LETTERSOpinion


email info@flat-living.co.uk tel0845 257 6374 fax0845 257 6319


Compensation Schemefor servicecharge funds


An articleinthe lastissue of Flat Livingmagazine by the chair of the Federation of Private Residents’ Associations stated that the limit of protection for service chargefunds is £50,000 per schemeif a bank goes into receivership. This is inaccurate andit is important that your readers know thetrue position. Servicechargemonies


held in trust are protected by theFinancial Services Compensation Scheme (FSCS).InSeptember 2010 theFSCSannounced an increase in theprotection limitfor savers from £50,000 to £85,000 with effectfrom January2011. Moreover,this


protectionisnot an £85,000 maximumper blockor savingsscheme. In April 2009 theCommunities andLocalGovernment Dept.issuedaguidance note on this topic. Itmade clearthat,whileany claim wouldbedependent on thecircumstances and evidence availableatthe timeof theclaim,the FSCS wouldgenerally expect to treatthe tenants(not thelandlord)asbeing individually entitled to the protectionavailablefor that proportion of themoney in theaccounttowhich they were entitled by statutory trust. (Inthiscontext “tenants”means lessees.) Thismeans that each


tenant would potentially be eligible foramaximum of £85,000 compensation to coverthe loss of their individual proportion of the deposited funds. Your readers mightbe


furtherreassuredtoknow that allARMAmembers are required each year to submit prooffrom an independentaccountant that they hold service


Flat Living Summer 2012 Flat


Ifyouhaveaquestionorwouldliketosharewithotherreadersyourideasorexperiencesof livinginaleaseholdblock,wewant tohearfromyou.


Living Addressyourcommentsorqueriesto theFlat Living teamat info@flat-living.co.uk BloCkMAnAgeMenT


Iamone of thefourdirectors of an RMC.Wehave amanaging agentwho onlydoesverylittleaswechoseto runthe buildingand company ourselves.Adirector has been asked to step downby the residentswhich she has. The managingagentisnowtelling methat althoughthis director


director has resigned she is still amember of the blockmanagementteam and can take part in the running of the building, make decisions and have voting powers on certain issues (which the


block nagem


managing agent does not clearly define.) but has no legal


liabilities. They also saymembers of the managementteam are appointed and removed by the directors.


Weare quite surprised by this


information. Canyou please give us your opinion on this? Namewithheld


Helen Christie,ARMATechnical Officer replies


As alessee,you arelikelytobeamember of theResidents’ManagementCompany (RMC) if thecompany is limitedbyguarantee,or ashareholder if thecompany is limitedby shares.You thereforehavetwo hats:thatofa lessee andthatofamember of thecompany. Thereare both legaland practicalreasons why thesetwo identities areseparateand distinct from each other even though theymaybethe same person. As a lessee you are contractually bound


underyourlease to abidebythe covenants to theRMCor landlord andyourrightsare not fettered by the fact that you are also a member of theRMC. Asamember of theRMCyouwillbe entitled to take part in decision-making


chargemoniesintrust as


required by law. MichelleBanks


ChiefExecutive,ARMA BobSmythermanalso


correctshis previousarticle in hiscolumn this issue.Turnto page 30 for more.


ariskassessmentand they referredmeto the local council. The council replied to say that we were no longer regarded as anHMOso basicallydidn’tneed it.Ihavepreparedthe assessment using forms I downloaded but our company have not officially agreed to adopt it. I’mnowcompletely confused as towhether we need it or not. Please can I have some


guidance. DeePaice


KevinBoreham, firesafetyand compliancespecialist with Mainstay PropertyManagers replies


How many hats are you wearing?


(albeit probably restricted to voting for the removal of the board) and will have a sayatcompany meetings.Yourliabilityto theRMCandits creditors is limitedtothe extent of your shareholding or guarantee (commonly£1).Asamember of thecompany, youhavenoresponsibility forits daytoday running andyourrightsand obligations are thoseset outinthe Articles of Association of the company.


As a director of theRMC, you are


responsiblefor theday to dayrunningofthe company,havepersonalliabilitiesand your rights andobligations arethose as setout in thecompanies Act2006and any service contract. To help lessees better understand the


differences betweentheirroles as residents andasmembers/shareholders of theirRMC, ARMAhas produced an advisory note which can be downloaded free fromwww.arma.org. uk (see also pages 40-41ofthisissue formore on this subject).


Fire safety I’ma subscriber to Flat Living and I’ve been looking at your web site on Fire Safety. Please can you offer clarification on our situation. Wehave 5flatsina


convertedVictorian Listed


building that is part of a largeterrace.Between us we ownthe freehold and we selfmanage. Somemonths ago


when I becameaware of thechangeinlegislation I contacted the Fire Serviceabout needing


Article 31(10) of The RegulatoryReform (Fire Safety) Order 2005 states “premisesincludes domestic premisesother than premises consisting of or comprisedinahouse which is occupied as a single dwelling.” Putsimplyany property with communal areas, be it asinglestairwell, plant room or storage rooms, requires afire risk assessment to be completed. From theproperty


description you have provided I havemade the assumption that thereare communal areas used by all residents. Therefore your thinking would be correct and a fire risk assessment would be required. The fire safety pages of the ‘Department for Communities’ website (http://www.communities. gov.uk/fire/firesafety/ firesafetylaw/)makes it very clear as to the types of propertiesaffected andwho theresponsiblepersons are. They also have anumber of formsand guidance documentswhichwillhelp youcompleteanassessment for simple premises.Aword of warning: the listed status of the building needs to be taken into account when considering any fire safety improvements.


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