Flat Management Structure- Why it’s important
Flat Management.Buying a flat in a block, whether it’s a converted house or a purpose built building, may seem like a fairly straight forward process, and generally it is, providing the freeholder is contactable and you can provide evidence of flat insurance,the process should be no different from buying a property on a freehold basis. Your solicitor should be able to complete matters for you with the minimum amount of fuss or anxiety. Once you become an owner, there are other matters that will need your attention, in particular the management of your block.
When you buy a flat in a block building, you will instantly as owner, share a common interest with the other owners in your block. You may have nothing else in common with these other individuals, you may not even see them on a regular basis but you will certainly have one major thing in common. The management of the flats in your building or block and the maintaining of your investment. Leaseholders do not own the fabric of the building or the land on which it stands,( these being in the ownership of the freeholder) however, all will all want to make sure that the building is run and kept in as good a condition as possible. Your relationship with the other others can de described as symbiotic, you all should help each other. By maintaining your own flat, you are contributing to maintaining the whole building, everyone benefits from this. Your investment is tied up in your lease and in order to protect this investment, you will undoubtedly have to meet and discuss issues with your fellow flat owners at some stage.
It will soon become apparent that living or owing a flat in a block will need a certain amount of planning and management, if you own your own home with a freehold, your pretty much able to make your own decisions, how and when you please. Owing a flat is a bit different, for one, if you don’t own the freehold, the person or organisation that does, will have a large part in issues affecting your property and secondly, you will almost certainly have to consider the respective rights and interests of the other flat owners in the block. When buying a flat, many owners move in or buy the flat then rent it out, sit back and let things happen, Adopting a pro active stance from the beginning, can help protect the saleability of your property. You can do it yourself or your solicitor may be able to help but finding out the management structure of the building. It may seem like common sense, but there are still countless blocks where individual owners have no channel of communications with the other owners, surprising since the well running of the block is in everyone’s vested interest. By ensuring a proper structure is in place( if there isn’t one in force, you could arrange a meeting to discuss this with the other owners, they may even be grateful that somehow is prepared to do the organising), you can then start to discuss each owners obligations and discuss any areas where you are not happy.
In may smaller blocks of flats, management is often on an informal, ad-hoc basis and this generally works very well, as with only a few leaseholders, decisions can be made relatively quickly and the owners will probably know more about their fellow flat owners.
However, once the number of flats in a block reaches 5 or more, it is often very difficult to keep track of all the owners in the building and in most cases, there will be a least one or two owners that do not even live on the premises. If any problems arise with the freeholder, it is often important to be able to get hold of other owners quickly to discuss issues, in simple terms, the larger the block the more complex the issues and problems can become. Of course, many blocks have very proactive freeholders and they may even use the services of a managing agent to look after the property. However, it cannot be assumed that either of these will simply act in you, the leaseholders best interest.
There will be times, as many flat owners will tell you, that you will find yourself in the position of having to write in a formal manner to them and having a mechanism in place where you can all speak for all flat owners as one voice is of paramount importance. Many owners of leasehold flats have found to their cost, that a freeholder who has been ignoring letters for quite some time has gone in to liquidation. Some freeholders even discover that following a serious loss at the building that no flats insurance policies are in force and in many cases have not been so for many years.
One of the biggest complaints from leaseholders is the inability to obtain documentation from freeholders, particularly with regard to insurance documentation and the importance of obtain proof of building insurance cover cannot be stressed enough. Many owners of flats have found themselves in the position of needing to provide evidence of insurance quickly, this scenario arises when a flat is about to be sold. Often, insurance is the last thought and it is not until very near the date of exchange that the vendors solicitor will ask for evidence to be provided. The purchasers solicitor will usually refuse to exchange contracts until adequate proof of valid insurance has been received and many sales of individual flats in blocks have fallen through, because proof of insurance could not be obtained in time.
Whilst the terms of the releases state that the freeholder is responsible for arranging the cover, in many cases this does not happen and if the freeholder enters liquidation it is often to late. Don’t assume that just because someone is supposed to do something they will, obtain proof and always keep copies. It may seem a little extreme but with the collective values of individual flats now reaching very sizeable amounts of money, one sure fire way of finding out if your insurance policy is in force is to obtain your policy number along with the name of the insurance company, and give them a call, ask if the policy is in force. Whilst they may be a little reluctant to release a large amount of detail, they should be able to confirm if the building insurance is in force or not.
Apart from the issue of insurance, lack of management at you building can result in other issues. In accepting a lease from the freeholder, you will be personally obligated to certain issues. In the main this will relate to paying the building insurance premiums, paying ground rent and an obligation to behave in a certain fashion towards the other owners and residents of the block. A form of management will have to be in place to make sure that these obligations are carried out. Someone will have to collect the ground rent and building insurance, make sure that the common parts of the building are kept clean, and in order and make sure that all parts of the building are adequately maintained. If these tasks are not carried out on a regular basis, it may be a pointer to other problems.