Dealing with management companies in an enforcement situation
Produced in partnership with Jonathan Titmuss of Hardwicke Chambers
Dealing with management companies in an enforcement situation

The following Restructuring & Insolvency guidance note Produced in partnership with Jonathan Titmuss of Hardwicke Chambers provides comprehensive and up to date legal information covering:

  • Dealing with management companies in an enforcement situation
  • Background to management companies
  • Establishing existing management arrangements
  • The management company
  • Service charge voids prior to appointment
  • Existing long leases
  • The mortgagee’s security package
  • Control issues
  • A new management company?

This Practice Note considers the position of a fixed charge receiver appointed over a development property—commonly a residential block of flats under construction—where there is a management company in place.

The basic objective of receivers in such a situation is to obtain a sufficient degree of control over the management of the property to ensure:

  1. the receivers are able to obtain management company’s signatures to new long leases to be granted to purchasers, and

  2. the property is properly maintained while the receivers seeks to sell the unsold units

This Practice Note does not deal with statutory provisions which may be available in both solvent and insolvency situations. Nor does it consider statutory trusts applicable to service charge receipts from tenants pursuant to section 42 of the Landlord and Tenant Act 1987 (LTA 1987), nor does the Practice Note consider the potential impact of the statutory pre-emption right in respect of the landlords interest and the threshold pursuant to the LTA 1987, see Practice Note: Landlord and Tenant Act 1987—tenants' right of first refusal (subscription to Lexis©PSL Property required).

Background to management companies

How it should work

Following (or during) construction of a residential block of flats, a developer who owns the freehold (or long headleasehold) will commonly look to sell units in the residential block on long leases to purchasers.

The developer in