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Citrus Zest

Property 'management' Companies

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Hi

I am a long time lurker of this forum who pops in now and again.

I was wondering if anyone here has experienced a poor service from a property management company or knows of anyone who has managed to sack the property management company appointed to run their appartment block?

We recently voted to remove ours at our AGM. (25% of shareholders were present and 80% of those voted to remove the agent)

The agent refused to note our vote in the minutes. They came out with all sorts of excuses and they have not yet sent out our minutes containing the vote. (this was about a month ago)

Basically they have ignored our vote and I am about to get back in touch with them looking for our minutes of the last meeting and to request a further meeting so

that shareholders can appoint a new agent. I know in advance they will most likely ignore this too.

Prior to doing that I was hoping to find someone who has had similar dealings or has heard of similar dealings in the past?

Our particular agent who is based in Belfast appears to be a law onto themselves.

I know this is houseprice 'crash' but I thought this forum would be an ideal place to seek information as everyone here appears clued into the property sector

Thanks

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Thanks! I thought that there was a thread in this forum that i posted in ages ago and you just linked me to it!

I never got around to sacking the company back then due to personal issues and i am only trying to sort it now. I have a quorum of over ten percent of shareholders now too.

Will let you all know how it goes with the University Street crowd. I,m gonna phone them tomorrow.

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Thanks for the info lagansider.

I have drafted a letter which I intend to get our quorum of shareholders to sign and will then send it of to our current agents . (we have a quorum of about 20% of the shareholders - the majority of the other shareholders do not attend any meetings and so are unknown to us)

This letter is to the director of our company and will be sent c/o our management agents address. It is asking for him to call a general meeting with 28 days. The agenda of which is set out in the letter but will include appointment and resignation of directors as voted by the shareholders at the meeting. (this is in order to get shareholders on as directors and remove our current director who is the person who built the estate and not a shareholder nor does he take anything to do with running our company!)

Hopefully if we get our meeting and appoint our directors and remove current directors we will have a lot more power than currently.

I imagine they will just ignore our letter though which will probably only legal proceedings as next course of action.

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Thanks for the info lagansider.

I have drafted a letter which I intend to get our quorum of shareholders to sign and will then send it of to our current agents . (we have a quorum of about 20% of the shareholders - the majority of the other shareholders do not attend any meetings and so are unknown to us)

This letter is to the director of our company and will be sent c/o our management agents address. It is asking for him to call a general meeting with 28 days. The agenda of which is set out in the letter but will include appointment and resignation of directors as voted by the shareholders at the meeting. (this is in order to get shareholders on as directors and remove our current director who is the person who built the estate and not a shareholder nor does he take anything to do with running our company!)

Hopefully if we get our meeting and appoint our directors and remove current directors we will have a lot more power than currently.

I imagine they will just ignore our letter though which will probably only legal proceedings as next course of action.

Has all the houses been completed and handed over?

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Yes this is not a new development. It was built about 6 years ago.

The management company was appointed by the developer and they installed the developer as a director of our company.

No shareholder is director of our company. (A major gripe I have is this)

The management company tried to bill us a fortune for painting which started this recent dispute (we had a local painter quote us at half the price).

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Yes this is not a new development. It was built about 6 years ago.

The management company was appointed by the developer and they installed the developer as a director of our company.

No shareholder is director of our company. (A major gripe I have is this)

The management company tried to bill us a fortune for painting which started this recent dispute (we had a local painter quote us at half the price).

Obviously I have no details here. What normally happens - the developer sets up a shelf company and has to appoint himself as the director. Every company needs one (used to be two). This company (the management Co) appoints a Agency to manage the company. Each person who completes obtains a share in this company.

Normally, when all of the units are completed the developer transfers ownership of the 'common areas' into the ownership of the management company and resigns as director and has no further say in any matters. I say normally as certain matters such as adoption of sewers and public roads will need to be completed and the Management Co. should not take possession until such matters are sorted as to avoid any liability coming with the title.

So every Management Company starts with the Developer as the shareholder. He appoints the management agent, who the shareholders can remove at any meeting, if enough vote for a change. You will need to have a replacement management agency ready and have approval before making the change.

When the Developer resigns as director other vol will be requested. (don't be in a hurry to take that role)

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HI I believe there may have been a roads adoption issue which is probably still not sorted. Not sure how I can find that out

In any case the director is still the developer and the shareholders are stuck with a management company they do not want and who refused to note their

removal at the recent general meeting (it wasn't on the agenda was one excuse) and also stuck with a director who is nothing to do with their company.

We do have another management company lined up who I wanted to tender for the position then let the shareholders vote on accepting them.

Maybe we should proceed with the current director still in place and send a letter requesting meeting to appoint new management company instead

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HI I believe there may have been a roads adoption issue which is probably still not sorted. Not sure how I can find that out

In any case the director is still the developer and the shareholders are stuck with a management company they do not want and who refused to note their

removal at the recent general meeting (it wasn't on the agenda was one excuse) and also stuck with a director who is nothing to do with their company.

We do have another management company lined up who I wanted to tender for the position then let the shareholders vote on accepting them.

Maybe we should proceed with the current director still in place and send a letter requesting meeting to appoint new management company instead

I would imagine the current director (the developer) would only be too glad to resign his directorship and hand over everything to the management company. However, he shouldn't and you don't want him to. There may be issues involved with the adoption of the roads and sewers. There is a 12 month maintainance period and a further inspection takes place. Any outstanding defects have to be repaired prior to full adoption.

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Citrus Zest, you mentioned that you do not know approx 80% of the other shareholders, as they do not attend meetings etc - as a shareholder, you should be able to legally request a list of the other shareholders of the Management Company, from the Director &/or Managing Agent. I requested a list of shareholders once from a Managing Agent for a block in which I was a shareholder and initially got bluffed off about Data Protection Act etc, however I threatened to report them to Companies Registry etc and a list was soon produced.

