Freehold Managers PLC forcing me to buy their insurance?

[andydd]

Thanks for the help

There are 37 flats and I have contacted them all and told them not to pay Freehold Managers ( no matter how threatning a letter they get )

I have told FM to send one invoice for the total bill to our management company. We will pay them in full for the insurance but will "talk about"

any admin charges Last year it was 5K on top of a 10K policy Nice work if you can get it for just one phone call and sending out 37 invoices

 

 

EEkk !..Looks confusing.

 

What do you mean by 'our' management company ?, have you already gone through the RTM/RTE process ?

 

Also refering to your first post, you say you already had insurance ?. What exactly was this ?. Buildings Insurnace just for your flat ?. Buildings insurance for the whole building divided by 37 ? or Contents insurance ?

 

Andy

Edited October 30, 2009 by andydd

[rocket99]

Andy

Sorry We have a management agent (not company ) who used to sort out the insurance for us and when Freehod Managers purchased the Freehold they told our Management agents that they would now look after the insurance.

By sending an invoice to each leaseholder they "divide and seperate" us.

I am trying to get one invoice sent to our Management Agent who will the invoice each leaseholder.

This will take admin work away from Freehold Managers . It will be hard to justify 5K for sending one invoice and making one call to the broker.

Our Management Agent gets a set fee and so will do the work for free as it were

With one invoice I hope to have more power to insist on knowing the full facts before we pay

[andydd]

Andy

Sorry We have a management agent (not company ) who used to sort out the insurance for us and when Freehod Managers purchased the Freehold they told our Management agents that they would now look after the insurance.

By sending an invoice to each leaseholder they "divide and seperate" us.

I am trying to get one invoice sent to our Management Agent who will the invoice each leaseholder.

This will take admin work away from Freehold Managers . It will be hard to justify 5K for sending one invoice and making one call to the broker.

Our Management Agent gets a set fee and so will do the work for free as it were

With one invoice I hope to have more power to insist on knowing the full facts before we pay

 

Im still confused.

 

Invoices are always sent to individuals showing the cost that the individual would pay, one invoice wouldnt make sense.

 

Thew normal course of events is that the landlord(or freeholder) owns the land that your flats are on and therefore has a duty to maintain the premises and insure them all. They normally dont actually do this themselves, they employ a management agent/company to do this, the management agent/company bills the landlord/freeholder who in turn bills you.

 

I cant get my head around where the management agent/company fits into this, who employs them ?. You and your fellow flat owners ?

 

Andy

[rocket99]

Hi Andy

We employ the Management Agents to look after the admin etc

We now also have to pay Freehold Managers an "hidden" admin charge for arranging insurance

 

So we are paying for something we do not need or want ie our Management agents would provide this service as part of whole service

charge

 

FM do have the right to purchase our insurance and to recieve a "cut back" from the broker But I do not think they can also add on an Admin charge when it is not stated in the lease

[andydd]

Hi Andy

We employ the Management Agents to look after the admin etc

We now also have to pay Freehold Managers an "hidden" admin charge for arranging insurance

 

So we are paying for something we do not need or want ie our Management agents would provide this service as part of whole service

charge

 

FM do have the right to purchase our insurance and to recieve a "cut back" from the broker But I do not think they can also add on an Admin charge when it is not stated in the lease

 

Who is 'we' ? The collection of flatowners ?

 

Have you already gone through a RTM process ? It sounds like you already have.

 

Andy

[rocket99]

Andy

We are the leaseholders some of us live in the flats and some rent them. so there are three players

The leaseholder us who pays for

The Management Agent

Freeholder (Freehold Managers ) who are shafting us

As for the RTM what is it

[andydd]

Andy

We are the leaseholders some of us live in the flats and some rent them. so there are three players

The leaseholder us who pays for

The Management Agent

Freeholder (Freehold Managers ) who are shafting us

As for the RTM what is it

 

Hi..

 

Well..The actuial contract (the lease) should be between you (leaseholders) and owners of the land (freeholders), all the legalities are between you.

 

The management agent should have nothing to do with the legalities of it (unless there is mention of them in the lease ?).

 

Management agents would normally be employed by the freeholder or the leaseholders have banded together and made a RTM (right to manage) company, this company then looks after all the aspects and its out of the hands of the freeholder.

 

It would be interesting to know how the management agent fits into all of this ?. Is he employed by you or tye freeholder ?

 

As youve described it the MC and Freeholder seem to be at odds with other (who insures, etc) which sounds wierd.

