Acquiring the right to manage is just the start for an RTM company. From the acquisition date onwards, the RTM company will assume responsibility for carrying out the “management functions”.

Management functions are functions with regards to

  1. services
  2. repairs
  3. maintenance
  4. improvements
  5. insurance

Essentially, from the acquisition date onwards, the only functions the RTM company cannot exercise are:

  1. functions relating to re-entry or forfeiture; and
  2. management functions in relation to flats or other units which are not held under a lease by a qualifying tenant (e.g. commercial units etc.).

Management from the acquisition date

The transfer of the management functions to the RTM company does not modify the leases, or create new rights and duties.

The management functions which the RTM company will exercise are those set out under the lease.  If a lease was unsatisfactory before the right to manage was acquired, it will still be unsatisfactory post-acquisition.

Ground rent

The right to demand and collect ground rent does not transfer to the RTM company. This right remains with the landlord.

Tenant covenants

Once the right to manage has been acquired by the RTM company, it needs to keep a check on compliance with covenants.  If a leaseholder is in breach of any covenant in their lease, the RTM must report this to the landlord.  And within the time limits.

There are circumstances (e.g. if the breach has been remedied) in which the RTM company does not have to report the breach.

Service charges

The collection of service charges and transfer of any accrued uncommitted service charges will be a priority for the RTM company.  It’s a matter of common sense that following the acquisition of the right to manage, the RTM company will need to access funds so that it can actually manage the building and perform the management functions it now has responsibility to perform.

Moving forward

These are just some examples of the issues an RTM company will face once it acquires management.  There are many more issues that the RTM company will need to take into consideration and deal with. If in doubt, obtain professional advice and support.  Management of a building requires a great deal of skill and expertise.