Update: Right to Manage Companies

A tribunal has recently decided that a right to manage company (RTM company) was liable for the landlord's reasonable costs following the RTM company's withdrawal of its right to manage application.

This decision is good news for landlords as it will prevent a RTM company from pulling out at the last minute leaving the landlord with substantial irrecoverable costs.

The right to manage: Legislation gives long leaseholders of flats the collective right to manage their building. The landlord's consent is not needed and there is no requirement to show that there has been mismanagement by the landlord or its agents.

The right to manage has to be exercised through a RTM company, which must be a private company limited by guarantee.

Recovery of landlord's costs: A RTM company is liable for the reasonable costs resulting from a RTM company's claim notice where those costs are incurred by any of the following:

• A landlord under a lease of the whole or any part of any premises
• A party to such a lease otherwise than as landlord or tenant
• A manager appointed to act in relation to the premises, or any premises containing or contained in the premises

A RTM company is liable for reasonable costs that any of the persons listed above incurs as party to any right to manage proceedings only if the appropriate tribunal dismisses the RTM company's application for a determination that it is entitled to acquire the right to manage.

To find out more about the right to manage click here. TSP Dispute Resolution solicitor, Judith Winward, is experienced in this area of the law and can help leaseholders who are considering setting up a right to manage company.

The content of this Update is for information only and does not constitute legal advice. It states the law as at August 2015. We recommend that professional advice is obtained on any particular matter. We do not accept responsibility for any loss arising as a result of the use of the information contained in this update.