 

Andy

[rocket99]

Hi Andy

The MA work for us the leaseholders. We the leaseholders have a Management company it has never done anything (it was set up by the developer and all the directors have resigned so I have just put myself forward to be a director. (this will take a few months to go through with shares being sent to each leaseholder.

 

I hhave wrote to the Freeholder FM(As a Director ) even though I am not one just yet asking our if our MA can look after the insurance but had no reply

[andydd]

Hi Andy

The MA work for us the leaseholders. We the leaseholders have a Management company it has never done anything (it was set up by the developer and all the directors have resigned so I have just put myself forward to be a director. (this will take a few months to go through with shares being sent to each leaseholder.

 

I have wrote to the Freeholder FM(As a Director ) even though I am not one just yet asking our if our MA can look after the insurance but had no reply

 

It sounds like the management company is an RTM company, (or at least something similar), RTM's take over all the running and maintainence and also insurance as far as I know.

 

You may like to visit the landlord zone forum and post on there as they have lots of experts, there is a long leasehold forum which deals with service charges, etc and also an insurance forum which may be relevant.

 

I think before anything can be done it needs to be clear what responsibilities all 3 parties have.

 

Andy

[NewSAHD]

rocket99, hello again, andydd, hi, been reading though the comments with interest

 

Will go through this as I understand it from your posts. Some are questions for you, some are just observations/comments, but hope all proves helpful. There are also some other comments that have been made in passing by you, which will ALSO cover below, as may be helpful for you too. It's a bit late in the evening now though, so some of this may repeat itself, or is stuff you already know about

 

Also, having just googled the property details (B* W*, Bradford) I've edited this message again... and may well edit it again later so it reads better, but for now it may chop around a bit!

 

As I understand it:

 

1.) rocket99 is a leaseholder of 1 of 37 flats.

 

Question, when was the block built/redeveloped? A quick google suggests 2003, is that right?

 

2.) I ask as there's been a large rise in insurance.

 

It could well be justified, but I would be curious if the block was NOT new build and had had a previous re-valuation. And curiouser still as to why, if it IS new build, the insurance sum insured was set so low...

 

3.) Just googled your details, B*W*, and find a "renovated period building in popular city centre location". If so, suggest you edit your post to remove any personal/address references, as will I tomorrow!

 

Agents DO read these forums and no point giving away too many pointers, or leaving yourself open to libel Other Leaseholder forums have been closed down by Freeholders over the years, would hate to see that happen to CAG

 

4.) So, it may well be that *F*M* have done the right thing, had an insurance revaluation carried out, and found, to their horror, that the block was grossly under insured. On the other hand it still means a fee for them ("win win" etc). Just depends on how cynical you all are

 

What did they charge for the insurance revaluation?

 

Who carried it out?

 

But see, 5), below

 

5.) It is VERY likely you will all be charged for the insurance revaluation. If they haven't billed you yet though DON'T remind them as there ARE time limits on incurring expenditure. No point reminding them and they might miss the deadline (which is generally 18 months from when the expense was incurred, unless certain notices have been served before the 18 month expiry)

 

6.) You are also now a new Director of the Resident Management Company (the RMC being responsible for the general running of the block). All OK so far

 

How was this arranged though? Have you had an AGM / EGM to ratify the same.

 

There are - or used to be - time limits on AGM's and various protocols to follow. Company Law has just changed as of the 1st October 2009 too, see Companies Act - Overview

 

Read through the stuff there for as a Director you are personally liable. It's not too much to worry about though and I'd hope your Agent (or whoever got you on as a Director) has explained all this to you, or, at least, directed you to Companies House website

 

7.) The previous Directors, likely to have been the developers themselves, or leaseholders who have already sold up have all resigned. Not uncommon. This the case for you?

 

8.) You have a Managing Agent working for you, E*?, to oversee/run the block. This the case? They ARE acting for YOU and not *F*M*?

 

9.) *F*M* are the Freeholders and they have an obligation to insure. Incidentally, you may find that they will invoice individual leaseholder's direct, but that's by the by for now

 

10.) In terms of formalising matters consider, at the outset, that any application to the LVT - to query the reasonableness of the insurance premium and even possibly the reinsurance valuation fee itself - will cost

 

More information available at

Residential Property Tribunal Service: Using Our Services - Tribunal and Committee Fees

 

also have a look at

http://www.rpts.gov.uk/pubs_and_forms/pdf/LVTguidance.pdf

 

If you are on speaking terms with the other flat owners - and all agree to contribute - then the relatively low costs do not look too bad when split amongst 37 leaseholders!

