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right to manage claims

right to manage process

The right

The Commonhold and Leasehold Reform Act 2002 (‘the 2002 Act’) created a new “no fault” Right To Manage Process on the part of tenants who can now force their landlord to transfer the manage- ment functions to a special kind of company called a “ Right to Manage (RTM) Company ”

The Right to Manage is a group right for tenants of flats to manage the building; there is no need for the landlord to consent to the establishment of an RTM company and no order of a court or Property Chamber is necessary; there is no premium to pay to exercise the right and further, the right is available regardless of any alleged deficiencies in the existing management. The Leasehold Enfranchisement team are happy and ready to be consulted on specific cases.

The procedure

The Right to Manage Process is not exercisable unless the building qualifies and that there are sufficient qualifying leaseholders who are willing to participate in RTM.

The formal process for exercising the RTM is started by the RTM Company serving a Claim Notice on the Landlord; it then follows a prescribed route.

Any person served with a notice of claim by an RTM company may give a counter- notice within the time period allowed in the notice of claim. The counter-notice may either:

  • consent to the RTM company acquiring the management on the date prescribed; OR
  • allege that the RTM company is not entitled to acquire the management of the property. Reasons must be given for any allegations made.

If there have been no disputes as to the notice of claim, the RTM company will acquire the right to mange on the date specified in the notice of claim.

If there have been disputes and the Property Chamber has determined in favour of the RTM company, the acquisition date will be three months after the determination becomes final.

Leaseholders will also be liable for the landlord’s costs.

Find out more on flowchart mapping.

What is the RTM company responsible for?

The RTM does not necessarily have to take over the day-to-day management of the building; it can appoint managing agents of its choice to take over the Company's responsibilities.

Where an RTM Company has acquired RTM, it will be responsible to manage functions under all of the leases held by qualifying tenants in the building.

To assess the exact management functions under the RTM will be responsible lessees will need to check the terms of the lease, but in the main, the RTM company will acquire responsibility for

  • repairs
  • maintenance
  • insurance and
  • services.

Other considerations

Existing Contracts:

It is the landlord’s obligation to ensure all parties are aware of the relevant contracts through service of “the contractor notice”. When RTM is exercised, the landlord is likely to have a number of contracts in place relating to the block.

Under the 2002 Act all responsibility for management under the terms of the leases transfer to the RTM Company. The landlord will therefore no longer be in a position therefore to fulfil any contractual duties and the RTM will need to decide whether to renew the contracts or look elsewhere for the provision of those services.

Contractor Notice:

The contractor notice must be served by the landlord on all contractors appointed by the landlord and must include a minimum amount of information.

Where any of the services are sub-contracted the contractor who receives the contractor notice must send a copy of the notice to the sub-contractor.

Duty to Provide Information:

The RTM Company will not be able to manage the building without detailed information and the company can request whatever it “reasonably requires in connection with the exercise of the RTM” by issuing the landlord with a duty to provide information notice.

Duty to transfer funds:

Where a landlord has collected service charges in advance but not yet spent them all, he is under an obligation to hand the sums over to the RTM. This does not require notice from the RTM – the legislation places the duty firmly on the landlord.

The sums must be paid on the Acquisition Date or as soon after as is reasonably practicabl

The total sum to be paid is calculated by taking any monies paid by the leaseholders as service charges plus any interest or investment income generated by such money less the landlords’ outgoings on the provision of services up to the Acquisition Date. Health warning!

Although the Right To Manage process is fairly simple there are huge pitfalls to avoid and tenants should be fully aware of what it means to RTM before embarking upon the journey. Our team can assist in providing jargon-free straight-talking legal advice on all aspects of the RTM process.

Please contact us if you would like to discuss your case with our specialist team.

Right to Manage Claims department