Right to Manage

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In the United Kingdom the Commonhold and Leasehold Reform Act 2002 provides a right for leaseholders to change the appointment of the management of their building to another provider, by setting up a special company to take over from the freeholder those rights of appointment of management of the building.[1]

The duty to transfer funds[edit]

The legal obligation of the freeholder or previous management company is to pass forward any unspent funds. In practice, if these are less than £2k, it is not economic to pursue them through the courts, but ultimate determination can be made by the Leasehold Valuation Tribunal (LVT)[2]

Freeholder's membership of the Right to Manage Company[edit]

Immediately upon the RTM company taking over on the acquisition date, the landlord becomes entitled to membership of the company, with full voting rights as a company member (if he wishes to take it up). The landlord’s votes are, in the first instance, determined according to the units he holds in thebuilding, flats or non-residential parts. In cases where he holds no units, and therefore would have novotes, he is allocated one vote as the landlord.

As the right to manage is not default-based, there is no reason why the landlord, who retains an interest in the building, should not have some input to the practicalities of its management. It is different where the manager has been appointed by a Tribunal to replace a poor or incompetent manager – there the landlord is removed entirely as a consequence of his mismanagement. With the right to manage, it is assumed that the landlord is not necessarily at fault and so there is no justification for his exclusionfrom the management process.[3]

References[edit]

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