The right to manage company ( or RTM Company) will have the following obligations and duties:
- Like any other landlord the company should comply with the government approved Code of Management Practice.
- The company must honour any obligations the landlord has in the tenant’s leases, i.e. to fix repairs within a certain time to a reasonable standard.
- The company has an obligation to keep the landlord informed when a tenant breaches the terms of their lease.
- As the right to manage company will function like an ordinary company, the directors will have all the responsibilities a normal director would have as well as maintaining the landlord’s covenants
- Right to manage companies will need to be registered at Companies House, maintain comprehensive accounts and submit yearly returns. It will also need to have Articles of Association drawn up – something your solicitor can help you with
- You will need a Board of Directors for the company (usually made up of qualifying tenants), who will oversee the company’s day-to-day management. It is therefore particularly important, when considering exercising the right to manage, to identify tenants who are willing to take on this level of responsibility and commitment
- The company must remain solvent, which may involve directors or members funding the shortfall when other tenants do not pay their monthly contribution on time. It will also need a tight fundraising strategy – to make sure that sufficient monies are raised to keep up with a satisfactory level of block maintenance
- It will need to hold regular board meetings
Most importantly, any UK RTMcompany will be responsible for the day-to-day running of the building, including arranging insurance, maintenance and repairs. Any planned developments must be voted on by the company’s members, which may include the landlord.
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