By Naomi Raymond-George
March 2016
Leaseholders of flats in mainly residential buildings are entitled to take over the management of the building through a Right to Manage company.
There is a procedure to follow involving at the outset the creation of a Right to Manage company (“RTM company”) of which all the leaseholders are entitled to be members and ultimately service of a formal Claim Notice on the freeholder and any other relevant persons.
The appeal case of Avon Ground Rents Limited v 51 Earls Court Square RTM Company Limited [2016] UKUT 0022 (LC)concerned the accuracy of the wording in the articles of association of the RTM company identifying the premises over which the right to manage (RTM) was to be exercised.
The law
The RTM procedure is governed by the Commonhold and Leasehold Reform Act 2002 (the Act).
Section 71 (1) of the Act provides that the right is ‘for the acquisition and exercise of the rights in relation to the management of premises …..by a company which ……may acquire and exercise those rights (referred to….as a RTM Company).’
Further, section 72 (1) provides that the premises in question must consist of ‘a self-contained building or part of a building, with or without appurtenant property’.
Section 73 (2) defines a RTM company and at (b) it provides that one of the essential qualities of a RTM company is that its articles of association must state ‘that its object, or one of its objects, is the acquisition and exercise of the right to manage the premises.’
The RTM Companies (Model Articles) (England) Regulations 2009 set out the prescribed form of articles.
The facts
Earls Court Square is a self-contained building containing 13 flats, each with leases of 125 years from 25 December 1983.
The RTM company was incorporated on 5 December 2004.
The RTM company’s articles were the statutory prescribed model and the ‘Premises’ were defined as Flats 1 -13, 51 Earls Court Square, London SW5 9DG’.
The Claim Notice did not include the flat numbers in the description of the premises.
The landlord challenged the validity of the company’s claim on the basis that the articles did not accurately identify the premises over which the RTM was to be exercised. The claim merely identified the flats and failed to include the foundations, common parts or roof of the premises.
The decision
The First-tier Tribunal (Property Chamber) determined that the articles did not need to identify the premises specifically and that the informed reader would deduce that the reference to Flats 1-13, 51 Earls Court Square means the whole of the self-contained building at 51 Earls Court Square.
The landlord appealed to the Upper Tribunal (Lands Chamber)
The Upper Tribunal upheld the First-tier Tribunal’s decision.
It concluded that the wording in the articles of association was clear enough when judged from the perspective of the reasonable reader to identify the premises as being the whole of the building at 51 Earls Court Square.
The RTM claim was therefore a valid one
Anyone embarking on Right to Manage should therefore take note of the following:
- It must be clear that the articles of association confer the power to manage “premises” within the meaning of Section 72 of the 2002 Act
- For the right to manage to be valid the description of the premises should ideally be sufficiently defined within the company’s articles of association as to leave no room for any doubt
Further information
