Tag Archives: Right to Manage Companies

Improvement notice relating to apartment block should have been served on tenants

Where an apartment block is managed by a Right to Manage (“RTM”) Company who can a local housing authority serve an improvement notice on requiring work? Can an improvement notice still be validly served on the landlord under paragraph 4(2) of Schedule 1 to the Housing Act 2004 (“the Housing Act”)?

In the Upper Tribunal (Lands Chamber)case of Hastings Borough Council v Braear Developments Ltd [2015] Hastings Borough Council served an improvement notice requiring work to the common parts on Braear Developments Limited, the freeholder, and on the RTM Company.

Previous freeholders had granted long leases of the five first, second and third floors flats in the building, for a term of 99 years. The leases of the flats granted rights over the only means of access. Four of the five flats in the building were sublet on assured tenancies by the lessees. The fifth flat was not let, but if it were, the recipient of the rack-rent would be the lessee.

The Tribunal said looking at the building as a whole, the “person in control”, in the statutory sense of the person(s) in receipt of the rack rents, were the lessees of the five flats.

It would be wrong to ascribe a notional rack-rent to the common parts of the building, when there is no realistic possibility of such a rent being received.

The persons in control of the building were the lessees of the five flats.

Collectively they received the rack-rent of the building. So they satisfied the description in section 263(1) of the Housing Act.

Neither the respondent, as freeholder, nor the RTM Company could be served with an improvement notice in relation to any part of the building.

The freeholder did not qualify to receive the notice as the “person in control” of a House in Multiple Occupation (“HMO”) because it did not receive the rack-rents of the premises and so did not match the description in section 263(1) of the Housing Act. The RTM Company was in the same position.

Nor were either of the freeholder or the RTM a “person managing the building” within section 263(3) of the Housing Act. The respondent received a ground rent from the lessees, but no rent from persons who were in occupation as tenants or licensees of parts of the premises. The RTM Company received no rent at all.

So, in relation to the building as a whole, paragraph 2 of Schedule 1 to the Housing Act required the improvement notice to be served on the lessees collectively, and, to the extent that work was required within any individual flats, it required each lessee of those flats to be served with the notice requiring that work.

Paragraph 2 of Schedule 1 to the Housing Act applies only to HMOs which are not licensed. So where a building is an HMO subject to licensing it would normally be expected that an improvement notice would be served on the person holding the licence.

This building was subject to licensing as an HMO but it was not licensed.

Had the RTM Company obtained an HMO licence under Part 2 of the Act, as it should, it would have been the appropriate person on whom an improvement notice ought to be served under paragraph 1 of Schedule 1. As it had failed to do so the notice was to be served on the lessees collectively under paragraph 2.

There may be circumstances where a local housing authority could, and might have to, serve an improvement notice in relation to common parts either on the freeholder or on some or all of the lessees of flats. Each case would turn on which of those owners “ought to take the actions specified in the notice” in the circumstances. For example, where an RTM company has the management the freeholder would have no power to undertake works and no entitlement to recoup the costs of works from lessees.

Here, the better course would be to direct any improvement notice at those lessees who are members of the RTM company and who are therefore collectively able to control the RTM company’s decisions. Usually the RTM company would be able to carry out the works and to recoup their costs under service charges.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Housing: Corresponding date rule validated Right to Manage Claim Notice

An application may be made for the appointment of a manager of leasehold housing under the Commonhold and Leasehold Reform Act 2002 (“2002 Act”).

Section 80 of the 2002 Act prescribes that the claim notice:

– must specify a date, at least one month after “the relevant date”, by which each person who was given the notice under section 79(6) may respond to it by giving a counter-notice under section 84 (Section 80(6)) and

– must specify a date, at least three months after that specified as above, on which the Right To Manage company (“RTM company”) intends to acquire the right to manage the premises (Section 80(7)).

In the Upper Tribunal Lands Chamber) case of Windermere Court Kenley RTM Company Ltd v Sinclair Gardens Investments (Kensington) Ltd [2014] “the relevant date” was the 29th August 2013, when the claim notice was given, and the 30th September 2013 was the date specified under section 80(6) and the 31st December 2013 was the date specified under section 80(7).

Issue: whether a specified date of 31st December 2013 satisfied the requirements of section 80(7) or whether the earliest date it could have been was 1st January 2014.

The Tribunal said:

– The corresponding date in the following month or months was to be used as the date of calculation particularly where, as here, there was one.

– The application of the corresponding date rule in this case required that the start time specified for the RTM company must be a date ‘after’ midnight on 30th-31st December 2013.

– The start-time the claim notice specified for the RTM company was 31st December 2013.

– 31st December was the day ‘after’ midnight on 30th-31st.

Accordingly specifying 31st December 2013 as being the first day three months “after” the 30th September 2013 satisfied the requirements of section 80(7). So the claim notice complied with the provisions of section 80 of the 2002 Act.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Landlord not bound by Right to Manage Company’s Claim Notice

Where a company (a “RTM Company”) applies to a residential landlord to acquire the right to manage conferred by Part 2 of the Commonhold and Leasehold Reform Act 2002 (“the 2002 Act”), section 78(5)(b) of the 2002 Act requires the service of “a notice inviting participation” to inform non-participating tenants that the RTM company’s articles of association are available for inspection on 3 days – at least one of which must be a Saturday or Sunday.

The claim notice must also be served on any landlord of the property under section 79(6) of the 2002 Act.

Would non-compliance with these requirements be fatal to the whole right to manage procedure or might it be overlooked?

In the recent case of Elim Court RTM Co Ltd v Avon Freeholds Ltd [2014] the first requirement was not complied with and as to the second requirement it was served not on the intermediate landlord but on one of the flats and not passed on to the intermediate landlord.

The Upper Tribunal (Lands Chamber) decided that the requirements were mandatory and that non compliance was fatal on both counts.

That disposed of the case in favour of the landlord but the case did raise an interesting signature issue.

The landlord argued that the disputed claim notice purported to be signed on behalf of the RTM Company by the secretarial company which was the company secretary of the RTM Company and that, accordingly, there being just the one unwitnessed signature on the claim notice, it was ineffective for failing to comply with section 44 of the Companies Act 2006.

The statement after the signature mentioned the signatory’s name and the words “RTMF Secretarial” which was the trading name of Federation Limited, the RTM Company’s company secretary, which suggested that he was signing as a representative of “RTMF Secretarial”, and not as the immediate agent of the RTM Company.

Had the signature been the purported signature of the secretarial company it would indeed have been ineffective for failure to comply with section 44.

However the Tribunal said the claim notice contained no indication as to who or what “RTMF Secretarial” was or indeed that it was a limited company. The provision of the additional information below his signature did not derogate from the fact that the signatory actually had separate authority to sign and give the notice in his individual capacity as authorised member or officer acting on behalf of the RTM Company.

The signatory’s signature neither purported to be that of a company to the intent that it was being given by the secretarial company on behalf of the RTM company, nor would Section 44 have allowed it to be. Had the secretarial company been pursuing that option a second company officer’s signature or a witness to his signature would have indeed have been required under Section 44 and their omission here would have been fatal to the validity of the notice.

We might disagree with the Tribunal and think the fact that someone acting in a particular way as a secretarial company’s signatory would have been legally ineffective has little probative value as a pointer to them having intended to act in their individual capacity as agent of the RTM Company (effective) especially when their signature was accompanied by a trading name which suggests they were actually signing, not in their individual capacity, but instead as the secretarial company’s signatory (ineffective).

This blog has been posted out of general interest. It does not remove the need to get bespoke legal advice in individual cases.