The list of members is available from Companies House. There is a charge of £1.

I would as Belfast VI says be more careful if sewers/roads aren't adopted yet, however it is essential as you say to get some kind of control/input.

Contact the local authority they will be able to give you the contact details of the relevant department responsible for adoption of the roads. They will be able to tell you what the current status of the adoption process is. It is usual in England for the developer to have provided the highways authority with a bond to cover the completion of any work needed in the event of the developer defaulting.

may be worth reminding the Director that they have a fiduciary duty to protect your interests as shareholders, and you could actually hold the Director accountable if your Managing Agent is not doing a good job or you suspect them of malpractice.

The principle is that shareholders delegate their authority to the directors. If they disapprove of the way the directors are carrying out their duties then the shareholders have the power to dismiss the directors and appoint directors of their own choosing. That's how shareholders control is exercised. The directors have a fiduciary duty to the shareholders and are forbidden in law from making a secret profit. If for example they receive a commission from any contracts without disclosure they can be sued by the shareholders. Be warned the burden of proof is high and legal costs can make it very risky to pursue.

Belfast VI states that the shareholders can remove the Managing Agent at any meeting, however it can be far from as straightforward as that...

Removal by ordinary resolution

Members of a company always have the right to remove a director from office at any time. This right cannot be taken from them by anything contained in the director's service contract or in the Articles of Association.

Any member wanting to propose a resolution to remove a director must give the company 'special notice', i.e. a formal notice setting out their request at the registered office of the company at least 28 days before a general meeting. The directors may try to frustrate the members' intention by not calling a general meeting at all.

Faced with this situation, a member could either request an annual general meeting providing they own at least 5% of the shares in the company or, if they own at least 10% of the shares in the company, request an extraordinary general meeting and thus fix the agenda for that meeting.

Whenever the company receives 'special notice' of a resolution to remove a director, the board must ensure that the director concerned is informed immediately. That director has the right to make written representations to the members and can circulate a statement in writing to them. They can also speak at the meeting.

________________________

To summarise my rather rambling response:

Developers generally do not want the burden of managing a development once construction has been completed and sold. The managing agent will for obvious reasons want to retain their contract. In my experience they will try and take advantage of the shareholders ignorance of company law to retain their contract and income. The general principles of company law are really quite simple. The shareholders own the company, they appoint directors to manage it on their behalf, they have the power to appoint and dismiss the directors. The law ensures that the principles can be enforced by imposing an obligation of full disclosure thus ensuring the shareholders can raise any concerns at company meetings. There is also protection for minority shareholders interests available through the courts but in the situation you describe it is unlikely to be necessary to investigate the remedies and how to obtain them.

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Hi everyone thanks very much for the replies..

I have been very busy (which is reason why I haven't done anything about this even though a month has passed since our meeting) The other shareholders are leaving it to me which is to be expected since I gathered them all in the first place.

I will get a proper read thorough this entire thread and try and get time to do something on Friday. My thoughts now are just to request another meeting of shareholders to appoint a new director or two and to install a new management agent? (no reason to sack the old one director yet in case of roads issues etc? )

I will maybe draft a letter and get a quorum of over 10% of shareholders to sign it (i.e our existing quorum?) no one else really attends the meetings anyway except for our 'residents committee' which comprises of one lady who is against our decision for reasons unknown

I will maybe add more when I have time later.

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Hi I promised to keep you up to date here on this:

Our director has continuously stalled on our request for a meeting of shareholders to discuss the block management issue.

Our original letter was signed by a quorum of over 25% of shareholders and was sent to him over two months ago. Since then he has come up with excuse after excuse for not calling the meeting (well i say 'he' but all the replys are coming from an employee of another company which he is also a director of i.e.an employee of our estate developer ltd company)

His standard reply is that he believes he is acting in the best interests of all shareholders in taking instruction from the current management agents (while not acknowledging that he has a duty to call a company meeting as instructed by our quorum of shareholders)

We suspect our meeting is deliberately being stalled until our current management company renews our insurance for another year under their block policy. We have even warned our director that if this happens and it becomes a barrier to moving agents we will hold him responsible for any financial liabilities as a result of problems in transferring our insurance away from our current agents block policy.

The most recent letter after two months back and forth states that there will be a meeting called 'soon' however it does not acknowledge that this meeting is at the request of shareholders nor does it acknowledge that the meeting will be chaired by shareholders and the agenda will be set by shareholders without our current management agents present as requested.

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Hi - just a quick thought also re delay of your meeting.. Is there due imminently an instalment of Management Charges due from shareholders/owners, which the Manging Agents are keen to try and get into their bank a/c before yourselves enforce a change of Managing Agent? Does your development have a ring-fenced bank account in the developments name etc or is it a 'pooled' a/c.?

You could possibly also try getting a quorum of shareholders to vote to set instruction to Director/Managing Agent that no payments are permitted to be made from shareholders funds/bank a/c unless approved by shareholders, with full transparency provided in writing with details re contract, works specification and invoice/ premium quote etc that shareholders must approve prior to any payment being released. If development has standalone a/c you could appoint a director and stipulate that they must get added to bank mandate so chque payments must be countersigned by this director which would give you greater control over payments for services.

Sorry i started a new job and was real busy. Thanks for the reply.

Our director will not call a meeting of shareholders even though he has indicated he wants to resign. As such we can get nothing done he is ignoring all our demands from our quorum.

We have no ring fenced anything our management agent is controlling everything through their client bank account even to the extent that they omitted a vote to remove them from last year minutes.

Think i have to approach a solicitor maybe get time to phone one on friday. One who is good at company law would be best.

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