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Hi All,
My Daughter is in the process of buying a house in Dudley, West Midlands and I have come across a major concern with one of the conditions of purchase that I would appreciate some advice on please.
The property is a 3 Bed Semi based in Dudley and there are approximately 20 properties on the estate. The houses were built in 2001. My Daughters solicitor is having major issues on obtaining a Management Pack in order to be able to complete the draft contract and t his is dragging on and on. My Daughter has had sight of the sellers contract in order to ascertain if there is a management pack in existence. Having read the sellers contract there is a clause in there which raises major concerns for me. I will repeat the clause below for reference:
"8.3 The Management Arrangements for communal facilities om the Woodland Grange Estate
The purpose of the management scheme
Modern residential developments now often include facilities which are provided for the benefit of the Plot owners on that development. These communal facilities are part of the layout of the site authorised by the Planning Permission. As these will not be taken into public ownership it is necessary to have a management structure in place for their future upkeep and a payment scheme to ensure the cost of that upkeep can be recovered from the Plot owners on the development who will have the benefit of these facilities.
The Transfer Deed on the sale of each freehold property contains the necessary rights and obligations yo create a management scheme.
The Future Management Arrangements for Estate Services:-
This will be the responsibility of a resident owned Management Company which has not yet been incorporated. It is intended t hat the company will be limited by guarantee and will not have a share capital. All Plot owners are required to become members of the Company and, if necessary, a Director.
This administrative arrangement will ensure that the Plot owners, through the Director's appointed from the Company membership, will control the Management Scheme and any Managing Agents who they appoint. If those Agents are found to be unsatisfactory they can be replaced as they will act for and be controlled by the Resident owned Management Company and Hookgate (Builders) will then have no control over the scheme.
It is important that the members are active in ensuring the Company complies with statutory obligations so that it is not struck off the Register of Companies. If that happens the Management Scheme would fail and if the managed areas were owned by the Company they would revert to the Treasury Solicitor as bona vacantia. There would then be considerable problems in raising mortgage finance with a consequent effect on the sale value and the residents would have the additional expense of reforming the Management Company.
The Company will be responsible for t he upkeep, repair and maintenance of:
- The estate road and footpath;
- Lighting on the road and any other apparatus;
- Any other communal area on the estate outside the plots;
- Public Liability Insurance, for the managed areas.
The Management Company will be obliged:
- To prepare an estimate of anticipated expenditure for t he annual financial period;
- At the end of the financial year provide a Certificate of actual expenditure for that year.
Plot owners on the development will be required:
- To pay an equal proportion of the estimated expenditure in advance;
- To pay any shortfall identified at the end of a financial period;
- To use the managed areas for uses appropriate to them and not cause damage.
Given this clause in the sellers contract the seller has advised my daughter that no Residents Management Company has ever been set up and no monies have been asked for or paid to cover Public Liability insurance.
I have advised my daughter to walk away from this purchase as there are too many grey areas and would welcome any advice as to what she should do.
Thanks in advance to anyone kind enough to respond.
Signed: A worried Dad :-)
My Daughter is in the process of buying a house in Dudley, West Midlands and I have come across a major concern with one of the conditions of purchase that I would appreciate some advice on please.
The property is a 3 Bed Semi based in Dudley and there are approximately 20 properties on the estate. The houses were built in 2001. My Daughters solicitor is having major issues on obtaining a Management Pack in order to be able to complete the draft contract and t his is dragging on and on. My Daughter has had sight of the sellers contract in order to ascertain if there is a management pack in existence. Having read the sellers contract there is a clause in there which raises major concerns for me. I will repeat the clause below for reference:
"8.3 The Management Arrangements for communal facilities om the Woodland Grange Estate
The purpose of the management scheme
Modern residential developments now often include facilities which are provided for the benefit of the Plot owners on that development. These communal facilities are part of the layout of the site authorised by the Planning Permission. As these will not be taken into public ownership it is necessary to have a management structure in place for their future upkeep and a payment scheme to ensure the cost of that upkeep can be recovered from the Plot owners on the development who will have the benefit of these facilities.
The Transfer Deed on the sale of each freehold property contains the necessary rights and obligations yo create a management scheme.
The Future Management Arrangements for Estate Services:-
This will be the responsibility of a resident owned Management Company which has not yet been incorporated. It is intended t hat the company will be limited by guarantee and will not have a share capital. All Plot owners are required to become members of the Company and, if necessary, a Director.
This administrative arrangement will ensure that the Plot owners, through the Director's appointed from the Company membership, will control the Management Scheme and any Managing Agents who they appoint. If those Agents are found to be unsatisfactory they can be replaced as they will act for and be controlled by the Resident owned Management Company and Hookgate (Builders) will then have no control over the scheme.
It is important that the members are active in ensuring the Company complies with statutory obligations so that it is not struck off the Register of Companies. If that happens the Management Scheme would fail and if the managed areas were owned by the Company they would revert to the Treasury Solicitor as bona vacantia. There would then be considerable problems in raising mortgage finance with a consequent effect on the sale value and the residents would have the additional expense of reforming the Management Company.
The Company will be responsible for t he upkeep, repair and maintenance of:
- The estate road and footpath;
- Lighting on the road and any other apparatus;
- Any other communal area on the estate outside the plots;
- Public Liability Insurance, for the managed areas.
The Management Company will be obliged:
- To prepare an estimate of anticipated expenditure for t he annual financial period;
- At the end of the financial year provide a Certificate of actual expenditure for that year.
Plot owners on the development will be required:
- To pay an equal proportion of the estimated expenditure in advance;
- To pay any shortfall identified at the end of a financial period;
- To use the managed areas for uses appropriate to them and not cause damage.
Given this clause in the sellers contract the seller has advised my daughter that no Residents Management Company has ever been set up and no monies have been asked for or paid to cover Public Liability insurance.
I have advised my daughter to walk away from this purchase as there are too many grey areas and would welcome any advice as to what she should do.
Thanks in advance to anyone kind enough to respond.
Signed: A worried Dad :-)
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