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RICS APC - Residential > Property Management - Level 3 > Flashcards

Property Management - Level 3 Flashcards

1
Q

How would you deal with a noise complaint?

A
  • They make use of Environmental Health noise team and
  • If they want us to enforce, they indemnify LL for costs
    a child running in a flat is really just day to day noise as per Camden v Baxter, this is essentially conflict of lifestyles.
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2
Q

What are the RICS documents that you refer to for support?

A
  1. RICS Professional Statement - Real Estate Management 2016
  2. RICS Code of Practice - Service Charge Residential Management Code 2016
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3
Q

What are the key principles of the RICS Professional Statement - Real Estate Management 2016?

A
  1. Act in an honest, fair, transparent and professional manner
  2. Carry out work with due skill, care and diligence.
  3. Ensure the client is provided with terms of business which include your CHP.
  4. All communications with client should be clear and fair
  5. Hold appropriate PII
  6. Make sure all parties are clear on the obligations
  7. Ensure all meetings/inspections are carried out in accordance with the agreement
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4
Q

What are the four ways to apportion service charge?

A
  1. Floor area
  2. fixed percentages
  3. rateable value
  4. weighted floor area
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5
Q

What is the RICS information paper for sinking funds?

A

RICS information paper - Sinking Funds, reserve funds and depreciation charges 2014

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6
Q

When offered new business what would you assess?

A
  1. Assess I am competent to take on the instruction
  2. Check for personal interests or conflict of interest
  3. Include CHP
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7
Q

What is an example of a conflict of interest, for a new management appointment?

A

If it is a RTM company and the freeholder is already a client.

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8
Q

When offered new business what would you do?

A
  1. Conflict of interest
  2. Competency check
  3. Agree ToE
  4. Obtain an understanding of client’s objectives
  5. Obtain an understanding of the landlord’s obligations in the lease
  6. Check the client has read and understood the terms of engagement
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9
Q

What is a tenancy at will?

A

Form of licence created by written agreement for a unspecified length of time, the tenant has no legal interest and no renewal right.
Used for early tenant entry so they can carry out a fit out

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10
Q

What is the Hackitt Report?

A

An independent review of building regulations and fire safety, produced in 2018 by Dame Judith Hackitt

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11
Q

Why was the Hackitt Report produced?

A

Because the regulatory system covering high-rise and complex buildings was not fit for purpose.

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12
Q

What are the key issues highlighted in the Hackitt Report, with the system failure for fire safety?

A
  1. Ignorance - regulations and guidance are not understood by those in charge
  2. Indifference - Aim to do works quickly and cheaply and don’t prioritise safety
  3. Lack of clarity of roles and responsibilities - levels of hierarchy, people don’t know who is responsible.
  4. Inadequate regulatory oversight and enforcement tools.
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13
Q

What are the duties imposed by the Fire Safety Order 2005?

A
  1. Suitable sufficient fire assessment risk
  2. Protect those on and around the premises
  3. To mitigate risk and plan for an emergency
  4. Provide staff information/training
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14
Q

When you inspect a building what do you do to ensure fire safety?

A
  1. I take a copy of the FRA
  2. I check signage; exit route/ fire strategy notices
  3. Ensure staff are adequately trained
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15
Q

If you manage a building, with a vulnerable person in what do you do to ensure their safety?

A
  1. Collate a vulnerable list - notify Fire Brigade and Aduvio (OOO)
  2. Provide an Evacuchair
  3. Ensure there are no trip hazards in the communal parts
  4. Ensure all emergency lights work
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16
Q

Is there a need for fire extinguishers in communal parts?

A
  1. No
  2. Should not be used unless person is trained
  3. If there is a fire no resident should try to fight it.
  4. Only in the boiler room/lift room.
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17
Q

What does Article 18 of the FSO 2005 say?

A

The ‘responsible person’ must appoint a competent person to advise on necessary actions to mitigate against risk.

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18
Q

What do you do if a client says no to spending money on fire safety?

A
  1. Provide clear forecast costs for the required works
  2. Support my advise with statue e.g. from Regulatory Reform (Fire Safety) 2005.
  3. LAST RESORT - resign
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19
Q

What are the different types of the fire risk assessment?

A
  1. Common Parts non- destructive
  2. Common Parts Destructive
  3. Common Parts and flat - non-destructive
  4. Common Parts and flat - destructive
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20
Q

Which type of fire risk assessment is mandatory?

A

Common parts non-destructive

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21
Q

If you receive a report that says ‘presumed’ everywhere, what should you do?

A

Instruct a Type 2 assessment - Common Parts Destructive

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22
Q

When looking at apartment fire doors for fire compliance, what should you consider?

