Q&As

Where a ‘right to manage’ company has taken over the management of a block of flats, is the original management company still responsible for entering into a deed of covenant and providing a certificate on transfer under a restriction on title to the individual lease titles, or does the right to manage company now have responsibility?

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Published on LexisPSL on 31/08/2016

The following Property Q&A provides comprehensive and up to date legal information covering:

  • Where a ‘right to manage’ company has taken over the management of a block of flats, is the original management company still responsible for entering into a deed of covenant and providing a certificate on transfer under a restriction on title to the individual lease titles, or does the right to manage company now have responsibility?

Where a ‘right to manage’ company has taken over the management of a block of flats, is the original management company still responsible for entering into a deed of covenant and providing a certificate on transfer under a restriction on title to the individual lease titles, or does the right to manage company now have responsibility?

The answer to this Q&A in any particular case will depend upon the structure and ownership of the reversion, the original management company, and the provisions of the lease.

Under Chapter 1, Part 2 of the Commonhold and Leasehold Reform Act 2002 (CLRA 2002), qualifying leaseholders of flats have the collective right to take control of their block, on a 'no-fault' basis. This is effected through the creation of ‘Right to Manage (RTM) Company’ by the leaseholders. For further information, see Practice Note: The right to manage.

The RTM Company operates by the statutory transfer of the management functions (ie including the management obligations) of the landlord, and/or any management company, to the RTM Company (CLRA 2002, ss 96(2), 97(2)).

Similarly, the tenant's functions (and obligations, eg payment of service charge) become exercisable in relation to the RTM Company rather than the landlord, and/or any management company pursuant to CLRA 2002, s 97(4). The RTM Company does not therefore become, nor is it deemed to become, a party to the original lease

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