block and the entire claim could be rejected.
You would then have to correct the error and resubmit the notices – with all the extra legal costs and wasted time that this would involve. Resubmission can add hundreds of pounds to your legal bill and weeks or even months to the time needed to complete the RTM process.
Why all this extra time? There are legally defined periods of times for each stage in the process:
- Invitation to Participate – 14 days to give the leaseholders time to decide.
- Notice of Claim – one month for the freeholder to respond with a Counter Notice.
- Counter Notice – at least three months before the Right To Manage company can take over from those currently managing the block.
So every self-inflicted bump in the road can make the journey to RTM freedom longer.
RTM Pitfall Example 1: Jointly Owned Property
Each qualifying tenant of the flat must be invited to participate in the Right to Manage. Fail to notify every qualifying tenant and you risk your claim being invalidated.
If the property is owned jointly, you have to send an Invitation To Participate to both tenants. Send it to just one and the RTM will fail because you have not invited all the leaseholders/tenants.
Things become trickier where there are multiple owners of a single property and at least one of them lives at a separate address. You would need to be able to show that you have given each qualifying tenant the opportunity to participate.
And don’t forget – there may also be sub-leases. If so, you would have to invite the sub-lessees too.
RTM Pitfall Example 2: One Of The Leaseholders Has Died
What happens if you have sent a participation agreement but afterwards one of the leaseholders has passed away?
You may need to provide a death certificate. If there is a surviving spouse, you will need to confirm that they have the right to own the property. This may involve providing a copy of the will.
If the leaseholder died without making a will then you may need to supply a marriage certificate to confirm the spouse’s ownership of the property under the intestacy rules.
RTM Pitfall Example 3: The Lease Details Are Incorrect
For an RTM to succeed, it must be supported by 50 or more per cent of the leaseholders in the block. Each leaseholder involved in this calculation must be eligible to participate in the RTM. That eligibility depends on a number of factors – one of which is that they hold a long lease (of 21 or more years).
So you will need to provide evidence of each lease. And every lease must be the right one. If a leaseholder has just extended their lease and you quote old or incorrect details registered at HM Land Registry then the RTM attempt may fail.
RTM Pitfall Example 4: Your Freeholder Uses Delaying Tactics
Your freeholder may not be overjoyed to receive your Notice of Claim. For various reasons, they may not want to surrender control of the management of the block to an RTM company created by the leaseholders.
Unfortunately for the freeholder, they don’t have any choice in the matter. But they can employ stalling tactics…a steady drip, drip, drip of delays designed to wear down your resolve (and your bank balance).
Your freeholder may try to pick holes in your applications one fault at a time so you have to resubmit your claim…then resubmit again…and again…and again, all whilst paying the freeholder’s costs for invalidating each claim.
This is why it’s so important to have an expert solicitor on hand to spot all the possible pitfalls at the outset and deal with them before they cause problems further down the line.
Never forget, your freeholder may well have a specialist leasehold solicitor in their corner – so you will need one in yours.
Spotting Errors In Right To Manage Documentation
Beware if you’re attempting a DIY RTM application. Your freeholder may find it much easier to pick holes in it than you think.
Most of the RTM enquiries we receive are from leaseholders. But recently we received one from a landlord. They had just received a Notice of Claim. We were able to identify one significant error in it immediately – even before delving into the detail.
It’s as easy as that. So always seek legal advice from a leasehold specialist!
Get Expert Legal Advice On Residential Leasehold Matters
At Coles Miller, we have a specialist residential leasehold department based at our Bournemouth office.
Contact us for expert legal advice on Right To Manage, disputing service charges, buying the freehold, extending the lease, restrictive covenants, varying your lease and the Right of First Refusal. Book a free chat.