A
  1. Should be 60 minute rated
  2. intumescent strips
  3. door closer
  4. 3 x 30 minute hinges
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23
Q

Why are there three hinges on fire doors?

A

stop the door twisting

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24
Q

How often should fire doors be surveyed?

A

annually.

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25
Q

How often should a FRA be carried out?

A
  1. every two years
  2. with an annual review - check all action points are cleared off
  3. Unless there is a change in the building - e.g. doors.
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26
Q

What are the three different fire strategies?

A
  1. Stay Put - compartmentation - everyone stay put
  2. Simultaneous Evacuation - Everyone get out
  3. Phased Evacuation - for BIG Blocks
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27
Q

If the fire strategy for a building changes, what should you do?

A
  1. Write to all leaseholders
  2. Change all fire strategy signage
  3. Train site staff
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28
Q

If a building is heritage and a FRA asks that you should change the doors and heritage glass?

A

Ask the competent advisor if an evacuation strategy would be appropriate

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29
Q

In relation to fire safety, if someone is carrying out alterations in the apartment, what should you ensure?

A

A competent person, e.g. surveyor, ensure the apartment meets building regulations. E.g. fire doors, alarms.

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30
Q

What is the frequency requirement for flick test?

A

Bi-annually.

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31
Q

What has the RICS said about PI insurance and fire safety?

A

The RICS changed the minimum wording for PI insurance, to improve fire safety cover for professionals.

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32
Q

What are the key principles of the RICS Real Estate Management Professional Statement 2016?

A

Professional Statement - Mandatory

  1. principles to ensure a culture of fairness and transparency
  2. provides managers with guidance on how to conduct their business.
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33
Q

Examples of landlord’s covenants you assist with?

A
  1. repairs
  2. insurance
  3. external decorations
  4. provision of services
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34
Q

What is the process of assignment?

A

CHECK LEASE CLAUSE
1. Leaseholder informs LL 2. LL solicitor draws up a licence to assign 3. AML/Identity/Credit checks 4. Rent deposit agreed 5. Sign.

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35
Q

What are the rights of an RTM?

A
  1. notifiable of section 20 and can nominate.

2. leaseholders management the building

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36
Q

How do you deal with conflicts of interest open and fairly?

A
  1. notify all affected parties and decline the instruction.
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37
Q

How do you ensure you meet your clients expectations?

A
  1. Communication

2. Service Standards

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38
Q

What are BEL’s terms of Business?

A

service to be provided by the agent;

  • authority of the agent;
  • client’s obligations;
  • fees
  • termination; and
  • CHP
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39
Q

What is BELS minimum fee?

A

£7,000

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40
Q

What is BEL’s fee per unit?

A

£350

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41
Q

What is BEL’s complaints handling procedure?

A
  1. write to tony - confirm receipt in 3 days, update in 15 days
  2. if complaint not resoleved in 8 weeks, complaint put forward to RICS approved redress provider; a. consumer - TPO / b. B2B - RICS DRS
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42
Q

What do you provide as part of your company secretarial services?

A
  1. Organising filing of company accounts, confirmation statement
  2. Ensuring Companies House is up to date
  3. AGMs
  4. Termination/appointment of directors
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43
Q

What is a summary of tenants rights and obligations?

A

Required under Section 153 CLRA 2002
A notice served with variable service charges, detailed the tenants rights. Without it the tenant has right to withhold payment. States you have the right to apply to FTT to determine who is liable to pay.

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44
Q

What is s35 and s36 of LTA 1987?

A

35 - Right to apply to FTT to vary lease

36 - Right to apply to FTT to vary other leases - if other leases fail to make satisfactory provision

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45
Q

What does vertical cracking show?

A

Structural defects and movement of foundations

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46
Q

What is the PW Act 1996 about?

A

provides a framework for preventing and resolving disputes in relation to party walls, boundary walls and excavations near neighbouring buildings.

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47
Q

What is Section 10 of PW Act 1996?

A

deals with the resolution of disputes.
Any issue or “dispute” arising between the building owner and the adjoining owner in connection with works proposed under the PWA 1996.

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48
Q

What is the procurement of contracts process?

A
  1. Planning – guidance on the various planning activities that should be undertaken and decisions that should be made before going to the market for facility services
  2. Procurement – guidance on the activities and key decisions that should be undertaken during a procurement process
  3. Post-procurement – guidance on activities that should be undertaken post-procurement.
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49
Q

When procuring contracts, what do you assess?

A

.

50
Q

What is the process of enfranchisement?

A

.

51
Q

If a lease is assigned and you are not notified, who is liable for the arrears?

