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RTM Applications: Challenging Unqualified Assumptions…

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The JB Leitch litigation team were recently successful in a First-tier Tribunal matter challenging the validity of an application for the right to manage (RTM) under section 84(3) of the Commonhold and Leasehold Reform Act 2002. In this post, we highlight that the case illustrates several points regarding what constitutes a fully qualified application and the key questions landlords should ask…

The Background

By a claim notice dated the 17th of February 2021, the Applicant RTM Company gave notice that it intended to acquire the Right to Manage the Premises, a large block of residential flats in north London, on the 30th of June 2021. By a counter-notice, dated the19th of March 2021, the Respondent freeholder disputed the claim, alleging that the Applicant had failed to establish compliance with sections 79(5), 78(1) and 79(8) of the Act.

In particular:

(i) The membership of the Respondent Company on the relevant day was not less than one half of the thirty-three flats contained in the Premises (section 79(5)).

(ii) Before making the RTM Claim, the Applicant had not given the requisite Notice Inviting Participation on each person who was a qualifying tenant and who neither was nor had agreed to become a member of the Respondent Company (section 78(1));

(iii) A copy of the Claim Notice had not been given to each person who was a qualifying tenant of a flat in the Premises (section 79(8)).

Further to pointing out the defects to the application, the Applicant was invited to withdraw it. The Applicant failed to respond. Consequently, a Statement of Case was submitted expanding on its grounds for contending that the Applicant had failed to comply with the statutory requirements of the Act. The Applicant further filed an inadequate bundle, necessitating a further bundle to be filed with the Tribunal.

In Summary

The Applicant had not complied with the statutory requirements of section 79(5), 78(1) and 79(8) of the Commonhold and Leasehold Reform Act 2002 and subsequently was not entitled to acquire the right to manage the premises on the 30th of June 2021 pursuant to section 84(5)(a) of the Act.

The main points to note are that all joint tenants for an individual flat, must also all be members of the RTM company for the qualifying tenant of the individual flat to be a member.

Further, if both joint tenants are not members, the non-member / joint tenant needs to be given an invitation to participate, else any claim must fail.

Therefore, the important thing for landlords to note is that, on receipt of a claim notice, it would be prudent to request:

  1. Register of members at the date of claim notice;
  2. Copies of the invitations to participate; and
  3. Copies of the claim notice being given to the qualifying tenants.

It would also be advisable to thoroughly review and cross reference with both HMLR records and the landlord’s records, so that consideration can be given to serving a counter notice if there are inconsistencies. If the information is not provided by the deadline for serving a counter notice, a landlord should consider serving a protective counter notice.

If you would like to discuss this case further, or if we can help you in a similar matter, please contact us.

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