Owners powers over management co's in flats

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5 Posts
15 years ago
A question about management companies for a block of flats.....

1) The Background:
I own a flat in a small block of 15 flats. The building is two years old . As is usual, there is a Management Co owned by the flat owners. This has not yet been "handed over" to us by the developer. Currently the site is actually managed by a property management co (appointed by the developer) on behalf of the owners management co.

We (the owners ) are very unhappy with the property management co which was appointed by the developer.

The problems are mainly:
a) Service fees have almost doubled in two years - now £1000 pa for a very simple site. (A new identical block round the corner has an annual fee of £575 - far more realistic)
b) Cleaning and grounds not being done regularly
c) Complete lack of communication from management co despite numerous requests for information and explanations for excessive service fees.

So the owners (mainly me) decided to take over the owners management co and remove the property management co.

After studying the Company Memo & Articles we called an EGM and voted to remove the existing (original) directors and appoint new directors from amongst the owners. We also voted to fire the property management co for non peformance. We gave the appropriate notice (21 days) of the meeting to all owners, existing directors and the co secretary. No response and none attended the meeting.

We subsequently wrote to the property management co terminating their contract .

2) Our Problem:

The property management co have responded saying that they do not accept that we (the new directors) have authority to terminate the contract because the management co has not been "handed over" to us by the developer. They claim our meeting was invalid. They claim they have a three year contract effective from date of hand over. They say they will continue to manage the site and will ignore our termination letter.They also say they will defend their contract should we attempt to terminate prior to the end of the three years.

I am not aware of anything in law about "handing over" . There is nothing in the company Memo and Articles. As far as I see it this is simple : The flat owners are the members of the company, and we have the right to remove directors and appoint new ones per the rules in the Articles. That's what we have done. The developer is not involved in the company at all. My previous experience of handing over in a similar situation merely meant that the developer's directors resigned and we had to appoint new ones from amongst the owners . That's all we have done in this current case except that the owners initiated the change instead of the developer.

Can you advise me if there are any special rules anywhere about this situation which I am missing ?

What should we do to enforce our resolutions and get the property management co's acceptance that we are legally directors of the company ?

The matter of the three year contract is a different matter. I imagine we would have to argue that they are in breach of contract. They won't let me see a copy of the contract until such time as they recognise us as bona fide directors. I think this will have to wait until we resolve the first matter.

Any advice most welcome.


Vic Winton

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