Residents Management Company

[Stuart Street]

Hi,

I live in a development of 9 freehold houses, I live in one of the houses and contained within my house deeds is also the outline of the road (cul de sac).I am happy to maintain ownership of the road which is also linked to any future sale of my home. There is an expectation i should both inform and collect payments for repairs. As the road is private, each home owner via their deeds is obligated to pay a set share towards the repair and maintenance of the road. Presently the road is in good condition, however over the years this could change. As a result we have all decided to set up a residents management company all owning equal shares in this. Our aim is to keep the road in good order and as and when residents sell make the process as easy as possible to transfer shares to new owners, Any advice in how to set up a company, the costs that may be occurred and any other helpful advice.

Thanks for your time.

 

[WaveJumper]

Hi and welcome to the UKBF, my first question is that you say there is an "expectation you should both inform and collect payments" is this only written into your deeds or contained within the other 8 houses.

 

[Stuart Street]

Hi and welcome to the UKBF, my first question is that you say there is an "expectation you should both inform and collect payments" is this only written into your deeds or contained within the other 8 houses.

Hi,

Thanks for getting back to me. My deeds just state I am responsible for collecting the prescribed shares from each home owner. The percentage of their contributions are stated in their deeds. Nothing else has been claimed with the exception that it is for maintainence and repair of the road.

 

[Frank the Insurance guy]

Hi @Stuart Street

Welcome to the forum.

I think setting up a management company is a good idea, but will come with its own additional costs and considerations, including accountancy and insurance costs. You will need to be clear on the role and responsibilities of the management company.

If the road is clearly shown in your title deeds, your home insurance policy will usually cover your liability as homeowner of the property detailed on your deeds - if it is not on your deeds, I recommend you arrange a Public Liability policy (Which will cover you for any one claiming against you for injury or loss caused by your negligence as owner of the road.)

If there is more than 1 director in a limited company, you have to arrange Employers Liability Insurance.

 

[WaveJumper]

One comment I would make by forming a management company are you not making the "control" more complicated ie you at the moment have the authority to administer and collect apparently under the deeds, by forming a board you could be creating yourself issues by effectively giving other equal control?

Also what would be the plan of the company to collect regular payments, ie holding monies until works are required (sinking fund / emergency fund) possible outcome here is a fund builds up someone moves and wants their contribution returned as no work has been carried out.

 

[Stuart Street]

Thanks,

Very useful advice.

 

[Mark T Jones]

Hi @Stuart Street

Welcome to the forum.

I think setting up a management company is a good idea, but will come with its own additional costs and considerations, including accountancy and insurance costs. You will need to be clear on the role and responsibilities of the management company.

If the road is clearly shown in your title deeds, your home insurance policy will usually cover your liability as homeowner of the property detailed on your deeds - if it is not on your deeds, I recommend you arrange a Public Liability policy (Which will cover you for any one claiming against you for injury or loss caused by your negligence as owner of the road.)

If there is more than 1 director in a limited company, you have to arrange Employers Liability Insurance.

I would seldom question your advice, but are you sure about insurance

In the past I have been in several management companies & the question of insurance has never arisen.

 

[Frank the Insurance guy]

I would seldom question your advice, but are you sure about insurance

In the past I have been in several management companies & the question of insurance has never arisen.

Hi @Mark T Jones - my reference to Public Liability Insurance is more in relation to the fact that the OP owns the road and can therefore be liable for injury or damage caused by their negligence as owner of the road.

With regards to Employers' Liability Insurance for Management Companies, here is some government guidance on the legal requirement, including the exceptions - https://www.hse.gov.uk/pubns/hse40.pdf . My understanding is if there is more than 1 director of the management company (which there usually is. then Employers Liability is required.

I usually recommend Management Companies also arrange a Directors & Officers Insurance policy, to protect each individual if any allegations are made against them in relation to their actions as a director, officer, trustee etc.