By definition, tenants do not need to demonstrate mismanagement by the landlord. The management right is available to the tenants, whether the management chosen by the landlord has been good, bad or indifferent.
But realistically, the main reason tenants replace their management company is that they are dissatisfied with the current management situation. In many cases, there is a history of mismanagement or service charge complaints, so the right to manage procedure may be contradictory.
Often, the freehold owners have a vested interest in maintaining the current management situation and are reluctant to see any potential source of income disappear. In cases like these, a landlord may try to deny an RTM claim that you may make. Frequently, a freeholder will forward a new Claim to their chosen attorneys to carefully review the procedure and look for a reason to deny the claim.
Therefore, it is vital not to overlook any aspect of the Claims process. Even though the process is reasonably well defined, there are still many ways to deny a Claim. Many disputed cases end up being decided by the Lease Assessment Tribunal (LVT). Several of these rejection reasons include:
1. Notification of Claim not delivered to the landlord of all or part of the property (Rejection of Claim LVT January 26, 2009)
2. Less than two-thirds of the apartments are owned by qualified tenants (Claim rejected April 17, 2009)
3. That less than 50% of the owners are members of the RTM company (rejection of Claim on September 8, 2008)
4. Not keeping the membership record properly updated in the correct location
5. Insufficient Documents to Show Members Are Truly Qualified Tenants (Claim Denied May 6, 2008)
6. Any incorrect company formation – not limited by warranty, incorrect Memorandum of Association, no certificate of incorporation (Claim rejection May 1, 2009 – second attempt)
7. More than 25% commercial space in the building (anything close to this figure is likely to be questioned and requires detailed proof from the surveyor)
8. A date for a counter notification that is too close (rejection of the claim on May 9, 2008)
9. Some or all of the non-participants did not receive the properly worded invitation to join (Claim denial Feb 22, 2008)
10. Non-participants who do not have access to the required company documentation
11. Non-participants are not given enough time to respond
12. Insufficient proof that RTM members received copies of the Complaint (Claim rejected on May 6, 2008)
In addition to these, there are other, admittedly less common, problems with RTM claims. Clearly, it is vital to follow the process to the letter, in order to try to avoid a counterclaim that will deny your application.
But don’t let the cautious tone of this article stop you from replacing mismanagement. The good news is that if you do things exactly right, your RTM takeover is only a matter of a few months.