Management Company Struck Off

W

Will

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I'm about to purchase an apartment and have just found out that the original Management Company was struck off. The current residents formed their own management company and seem to be looking after everything ok. However my solicitor pointed out to me that the current 'residents' management company doesn't actually own the common grounds and this may be an issue in the future if I go ahead with the purchase and try to sell at a later date.
Has anyone come across anything like this before and is there any reason not to purchase since I wouldn't own any of the common grounds regardless??
Any help would really be appreciated. Thanks
 
Is the new management company taking steps to take ownership of the relevant titles etc.? Other than apprising you of the facts did your solicitor give his/her considered legal opinion on the risks involved and whether or not s/he would recommend you to take them on?
 
This is a bad thing. You should not buy the apartment unless you ( or preferably your vendor) are willing to take on the task of restoring the Management Company to the Companies Office register. You need the Management Company ( as opposed to an ad hoc group) to be properly constituted.

mf
 
All my solicitor was able to tell me was that no one appears to be looking to reinstall the original management company due to the expense of high court costs. I'm not sure who's responsibility it is though.
She referred the subject to my bank as it would affect the mortgage application and they don't have a problem with the current setup... which makes me think its not really a big issue!!
 
I would have expected a solicitor to give a professional legal recommendation on what course of action to take if asked. mf1 is certainly giving his above!
 
Just checked the CRO and the current 'residents' management company has been in operation since 2002 and have filed all obliged documentation.
 
Be that as it may but if they don't hold the title to common areas then that is presumably the significant issue.
 
Problems with not having a Management Company

Ownership of the common areas vests in the Management Company. Or the developer if they have not transferred their interest to the Management Company. If there is no Management Company then the title to the common areas does not and cannot vest in them. It vests in a struck off entity or the developer who cannot transfer it to a struck off entity.

Each apartment owner has a lease which contains covenants and one of the parties to the Lease is the Management Company. If there is no Management Company then no-one has legal authority to enforce any of the covenants. Individual apartment owners cannot be forced to pay maintenance charges as their covenant to do so is with the Management Company. Individual apartment owners may choose to break all their covenants and there is precious little teh ad hoc group cna do. Block policy should be in the name of the Management Company – an ad hoc group may have no standing in the event of a claim.

mf
 
would it not be possible to apply to the local authority to take the common areas in charge?if it is, that may be a solution..

daithi
 
When you buy an apartment, you really only buy the airspace - the bricks and mortar (because they are shared) are also part of the common areas. So no, a local authority would not entertain taking in charge an apartment complex.

I've always thought that as nation we're so determined to own property that we don't yet have an "apartment owning/ mangement company/ own responsibility " mind set.

mf
 
daithi said:
would it not be possible to apply to the local authority to take the common areas in charge?if it is, that may be a solution..

daithi
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Only if somebody can get majority (or unanimous?) agreement from existing householders and can lobby the LA to actually take it in charge. Neither are necessarily trivial tasks.

From what mf1 says above it looks like proceeding without a proper management company in place involves significant risks.
 
mf1 said:
I've always thought that as nation we're so determined to own property that we don't yet have an "apartment owning/ mangement company/ own responsibility " mind set.
Click to expand...

From being invloved in a managment company, and from what I see on AAM, this would generally tally with what I believe.
 
mf1 said:
I've always thought that as nation we're so determined to own property that we don't yet have an "apartment owning/ mangement company/ own responsibility " mind set.
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I don't really understand this point.

BTW - some of my comments were couched to apply to all developments covered by management agreements/companies - i.e. both housing and apartment developments. Obviously the latter have some specific issues (e.g. block insurance/maintenance etc.) that may not apply to the former (such as where I live). I only noticed now that the original poster specifically mentioned an apartment which would arguably make the lack of a proper management company with ownership of the title to common areas etc. all the more critical.
 
Thanks for all your comments. After checking the CRO web site I found that the original management company was 'dissolved' - not sure if this is the same as being 'struck off'. I was also onto my solicitor and got this reply...
"The residents have set up the new company to look after the common areas. At all times this will belong to the owners but is registered in the name of the original management company. To reinstate this company will require an application to the high court and a substantial amout of money and the owners at the moment are not prepared to do this."
 
Hi Clubman, I'm really just reiterating what you have said many times about management companies. If as an owner/member you have problems/difficulties with the organisation of the estate/complex, there is no point whingeing unless you're willing to get stuck in to undertstanding the setup, getting involved, getting others involved ( the main issue normally) and changing whats wrong. The problem always is that most people in this situation sit back and wait for someone else to do it.

mf
 
Will said:
Thanks for all your comments. After checking the CRO web site I found that the original management company was 'dissolved' - not sure if this is the same as being 'struck off'. I was also onto my solicitor and got this reply...
"The residents have set up the new company to look after the common areas. At all times this will belong to the owners but is registered in the name of the original management company. To reinstate this company will require an application to the high court and a substantial amout of money and the owners at the moment are not prepared to do this."
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This is the nub of the issue - the fact that the title of the common areas remains in the hands of the dissolved management company. The issues/risks that mf1 points out above still stand. I would assume that your own solicitior would agree. I personally would be very wary of buying with these question marks remaining. That is a personal rather than a legal opinion.
 
mf1 said:
Hi Clubman, I'm really just reiterating what you have said many times about management companies. If as an owner/member you have problems/difficulties with the organisation of the estate/complex, there is no point whingeing unless you're willing to get stuck in to undertstanding the setup, getting involved, getting others involved ( the main issue normally) and changing whats wrong. The problem always is that most people in this situation sit back and wait for someone else to do it.
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mf1 said:
mf
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This seems to be whats happening. I've checked it out and other properties have been bought and sold since the current management company was setup so there doesn't seem to be any real impact on resale which was my main concern. Looks like the attitude is 'its working so why pay to fix it'!!!
 
mf1 said:
Hi Clubman, I'm really just reiterating what you have said many times about management companies. If as an owner/member you have problems/difficulties with the organisation of the estate/complex, there is no point whingeing unless you're willing to get stuck in to undertstanding the setup, getting involved, getting others involved ( the main issue normally) and changing whats wrong. The problem always is that most people in this situation sit back and wait for someone else to do it.
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Yes - I obviously agree. It's also the case that many people (not necessarily here though) confuse the management company and the management agent and often consider the whole thing a "them" and "us" situation even though housholders are, as shareholders/owners, the management company!
 
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