A

Normally the lease requires landlord approval of an assignment and the arrears will be paid on completion.
If not, the liability of the debts stay with the previous owner. At which point you can issue proceedings in court/FTT to recover the debts.

52
Q

When may a lease variation be required?

A
  1. If the lease does not make the necessary satisfactory provisions for e.g. repair or insurance or service charge recovery.
53
Q

Can compensation be offered for a lease variation?

A

Yes, under S38(10) LTA 1987

If a party to the lease is at a loss or disadvantage as a result of the variation

54
Q

What is the RICS document for facilities management?

A

Code of Practice - Procurement of facility management 1st edition OCTOBER 2020

55
Q

What are the key principles of Code of Practice - Procurement of facility management 1st edition OCTOBER 2020?

A
  1. There should be a defined, detailed scope of the services and state clear objectives, provide enough information to bidders
  2. The DO (demand organisation) should state clear objectives for the procurement project and the subsequent operations.
  3. specific and reasonable timescales for the procurement process.
  4. The DO should detail a payment mechanism and commercial terms that are transparent and fair.
  5. All parties are required to comply with relevant legislation and rules that apply in the territories where services will be provided, e.g. data protection.
56
Q

how did you demonstrate to the insurance company you were mitigating against risks?

A

this is a long term strategy - carrying out bi-annual gutter and drainage clearance and providing advice to leaseholder on common causes of leaks e.g. shower drains and silicone

57
Q

Give an example how you would act ethically as a property manager

A
  1. Trust/integrity - If carrying out s20 major works project and a contractor approached me and offered a bribe to ensure they would get the contract, I would decline the bribe and report this to the compliance officer within the business.
  2. Integrity/trust and respect - At a leaseholder meeting I would listen and answer any questions to the best of my ability -
  3. Service - I always strive to provide the highest level of service by meeting all terms of the lease and going the extra mile to please my client.
58
Q

how would you deal with a conflict of interest as a property manager

A

Approached by a RTM company who’s freeholder is a major client. I would politely decline the instruction.

59
Q

what are other methods of apportionment?

A
  1. Fixed apportionment
  2. Floor area
  3. Rateable value - N/A
60
Q

What is an RMC?

A

Residents Management Company - A block of flats is owned and/or managed by a company made up of leaseholders.

61
Q

When did RTM become a thing?

A

CLRA 2002

62
Q

What are the basis requirements for an RMC?

A
  1. Register at Companies House - Incorporation certificate
  2. Article of Association
  3. Memorandum
  4. To elect a board of directors
  5. Comply with bais company legislation
  6. Must have a registered office address.
63
Q

When managing a block, how would you ensure that you establish your duties?

A
  1. Make all parties aware that you have a contractual duty to the RMC
  2. Management services are limited in line with the management agreement
  3. Unresolved complaints by leaseholders concerning management issues should be directed to the Board.
64
Q

As a Managing agent, what are you duties to Leaseholders?

A
  1. Contractual duties - fulfilling landlords convenant e.g. repair and maintain
  2. Statutory Duties - reasonableness of service charge and consultations.
65
Q

What are the differences between a Leaseholder and a Shareholder?

A

They re two seperate legal entities.

  1. A shareholder is entitled to take part in decision making and will have a say at company meetings.
  2. A leaseholder is contractually bound under the lease to adibe by their covenants. If they breach this the leaseholder is liable for court action.
66
Q

What is the difference between service charge accounts and company accounts?

A

Funds must be kept separate.

  1. Company funds - derived from share capital, subscriptions or levies from members.
  2. Service charge fund is contributed to by leaseholders in accordance with the terms of their leases. The RMC is a statutory trustee for these contributions under s.42 of LTA 1987.
67
Q

What is the process to obtaining a Right to Manage under 2002 Act?

A

….

68
Q

What is the difference between an RTM and RMC?

A

Both have a duty to maintain, repair and insure block.
but an RTM;
1. is reliant on certain conditions set out within CLRA, and on costs (fees relating to the RTM application process) being met by those tenants seeking it;
2. is not party to the lease and so may have problems demanding monies (as a service charge) for items that are not detailed in the lease, such as directors’ insurance;
3. does not require 100% occupant participation and so could still find itself open to a dispute between it and tenants who are not members of the company;
4. has more tailored memorandum and articles of association, which allow non-tenants to become a director of the company.

69
Q

How could a RMC become insolvent?

A

When a shortfall occurs;

  • The service charge apportionments don’t add up to 100%
  • not completing s20 consultation correctly - costs irrecoverable
  • Substantial arrears
70
Q

What are the consequences for a RMC if they become insolvent?

A
  1. no fund to manage, maintain or insure property

2. management may revert to freeholder

71
Q

What advice would you give a RMC to mitigate against the risk of insolvency?

