Resolving disputes if leaseholders own or manage the building

Check your lease to confirm:

• what the company is responsible for
• what rights you have

If a right to manage company has taken over management of the building from the landlord (freeholder), they are responsible for the landlord’s obligations in the lease.

You can read more about your rights and responsibilities as a leaseholder to help you understand the issue and whose responsibility it is.

You could also check the RICS Service Charge Residential Management Code, which is a government-approved code of practice that anyone managing a building should follow, including leaseholder-run companies. If the company has failed to follow the code this can support your case if you need to take legal action.

It’s important to keep records of the issue, including:

• dates and times of incidents or breaches
• what has happened and how it has affected you
• any communications with the company
• evidence such as photos or videos where relevant

Good documentation can help if the issue continues or gets worse, or if you need to take formal legal action.

It’s often best to try to resolve the issue informally before taking formal action.

Your options depend on what the issue is, but in most cases you should start by contacting the company to clearly set out the problem and what action you want them to take.

Other things you could try include:

• alternative dispute resolution, such as mediation, where an impartial professional (mediator) helps both sides work out an agreement (you may have to pay for this)
• raising the issue at a meeting of the company members
• getting advice from your local council or organisations like Citizens Advice

Do not withhold payments

Do not deliberately withhold payments that are due under the terms of your lease as a way of resolving an issue with a leaseholder-run company. They might take action against you for breaching your lease.

If your dispute is about a service charge, it’s best to pay the charge under protest while looking into your options or challenging the charge at a tribunal.

Find out more about costs and charges, including when you can challenge them.

If you have not been able to resolve the issue informally, you should make a formal complaint to the directors of the company.

Check if there’s a complaints process to use. If not, write a formal complaint. Explain clearly:

• that you are raising a formal complaint
• the details of what has happened, and any rules or terms of your lease that you think are being broken
• what action you would like the company to take, such as making repairs
• when you expect a response – allow a reasonable amount of time, such as 2 to 3 weeks

Right to manage companies, residents’ management companies and share of freehold companies do not have to be part of a redress scheme for escalating complaints. So if a formal complaint does not work you may need to consider legal action.

Legal action is usually a last resort. It can be expensive, stressful and time-consuming, and you may not always get the outcome you want.

You’ll need to consider the cost and time of taking legal action and whether the outcome is likely to be worthwhile. Also think about whether you have the skills to do it yourself or if you’ll need support.

Your options will depend on what this issue is, but they may include:

• applying to a tribunal, if the dispute is something a tribunal can deal with, such as unreasonable service charges or administration charges
• applying to a tribunal to appoint a new manager, if you have evidence that the leaseholder-run company is not managing the building properly – but if there’s a right to manage company, this will end the right to manage if you’re successful
• going to court, if the dispute is about breaching the terms of the lease, such as not maintaining the building properly

It’s best to get legal advice first to see if legal action is likely to be the best way of resolving the issue.

Changing directors

If the problem is with one or more directors who are not managing the building properly, then it’s possible to take steps to remove a director, if enough company members agree.

Check the company’s articles of association (the rules that set out how the company is run). These should say what the process is for removing a director who has breached their obligations.

Under Sections 168 and 169 of the Companies Act 2006, company members can remove a director by proposing a “special resolution” which is then voted on at a general meeting. The company must give 28 days’ notice of the planned resolution to the director and allow them to be heard at the meeting.

If the board are refusing to hold a general meeting, members can request one under Section 303 of the Act. The request should state that one of the resolutions will be to remove the director, and must be signed by members representing at least 5% of the voting rights. The directors must then call a meeting within 21 days.

If the directors still do not call the meeting, the members can call one themselves.