Brady Solicitors discuss leaseholders’ right to appoint a manager and how this can impact on existing or prospective managing agents.
Managing agents should be aware that the Property Tribunal (formerly known as the LVT) has the power to appoint a manager and/or receiver to manage a building instead of the landlord or his managing agent.
This power is exercised where the management of a property is considered unsatisfactory by the leaseholders.
Unlike the Right to Manage process, leaseholders do not need to secure the support of a minimum number of leaseholders.
Appointment of a Manager – the process
The first step is for the leaseholders to give a ‘preliminary notice’ to the landlord and to any other person who has management duties under the lease, detailing the areas of concern regarding the management of the property. A managing agent whose duties are not due under the lease will not need to be served with the notice.
If the recipients of the notice fail to remedy the matters set out in the notice, or if there are other grounds for dissatisfaction, then the leaseholders may proceed with an application to the Property Tribunal.
In order to exercise its powers of appointment, the Property Tribunal must be convinced that it would be just and convenient in all the circumstances to do so and that:
- The person complained about is in breach of an obligation under the lease relating to the management of the building; or
- Unreasonable service charges have been made or are proposed or are likely to be made; or
- Unreasonable variable administration charges have been, or are proposed or likely to be made; or
- That there have been breaches of the relevant codes of practice under the Leasehold Reform Housing and Urban Development Act 1993.
The Property Tribunal also has power to make an order if other, undefined circumstances exist that make it just and convenient for the order to be made.
Who can be a Manager?
Although there is no requirement for the Property Tribunal to appoint a professional manager, one of the most common grounds for the Tribunal rejecting a proposed managing agent is a deemed lack of experience. We recommend therefore that leaseholders propose professional managing agents in order to reduce this risk.
The Order of Appointment
The Property Tribunal has a wide discretion when making any Order.
Generally speaking, the Order will provide the managing agent with the level of authority that the Property Tribunal considers appropriate to enable them to take control of the management of the building.
The managing agent is responsible to the Property Tribunal and is not required to seek or accept instructions from the landlord or from the leaseholders.
After the appointment
Once the new managing agent is appointed, the landlord ceases to have management control over the building to the extent set out in the Order.
The Property Tribunal can require the landlord to provide all necessary documentation, accounts and other information to the new managing agent as is necessary for the management of the building.
Existing managing agents must therefore remain committed to fulfilling the landlord’s responsibilities as required by the relevant leases and applicable legislation. A failure to do so could give rise to an application made by the leaseholders for the appointment of a new manager.
Legal advice should be sought wherever possible on any of the leases.
By the same token, prospective managing agents should be aware of the potential to be nominated by disgruntled leaseholders.
Find out more
For help and advice with the Appoint a Manager process or any other legal property management matter call Brady Solicitors on 0115 985 3450 or drop us an email and we can talk you through your options.