Managing Agent – What is the best practice when taking over a new estate?

The handover process is something the vast majority of managing agents will be familiar with, whether it is gaining the management of a development or passing a property on to another agent. However, despite most being familiar with the process, it is regularly not carried out effectively or efficiently. This not only creates frustration for everyone involved, but it can also have serious implications upon the management of the properties it relates to. 

In this blog our Head of Litigation, Liz Rowen, goes through handover details such as what documents should be included, who owns them and what action can be taken if a handover isn’t taking place.  

What documents should be expected within the handover process? 

The Royal Institute of Chartered Surveyors (RICS), Service Charge Residential Management Code, 3rd Edition (the RICS Code) offers significant guidance on the best practice for handover. Some of the guidance is worth familiarizing yourself with even if you aren’t currently going through the handover process. It advises on records worth keeping, details to include within your contract and much more, which can help ensure you’re prepared for any potential handover. 

Within the RICS Code clause 6.6 is of particular interest as it sets out the factors to be considered within the handover process and how to address them. 

Who owns what?

Commonly, where a managing agent has been instructed there will be a landlord or management company that instructed them. Upon instruction a contract will begin between the managing agent and their client, within which we would advise details be included in relation to the ownership of documentation upon termination of the contract. Although it may be an awkward discussion to have, it is much better having it at the beginning of the relationship than at the end, when the relationship may not be at its strongest.  

Without any specific details included within the contract in relation to documentation ownership, it will more often than not be the case that the vast majority of documents held by a managing agent will in fact belong to their client and will therefore need to be handed over upon the conclusion of the management agreement. 

Why does it matter?

The management of a property will naturally require historical information such as building surveys, details of the leaseholders and their correspondence address and financial records. If such information is not made available upon handover, it can’t make subsequent management of property very difficult for the new managing agent and may lead to them incurring unnecessary expense whilst trying to establish the background of the development. 

As for the leaseholders, if correct details aren’t supplied to the new agents, they could send demands and notices to the wrong address. This could then lead to non-payment of service charges, or them being unaware of upcoming work to the property. 

Financial information and funds

In addition to the general documentation relating to the development that must be handed over there is also likely to be a pot of service charge monies to handover. The RICS Code highlights that the management agreement should set out how the monies held by the agent on behalf of the client are accounted for and handed over. This will be relevant to any uncommitted service charge that should be handed over in a ‘timely manner’. 

When handover does not take place

In the rare circumstance that a new agent struggles to get the handover they require, they can look to force it to take place by seeking injunction relief in court. Asking the court to make an order for the delivery of property under section 4 of the Torts Interference with Goods Act 1977. However, we would hope such action isn’t necessary and is only considered as a last resort, as it can be an expensive and drawn out process. 

If you have any questions relating to the handover process or are currently struggling with a handover, please get in touch and a member of our team will be happy to help. 

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With hundreds of years’ worth of combined experience, our experts have dealt with nearly every leasehold property matter you can imagine. If you’re currently in need of legal support or advice, please get in touch.

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