Once it has been decided that Right to Manage is the most suitable way forward, the leaseholders, or indeed the managing agent if one has been instructed to act in this capacity, need to incorporate the Right to Manage Company.
There is a strict wording that must be utilised for the Company Memorandum and Articles of Association so it is important to get this right. It is vital to note that such items have been subject to amendments since the Act originally came into force, hence the need to get it right by obtaining professional guidance and advice.
Notice of Invitation to Participate
All qualifying leaseholders who are not already members of the Right to Manage Company are then served with a Notice of Invitation to Participate, essentially inviting them to become members of the Right to Manage Company. Again, this is via a prescribed format and must be correctly undertaken and complied with.
Membership of the Right to Manage Company needs to reach a minimum of 50% of the qualifying leaseholders within the property to allow the next step to be undertaken. This is service of the formal Claim Notice upon the Landlord, advising of the company’s intention to acquire the right to manage the property.
The Claim Notice
The Claim Notice allows for a period of one month for the Landlord to reply, and must provide a date of at least 3 months from expiry of the Claim Notice as to when the acquisition of management would take place. In practice, it is a good idea to time matters so that acquisition of management takes place just prior to the next service charge demands being due, meaning that the RTM Company can immediately go about collecting monies for ongoing services rather than waiting for funds to be transferred from the previous agents.
Reply to the Claim Notice
The Landlord has one month in which to reply to the Claim Notice, either denying the right via a Counter Notice in the correct format, or admitting the right. If the Landlord does not serve an adequate Counter Notice within one month, then the Right to Manage procedure is automatically successful and deemed to be accepted. This cannot be challenged at a later date.
However if the Landlord does deny the right, and the Counter Notice is in the correct format, then the Right to Manage Company must apply within 2 months to the First-tier Tribunal (FTT) for a determination as to whether they can rightfully acquire the right to manage the Property, depending on the reasons the Landlord has given for denying the right. The FTT will then decide as to whether the RTM claim is successful or not.
Therefore, depending on the actions of the Landlord, the Right to Manage can be acquired at its swiftest within 4 months.
However if the Landlord proves to be uncooperative, or has genuine reasons for denying the Right to Manage, such a time frame can be longer. It is essential to note at this point that the Landlord is able to recover their reasonable costs from the RTM Company in dealing with the claim; however such costs must be reasonable. Should the Landlord seek to recover an unreasonable level of costs, this can be challenged by the Right to Manage Company via the FTT. A brief perusal of previous decisions with respect to costs, made under Section 88(4) of the Act, can quickly give an indication of what is deemed reasonable.
