Managing agent terms of appointment can be a very useful written agreement and a good opportunity to establish expectations with your leaseholder clients. Colin Hussey, director at legal property management experts Brady Solicitors, explain the key points to include in your management agreement.
Our service charge solicitors work with managing agents of all shapes and sizes and we see many different forms of management agreements and terms of appointment!
We also regularly see agents with no terms in place at all – leaving themselves open to an unnecessary level of risk.
Your terms of appointment don’t need to be complicated or packed with ‘legalease’, but they do need to set out an agreed level of activity and expectations.
Ideally, your managing agent terms of appointment should cover / include the following:
- The charging structure: what you include in the basic fee and how, and when, can the fee be reviewed.
- What extra services you will need to charge for.
- Clarification of your permission to serve service charge demands and issue proceedings on behalf of the freeholder.
- The duration of the Terms of Appointment. (If it is for more than a year it will likely make it a Qualifying Long-Term Agreement, so you may wish to keep it to just under 365 days. Read more about QLTAs here.)
- An indemnity clause to protect you from being out-of-pocket during and also after your appointment if it is terminated.
- Your service standards so your client knows what they can expect from you.
- Details of what works you will carry out at the development, and also what you won’t do.
- Clarification that any action you take is taken in the name of the client and not in your own name.
- How the client can terminate your appointment and how much notice they must give.
- Ensure there is a clear position in terms of the liability for contractors’ fees and bills so that they don’t ‘go with you’.
Terms of appointment are valuable at the outset of a new relationship and they can be even more important at the end of it…
Your terms and conditions can help to reduce your exposure should you lose the block in the future – whether negligently or through no fault of your own. Set out how your fees will be paid in such a situation and whether these can be recouped from the service charge funds.
It’s important to remember that your terms of appointment may well be seen one day by the court or at tribunal should a dispute arise.