 

Get a round robin email to all the leaseholders if you can, but keep it simple / polite

 

11.) Obviously you need to be clear as to who pays / and when too / so that YOU (personally) do not get any extra headache for dealing with this, especially as I guess you are an unpaid volunteer. Is this last part correct?

 

12.) Renewal in March 2010? If so, lots of time to get extra comparable quotes, would suggest first

 

- get the policy documentation

- get the claims history

 

Might be worth asking for this from A* (? at *F*M*) first though and gauge his response/time to reply.

 

If in a few weeks there has been no response - and as a 'new' Director of the RMC - I would then be suggesting to A* that you will seek the information direct - and get on the 'phone to the Insurance Broker / Insurer direct, introduce yourself as a 'new' Director, keen to build a relationship etc.

 

You may find the Broker/Insurer will simply direct you back to *F*M*, but if you keep it "light" you'd be surprised at how much you could find out

 

13.) What's the minimum number of Directors required by your Memorandum & Articles of Association? Who is doing the Company Secretarial work for you?

 

Companies House are not really bothered by Resident Management Companies, but you can STILL pick up a fine/problems from time to time if you don't cover this aspect too

 

Your company number is *******? **? if so, all appears currently up to date

 

What are you being charged for the Company Secretarial service?

 

14.) If all this is the case, how are you getting on with E* too, if they are your Agent? I watched what happened to the previous agent with interest and E* picked up a LOT of their work!

 

15.) Please can you clarify YOUR position for me within the RMC, especially bearing in mind you could end up being responsible for positive - as well as negative - outcomes for the block.

 

You say that you are a Director (of the Resident Management Company). If so, do you have D&O (Directors & Officers) insurance cover?

 

I would hope that your Agent has gone through this with you already. Worst case scenario... you become personally liable for what goes wrong, so you arguably need the cover

 

So, it also seems quite right that the all leaseholders (including you, mind) pay their share of the D&O premium. Your Agent can arrange competitve quotes for you, if not already done

 

16.) Back to the "Average clause" in the insurance. Yes, arguably a valid point. Insurance revaluation, again, prudent. Fee for the Agent? Yes, of course, just depends on the level of the fee charged, of course. Was it reasonable? And all just depends on how cynical you are...

 

17.) Your Agent 'should' be aware of all this and 'could' assist, even if not part of their instruction... just depends on how you find them

 

As for me, happy to help out. I am not a Landlord, but I have been in the past. I am not an Agent, but I have been in the past. I am, therefore, a has been, so always seek independent and suitably qualified legal advice

 

Hope all this helps, any question please let us all know. Once sorted perhaps we can produce an edited version of this exchange to help others too

 

That cover it for now?

Edited October 31, 2009 by NewSAHD

[NewSAHD]

It sounds like the management company is an RTM company, (or at least something similar), RTM's take over all the running and maintainence and also insurance as far as I know.

 

You may like to visit the landlord zone forum and post on there as they have lots of experts, there is a long leasehold forum which deals with service charges, etc and also an insurance forum which may be relevant.

 

I think before anything can be done it needs to be clear what responsibilities all 3 parties have.

 

Andy

 

Hi, at present, I see it that

 

- rocket99 (or more correctly "B* RMC") have responsibility for management/day to day running

- *F*M* have responsibility for insurance, but little or nothing else

- rocket99's (or more correctly "* RMC") Agent, E*, actually deal with the management/day to day running and so collect Service Charges for rocket99 (etc)

- *F*M* have responsibility for insurance, collect same, plus also collect their Ground Rent, if any

 

 

Remind me to edit these posts (DONE!)

Edited October 31, 2009 by NewSAHD

[andydd]

Hi, at present, I see it that

 

- rocket99 (or more correctly "Behrens RMC") have responsibility for management/day to day running

- Freehold Managers have responsibility for insurance, but little or nothing else

- rocket99's (or more correctly "Behrens RMC") Agent, Eddisons, actually deal with the management/day to day running and so collect Service Charges for rocket99 (etc)

- Freehold Managers have responsibility for insurance, collect same, plus also collect their Ground Rent, if any

 

Not uncommon, also, Freehold Manager's interested in the reversionary interest and commission on insurance

 

Remind me to edit these posts

 

I was under the impression that in the case of an RTM or similar that all of the managemnet would be performed by the managemnet company, this would include insurance ?

 

My lease says landlord to insure but if i (with other flat owner) made a RTM company and took over running then we (or we prefered management company we employed) would take control of evrything in the annual service charge, admin, maintainence, insurance.

