The 2002 Commonhold and Leasehold Reform Act (applicable in England and Wales) legislation provides an opportunity for flat owners, to run their own affairs and to make their own decisions about the management and upkeep of their flats, including the insurance, repairs and service charges by means of The Right To Manage Process (RTM).

These are frequently asked questions about setting up and running a Right To Manage company:

How Long Does The Right To Manage Process Take?

The timescales are largely determined by the 2002 legislation. You need to allow approximately five months. You can take over management at this time, but if there are any disputes regarding transfer of existing funds, allow some extra time for resolution.

Do We Have To Pay The Freeholder’s Costs Relating To The Right To Manage?

You are responsible for the freeholder’s “reasonable costs” relating to the application. Often these costs are small and not requested, but some freeholders use expensive solicitors to verify the validity of your RTM claim. In this case, expect to pay several hundred pounds. You can dispute the ‘reasonableness’ of any charges at a Leasehold Valuation Tribunal (LVT).

What Exactly Is A Right To Manage Company?

It is a company formed to take over management through the Right To Manage process (RTM), as defined by the 2002 Commonhold and Leasehold Reform Act, has a number of differences to a normal Limited Company. Firstly it is limited by guarantee, not by shares. The owners of the company are members rather than shareholders, and their liability is limited to £1. The Right To Manage Company is still a limited company registered at Companies House with normal company reporting requirements, although the scope of its actions are limited. The memorandum of association is very specific and defined exactly by the 2002 Act.

Right To Manage Company – How many Directors Are Needed?

Companies House has recently changed the requirements for limited companies, so that they can now be operated with a single director and secretary. However the RTM memorandum of association does require a minimum of two unless determined by an ordinary resolution.

Right To Manage Company – How Do You Sell Your Flat?

What happens when somebody sells their flat and a new buyer takes over? A Right To Manage company maintains a Member Register (at the registered office), a membership transfer is simply a case of replacing one owner’s name with the new owner.

Right To Manage – What Rights Does The Freeholder Have?

Does the freeholder have a right to become a member of our RTM company? After you complete the RTM takeover, the freeholder has a right to become a member of the RTM company. Most will use this right, not because they want to be involved in the day-to-day running of the company, but because they have an ownership interest in the building. In addition you will probably have your company meetings in your own building, which would usually be inconvenient for the freeholder to attend. The freeholder is typically allocated one vote if he/she does not own any flats in the building, or one vote per flat owned. The situation is more complicated if there are any intermediate landlords, but you as owners will still be able to outvote any freeholder representation.

Right To Manage Company – What Are The Ongoing Obligations?

 In exchange for your limited liability (£1), the law requires limited companies to make certain information available to the public at Companies House. This includes an annual report and accounts, an annual return, and other notifications (such as change of directorship, change of registered office). These must be filed at Companies House.

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