Property management companies (MCs) are set up to manage the shared or common areas of a building or development in which there are a number of separate property owners (most commonly but not exclusively residential properties). Often the separate property owners will own the individual units and to manage the shared areas (such as the lifts, stairs, roof, exterior, corridors, landscaped areas, car parks and so on) a MC will be set up. The common areas may be owned by a separate landlord or by the management company itself. What happens on a handover? On sale of the last property in the development, the developers will usually ‘handover’ the MC to the property owners as it is unusual for the developer to have a say in the running of the MC once all properties have been sold. There are a number of steps that have to be followed to handover the MC:-

• The property owners will be contacted to let them know that the handover process is ready to begin and to ask for property owners to volunteer to be appointed as directors of the MC. Normally, the articles of association of the MC will state that only shareholders, i.e. property owners, can be appointed as directors. This is to ensure all those with a direct interest in the MC have a say in it’s running and the decisions made;
• The developer appointed directors of the MC will either transfer or issue shares or membership in the MC to the individual property owners;
• Share/membership certificates will be issued to the property owners and the statutory registers of the MC will be written up to formalise their ownership of the MC;
• The Person of Significant Control (PSC) filings are made at Companies House;
• The property owners who volunteer to become directors are appointed at Companies House;
• Each Company must have a registered office, a publicly available address in the jurisdiction in which it is incorporated and registered which is shown on Companies House. Often the registered office of the MC is the developer’s offices before the handover. The new directors will choose a new registered office for the MC. Herrington Carmichael offers a registered office/SAIL service) for MCs if required;
• The statutory books of the MC are written up and sent to the new registered office/SAIL address.

When is the handover complete? The handover will be complete when the share certificates for the new shareholders have been issued, the new directors are in place and all the required filings have been made to Companies House. Benefits of handing over Simply put, the property owners rather than the developers will have control over the MC. After the handover, the newly appointed directors can set the level of service charge, choose to put into place contracts for the management of the common areas (i.e. cleaning, gardening or maintenance contracts) or serve notice on those service providers. How can we help? For specialist legal advice on MC handovers please contact Michelle Lamberth on 0118 989 9706 or by email at Michelle.Lamberth@herrington-carmichael.com This reflects the law at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought as appropriate in relation to a particular matter.

By Michelle Lamberth

Senior Paralegal, Corporate and Commercial > View profile

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