Right to Manage – Holding Landlords Accountable

Leaseholders dreams… participation and accountability

This is one option available to qualifying buildings where a minimum 50% qualifying leaseholders become members of a RTM company effectively gain all the management rights from freeholders or superior leaseholders, allowing for communal running by 50% majority members directing the board and accountability with access to all company documents by providing reasonable notice.

This can be ALL be done directly by the leaseholders instructing the directors using resolutions on what to do or not to do, or
delegating this to a board of directors (minimum 2), and by resolution restricting directors authority, and
by special resolution (75% of members) force the board to alter decisions or force them to implement a decision!

Legal Procedure

Commonhold and Leasehold Reform Act 2002 [“CLRA2002”]

Chapter 1 Right to manage

S72 – Qualifying Rules

Premises to which Chapter applies

(1)This Chapter applies to premises if—

(a)they consist of a self-contained building or part of a building, with or without appurtenant property,

(b)they contain two or more flats held by qualifying tenants, and

From section 112 – definitions which apply to RTM

“flat” means a separate set of premises (whether or not on the same floor)—(a)which forms part of a building,(b)which is constructed or adapted for use for the purposes of a dwelling, and(c)either the whole or a material part of which lies above or below some other part of the building,

“unit” means—(a)a flat, (b)any other separate set of premises which is constructed or adapted for use for the purposes of a dwelling, or(c)a separate set of premises let, or intended for letting, on a tenancy to which Part 2 of the Landlord and Tenant Act 1954 (c. 56) (business tenancies) applies.

“dwelling” means a building or part of a building occupied or intended to be occupied as a separate dwelling,

as there is no definition for seperate dwelling it can only mean a part… OR….here we have a clear circular definition!!!
What a waste of space, but this is what the legal profession relies upon!
The intent of RTM is clear – to give those paying control over how their money is spent!!!

(c)the total number of flats held by such tenants is not less than two-thirds of the total number of flats contained in the premises.

(2)A building is a self-contained building if it is structurally detached.

(3)A part of a building is a self-contained part of the building if—

(a)it constitutes a vertical division of the building,

(b)the structure of the building is such that it could be redeveloped independently of the rest of the building, and

(c)subsection (4) applies in relation to it.

(4)This subsection applies in relation to a part of a building if the relevant services provided for occupiers of it—

(a)are provided independently of the relevant services provided for occupiers of the rest of the building, or

(b)could be so provided without involving the carrying out of works likely to result in a significant interruption in the provision of any relevant services for occupiers of the rest of the building.

(5)Relevant services are services provided by means of pipes, cables or other fixed installations.

(6)Schedule 6 (premises excepted from this Chapter) has effect.

EXCEPTIONS – CLRA2002, Schedule 6

YOU ARE NOW READY TO SETUP YOUR RTM….

Easiest is to get professional help – and RTM is a limited liability company with specific Articles of Association (the rules of the RTM).

ALL REASONABLE COSTS YOUR INCUR ARE RECOVERABLE FROM THE MEMBERS SO THE MORE YOU GET THE CHEAPER IT IS, AND IDEALLY YOU WANT ALL THE QUALIFYING LEASEHOLDERS SO THEY EQUALLY SHARE THE COSTS AND REWARDS!

Send notice inviting participation to qualifying tenants in accordance with CLRA2002 section 78

In your notice inviting participation to qualifying tenants send membership application in accordance with your RTM’s Articles of Association 26(1).

WHICH CAN BE MODIFIED to meet requirement of CLRA2002 (78) as follows:

COMMONHOLD AND LEASEHOLD REFORM ACT 2002

NOTICE OF INVITATION TO PARTICIPATE IN RIGHT TO MANAGE (Note 1)

To [NAME OF QUALIFYING TENANT/S] of [ADDRESS OF QUALIFYING TENANT/S] :

[NAME OF YOUR RTM] (“the company”), a private company limited by guarantee, of [ADDRESS OF YOUR RTM], and of which the registered number is [# OF YOUR RTM] is authorised by its memorandum of association [HYPERLINK TO COMPANIES HOUSE SO INVITEES CAN DOWNLOAD] (Notes 2 & 3) to acquire and exercise the right to manage [THE NAME AND ADDRESS OF THE BUILDING] (“the premises”). The company intends to acquire the right to manage the premises.

1 The names of-

(a) the members of the company are [ENTER THE NAMES OF THE EXISTING MEMBERS]

(b) the company’s directors; [ENTER THE NAMES OF THE EXISTING DIRECTORS], and

2 The names of the landlord and of the person (if any) who is party to a lease of the whole or any part of the premises otherwise than as landlord or tenant are:

[ENTER THE NAMES IF ANY OTHERWISE STATE NONE]

3 Subject to if the right to manage is acquired by the company, the company will be responsible for-

(a) the discharge of the landlord’s duties under the lease; and

(b) the exercise of his powers under the lease,

with respect to services, repairs, maintenance, improvements, insurance and management.

4 Subject to the exclusion mentioned in 7 below, if the right to manage is acquired by the company, the company may enforce untransferred tenant covenants (Note 4).