 

Having choice over your own insurance arrangements is the no.1 cause of people wanting to do an RTM, as they get sick of the landlords high prices.

 

Andy

[rocket99]

The Plot thickens . I said that there were three players I was wrong

(1) We have the owners of the flats at behrens (leaseholders) 37 off

(2) We now have the Management Company me and 3 other leaseholders

(3) Eddisons our Managing Agents we pay them and they look after the day to day running

(4) Freehold Managers (Nominees)LTD the Landlord

(5)Freehold Managers PLC who are a seperate company but act for FM (nom)

(5) Zurich the insurance company (who have a special deal with the Broker)

(6) Oval the broker for Freehold Managers (Alasdair is the MD ) the broker has the power to write and keep the policy. Zurich do not even have a copy. It is all bunched together in some kind of special deal

 

What is very clever is that by spliting Freehold Managers into two companies when I wrote 5 letters asking for details of any commision or add on charge. Freehold Mangers replied that this is a matter between the Broker and the Landlord and would not tell me ( it just so happens that the landlord is FM (Nominees) same people but different company

 

Ok back to the points above

(1) I do not have a problem with the insurance . We now have a price of 7K with Zurich . I think we can get it for 6K but Zurich is a good company . It is the added on admin charge that no one admits to that pushes the up price to £10500

 

(2) As for the revaluation. We had a 15K bill sent to all the leaseholders in March asking for our 37th of the 15K. In 2003 the insurance cost 4K. We the leaseholders wrote to complain and I think that Freehold Managers must have realised that 15K was over the top even by their standards. Some "revaluation" took place by Oval and the Bill was reduced to £10500

 

I did what you suggested and contacted Oval and managed by a little craftness did find out (and have proof ) that Freehold Managers tried to add on 5K to a 10K invoice but then "changed there minds and added 3.5K to a 7K bill

7 the previous directors were the developers and have not taken any part in anything to date and have no interest in matters

 

(10) I have the address of all leaseholders and have contacted them. I have instucted them not to pay FM for there 37th of insurance bill. Eddisons our agent will pay them in one payment then collect the money from the each leaseholder at a latter date. This will make it easier for FM to be paid but will give us a bit of leverage to ask

Please tell us how much admin charge are you adding to this bill before we pay you the full amount. Up to now this has been a hidden cost.

 

As for the RTM Eddisons our agents are doing that for us and yes we have insurance

 

 

(12) We can get comparable quotes however we may only save about 1K

I have asked for a direct quote from Oval but he is fobbing us off. I have also asked if he can bill us direct. That way it it plain to see the net cost

[rocket99]

I was under the impression that in the case of an RTM or similar that all of the managemnet would be performed by the managemnet company, this would include insurance ?

 

My lease says landlord to insure but if i (with other flat owner) made a RTM company and took over running then we (or we prefered management company we employed) would take control of evrything in the annual service charge, admin, maintainence, insurance.

 

Having choice over your own insurance arrangements is the no.1 cause of people wanting to do an RTM, as they get sick of the landlords high prices.

 

Andy

 

Andy

Is it that simple. We are a managemt company. So do we just tell FM that we will get the insurance from now on

[NewSAHD]

Andy

Is it that simple. We are a managemt company. So do we just tell *F*M*that we will get the insurance from now on

 

Depends on your lease

 

From what you said before, the answer would appear to be a "no"

 

Also, if the liability under the terms of the lease rests with *F*M* then, strictly speaking, they may still insist on billing each leaseholder direct - or seek an indemnity from you in the event that any leaseholder later challenges the reasonableness of the premium

 

It's a potential mindfield for them (and you) so it would appear they will simply follow the lease, as they should, and bill each leaseholder individually

 

Preparing for halloween at present so will come back to the posts later!

Edited October 31, 2009 by NewSAHD

[NewSAHD]

(2) As for the revaluation. We had a 15K bill sent to all the leaseholders in March asking for our 37th of the 15K. In 2003 the insurance cost 4K. We the leaseholders wrote to complain and I think that *F*M* must have realised that 15K was over the top even by their standards. Some "revaluation" took place by O*** and the Bill was reduced to £10500

 

and

 

(12) We can get comparable quotes however we may only save about 1K

I have asked for a direct quote from O*** but he is fobbing us off. I have also asked if he can bill us direct. That way it it plain to see the net cost

 

With regards your point (2) have you been billed for the insurance revaluation itself?

