The Commonhold and Leasehold Reform Act 2002 provides owners of leasehold properties in England with the right to manage their property. Once they have this right they can decide how to manage their property, and how it is insured and repaired. The Landlord does not need to consent to the Right to Manage process.
The qualifying criteria for this right are as follows:
The Leaseholders are required to form a Right to Manage (RTM) Company. This is a separate legal entity in which the participating members become members. It is the RTM Company that applies for the right to manage the property. The RTM Company has to be established in accordance with the Commonhold and Leasehold Reform Act 2002. The RTM Company must be limited by guarantee (as opposed to shares) and should bind the leaseholders to the prescribed Memorandum and Articles of Association.
Once the RTM Company is formed it is mandatory to serve the ”Notice Inviting Participation” (aka Participation Notice) on those leaseholders who have not confirmed whether or not they want to participate in the RTM process (i.e. become members of the RTM Company).
Once the membership of the RTM Company has been taken up by leaseholders of at least 50% of the total number of flats in the building and 14 days have passed since serving the Participation Notice the Leaseholders can serve a Section 79 Claim Notice which informs their Landlord of their intention to claim their Right to Manage. The Claim Notice must be served upon the Landlord and any third parties (e.g. Managing Agent). The Claim Notice must state the deadline by which the Landlord (or any other recipients) must respond. This deadline must be at least one month after the date the Claim Notice has been served. The recipients of the Claim Notice have three options:
If the RTM Claim is ignored or accepted by the Landlord the acquisition date of the Right to Manage will be at least 3 months from the date that the counter-notice was due to be given.(This date will be specified in the Claim Notice)
If the Landlord challenges the Claim Notice, he has to show that the Right to Manage application does not comply with the 2002 Act. Such challenges could include:
By the date specified in the Claim Notice Landlord must serve a Counter Notice. If the RTM Company and the Landlord cannot resolve their disagreement, the RTM Company must make an application to the Tribunal First-Tier Tribunal(property chamber) within two months of the service of the Landlord’s Counter Notice. An Application to the LVT can delay the process by about three months.
The RTM Company takes control of the Property and the way its services are managed. The RTM Company will take over the Landlord’s responsibilities for the maintenance, repair, service charge collection, accounting, insurance and overall management of the block. The RTM Company should do the following before taking control of the Property:
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