5 If the right to manage is acquired by the company, the company will not be responsible for the discharge of the landlord’s duties or the exercise of his powers under the lease-

(a) with respect to a matter concerning only a part of the premises consisting of a flat or other unit not subject to a lease held by a qualifying tenant; or

(b) relating to re-entry or forfeiture.

6 If the right to manage is acquired by the company, the company will have functions under the statutory provisions referred to in Schedule 7 to the Commonhold and Leasehold Reform Act 2002 (Note 5).

7 The company intends to appoint a managing agent within the meaning of section 30B(8) of the Landlord and Tenant Act 1985.

8 If the company gives notice of its claim to acquire the right to manage the premises (a “claim notice”), a person who is or has been a member of the company may be liable for costs incurred by the landlord and others in consequence of the claim notice (Note 6).

9 You are invited to become a member of the company (Note 7).

10 If you do not fully understand the purpose or implications of this notice you are advised to seek professional help.

Signed by authority of the company [Signature of authorised member or officer]

Director Name:

Date:

NOTES

1 The notice inviting participation must be sent to each person who is at the time the notice is given a qualifying tenant of a flat in the premises but who is not already, and has not agreed to become, a member of the company. A qualifying tenant is defined in section 75 of the Commonhold and Leasehold Reform Act 2002 (“the 2002 Act”).

2 The specified times for inspection must be periods of at least 2 hours on each of at least 3 days (including a Saturday or Sunday or both) within the 7 days beginning with the day following that on which the notice is given.

3 The ordering facility must be available throughout the 7 day period referred to in Note 2. The fee must not exceed the reasonable cost of providing the ordered copy.

4 An untransferred tenant covenant is a covenant in a tenant’s lease that he must comply with, but which can be enforced by the company only by virtue of section 100 of the Commonhold and Leasehold Reform Act 2002.

5 The functions relate to matters such as repairing obligations, administration and service charges, and information to be furnished to tenants. Details are contained in the Articles of Association.

6 If the claim notice is at any time withdrawn, deemed to be withdrawn or otherwise ceases to have effect, each person who is or has been a member of the company is liable (except in the circumstances mentioned at the end of this note) for reasonable costs incurred by-

(a) the landlord,

(b) any person who is party to a lease of the whole or any part of the premises otherwise than as landlord or tenant, or

(c) a manager appointed under Part 2 of the Landlord and Tenant Act 1987 to act in relation to the premises to which this notice relates, or any premises containing or contained in the premises to which this notice relates in consequence of the claim notice.

A current or former member of the company is liable both jointly with the company and every other person who is or has been a member of the company, and individually. However a former member is not liable if he has assigned the lease by virtue of which he was a qualifying tenant to another person and that other person has become a member of the company.

7 All qualifying tenants of flats contained in the premises are entitled to be members. Landlords under leases of the whole or any part of the premises are also entitled to be members, but only once the right to manage has been acquired by the company. An application for membership may be made in accordance with the company’s articles of association and you are required to complete and return the following membership application;

To the Board of [YOUR RTM NAME]

I, [REPLACE WITH YOUR NAME/S] of [REPLACE WITH YOUR ADDRESS], leaseholder of flat [REPLACE WITH YOUR FLAT NUMBER] under Land Registry title number [REPLACE WITH YOUR TITLE NUMBER] am a qualifying tenant of [NAME AND ADDRESS OF BUILDING] and wish to become a member of [YOUR RTM NAME] subject to the provisions of the Articles of Association of the company and to any rules made under those Articles. I agree to pay the company an amount of up to £1 if the company is wound up while I am a members or for up to 12 months after I/we have ceased to become a member.

Signed:

This [DAY] of [MONTH] in the year [FOUR DIGIT YEAR].

8 If the right to manage is acquired by the company, the company must report to any person who is landlord under a lease of the whole or any part of premises any failure to comply with any tenant covenant of the lease unless, within the period of three months beginning with the day on which the failure to comply comes to the attention of the company-

(a) the failure has been remedied,

(b) reasonable compensation has been paid in respect of the failure, or

(c) the landlord has notified the company that it need not report to him failures of the description of the failure concerned.

9 If the right to manage is acquired by the company, management functions of a person who is party to a lease of the whole or any part of the premises otherwise than as landlord or tenant will become functions of the company. The company will be responsible for the discharge of that person’s duties under the lease and the exercise of his powers under the lease, with respect to services, repairs, maintenance, improvements, insurance and management. However, the company will not be responsible for matters concerning only a part of the premises consisting of a flat or other unit not subject to a lease held by a qualifying tenant, or relating to re-entry or forfeiture.

10 If the right to manage is acquired by the company, the company will be responsible for the exercise of the powers relating to the grant of approvals to a tenant under the lease, but will not be responsible for the exercise of those powers in relation to an approval concerning only a part of the premises consisting of a flat or other unit not subject to a lease held by a qualifying tenant.

Download template word format

Once you have over 50% of the qualifying tenants you are ready to send the landlord and each qualifying tenant a claim notice in accordance with CLRA2002 (79), and must contain the information in accordance with CLRA2002 (80). CLRA2002 (81) CLRA2002 (82) and CLRA2002 (83)

The landlord may object by issuing counter notice in accordance with CLRA2002 (84) and if not settled and you believe you have done everything correctly you must apply to an appropriate Tribunal (CLRA2002(84)(3) for a decision.