 

It should have been undertaken by suitably qualified Surveyors... my comment about reminding the Agent to bill you for this still applies ie don't do it, but be prepared for it when it comes

 

With regards (12) there are many other block management/insurance brokers aside from O*** who will provide alternative quotes

 

Once you have the policy documents/claims history you can use that to get quotes - you can then better negotiate with O*** / *F*M* as to what you wish to pay

 

You probably are well aware that *F*M* are O***'s client, not you, but it doesn't do any harm to remind yourself of that fact from time to time :-|

Edited October 31, 2009 by NewSAHD

[NewSAHD]

rocket99, andydd, have sent you both a separate message. I'm new to the CAG forum, so apologies if not following whatever etiquette there is here

[rocket99]

Just a quick note aside. I have been using rough figuers for the calculations. But this is strange the exact figures are

 

(1) The cost of the policy was £10.091 FM invoiced us for £15,519

(2) After revaluation policy was £7178 FM invoiced us for £10,091

 

The chance of it working out to the exact number!!!!

[andydd]

Andy

Is it that simple. We are a managemt company. So do we just tell FM that we will get the insurance from now on

 

Well..Thats how a RTM works, an RTM is a proper legal way to take control away from the landlord and into your hands (assuming you met the criteria, over 50% of flats agree, etc).

 

But I'm unclear wether this applies to your management company, as its not clear how it was formed, Im assuming as they are new flats that the MC was there from the begining ?

 

Andy

[rocket99]

Hi

I have been overseas forthe last week so sorry for the delay. Yes the MC was there from the start but was made up of the develper now we will be a leeseholder / MC so can we ju easily set things in motion to arrange our own insurance

[NewSAHD]

Hi again.

 

The original RMC (Resident Management Company), of which you are now a Director, is quite distinct from a RTM company (Right to Manage).

 

This means that, unfortunately, you don't yet have the right to arrange your buildings/block insurance.

 

The current situation is decided by your lease, so from what has been said you will still need to deal with FM, for the time being.

 

Don't forget though that the insurance premium itself can be put to the LVT (Leasehold Valuation Tribunal) to determine if it is reasonable, as you can with other service charges. Doesn't have to be the cheapest, but does have to be reasonable.

 

Do you know if you have yet been charged a professional fee for the insurance revaluation itself, as opposed to the insurance premium itself after it had been adjusted downwards? Comments from before about such a fee still applies

 

Someone, somewhere undertook an insurance revaluation for FM and I would be surprised if you are not billed for the professional work undertaken!

[rocket99]

Thanks for this. I think I will take the matter through the LVT

[NewSAHD]

Cheers.

 

Check your lease as to when the insurance is to be renewed / paid. You have the premiums already, so what are the dates of cover? Sorry, it's late, but didn't want this to slip through. (Edit: Oops, you appear to have already answered this!)

 

Do the leg work now in terms of getting alternative quotes from other Brokers aside from O*** too, of course, as you may be able to negotiate with FM without needing to go to the LVT for a determination on what is reasonable.

 

What about the fee for the buildings insurance revaluation as well?

 

I can see that making it's way to you shortly too, if it hasn't already been slipped in. I'd suggest you ask for a summary of all expenditure to date.

 

If needs be have another leaseholder / one of your fellow Directors (not you, perhaps, as you are querying Insurance and so whoever you are dealing with will be thinking Insurance and associated fees too) do so. Leave that up to you.

 

Once you have it post here if you wish.

 

The cost of the insurance premium is greater than the cost of the likely fee for the valuation itself, but if you can get a healthy discount on the premium, it may enable you to argue over fees too.

 

Negotiate first with FM if you can for although the LVT can be leaseholder friendly it is not infallible. And it is not unreasonable to suggest that a company of FM's size may have been to the LVT before, so will be well versed in what they want to achieve.

 

Good luck and look forward to hearing more from you on this.

Edited November 9, 2009 by NewSAHD

[andydd]

Thanks for this. I think I will take the matter through the LVT

 

Unfortunaty most LVT applications related to insurance do fail, this is mainly due to a few precedents being set early on.

 

Important things to note are:-

 

1. You need to prove current quote is unreasonabe and way above other quotes you get.

 

2. There is some sort of commision paid.

 

3. That the landlord didn't shop around.

 

4. Building is over valued and over insured ?

 

Read through other LVT and perhaps apealled Lands Tribunal cases.

 

Andy

[rocket99]

Hi Andy

The premium is not bad at 7 K we could get it for maybe 6K

 

What FM have done is add on 3K handling charge and invoiced us for 10K

 

FM would not admit to a handling charge but after some detective work and asking for conformation from the broker that the cost is 7K I have worked it out