A
  1. Recover arrears
  2. Allow time for correct s20 consultation
  3. If imminent - can directors make a personal loan to bridge the gap, can RF be used?, can the next sc payment be made sooner.
72
Q

What are the powers of an RMC if they own the freehold?

A

They possess the power of forfeiture, subject to statutory and common law restrictions.
2002 Act - Forfeiture cannot be commenced (nor even a section.146 notice served unless a breach has been agreed by the leaseholder or it has been determined to exist by the Tribunal or court.
Look at this in relation to the Airbnb at Hempel Gardens

73
Q

What should you do if a leaseholder asks for works to be done and it hasn’t been budgetted for?

A
  1. Assess the urgency of the works - if not done would the LL be in breach?
  2. Communicate with them the reason why cant do it but how plan to do it next budget year.
    e. g. Carlton Front Elevation
74
Q

What steps can be taken to avoid common mistakes?

A
  1. Research and understand the building
  2. Get expert advice
  3. Have an up to date Capex plan
  4. Set an appropriate budget
  5. Take appropriate action
75
Q

What is the purpose of service charge account certification?

A

S21 of LTA 1985

To certify the annual expenditure, demonstrated in the cash flow, balance sheet and profit and loss accounts.

76
Q

What do I mean by final and binding for accounts?

A

In the case of residential tenancies, any clause in the lease that makes a certificate of expenditure final and binding would be rendered void by of s.27A(6) of the LTA 1985. In such cases, the FTT has jurisdiction to determine the amount of the service charge payable on an application by a party to the lease (s.27A(1)).

77
Q

What is the time limit for residential service charge accounts?

A

Section 20B of LTA 1985; a tenant shall not be liable for payment of any costs incurred more than 18 months before a demand for payment of the service charge is served (a deficit demand). Unless the tenant is notified.

78
Q

What is the case of Gilje Vs Charlegrove Securities 2003?

A

The landlord did not supply the accounts within the 18 months rule, but there was a surplus. The S20 B notice was note required.

79
Q

What is the case of OM Property Management Ltd Vs Burr 2012?

A

A managing agent paid the incorrect gas supplier from 2001-2007. In 2007 they received a substantial bill. They could not recover costs because the expenditure was incurred more than 18 months before demand was issued. But the law focuses on when the payment becomes due, and the gas bill was provided (November 2007). Thus could be recovered.

80
Q

How do you identify who the should certify the accounts?

A

The lease will state whether they need to be a chartered accountant, landlord’s surveyor, managing agents. But the minimum the accounts should be prepared in accordance with TECH 03/11.

81
Q

What if the lease apportionments add up to more than 100%?

A

This is argueably immoral as the landlord should not seek to profit from the provision of services.
An agreement should be reach to either vary the leases or move the additional collection into the reserve fund or credit back to leaseholders.

82
Q

What is the case of Mylles Vs Hall 1980?

A

Apportionments of 1/11 in lease. Then resident caretaker moved out and the apartment was sold. The landlord was under no legal obligation to reduce the contribution but did so anyway, to 1/12 to ensure it was fair.

83
Q

All residential service charges must be held on trust, under what law?

A

Section 42 LTA 1987

84
Q

Can you recover management fees via service charge?

A

Majority of leases do allow it, subject to the reasonableness test S.19 LTA 1985.

85
Q

Do consultation requirements of S20 LTA 1985 apply to management fees?

A

Yes, if they are considered a qualifying long-term agreement - lasting 12 months or more.

86
Q

What is the case of Paddington Walk Management Limited Vs Governors of Peabody Trust?

A

Management agreement was for the initial period of 12 months and then year to year subject to termination by notice. The judge concluded that there was no agreemnt for more than 12 months and consultation was not required.

87
Q

When cant a landlord recover legal costs?

A
  1. Under s20C LTA 1985. When the FTT says so. If the landlord has lost a case at court.
  2. Enforcing tenant covenants e.g. arrears collection, alterations and assignments.
88
Q

Define service charge

A

Section 18(1) of LTA 1985 as amended by CLRA 2020 - an amount payable by a tenant of a dwelling as part or in addition to the rent for the services, repairs and maintenance and landlords cost of management.

89
Q

Why do leases contain service charge sweeper clauses?

A

So costs can be recovered for future additional services e.g. if CCTV was installed to improve security but CCTV didn’t exist when the lease was written, the cost of maintenance could be recovered under the sweeper clause.

90
Q

What is the test of reasonableness?

A

S19 LTA 1895.
Relevant costs shall be taken into account in determining the amount of a service charge payable for a period
- Costs can only be recovered if they are reasonably incurred
- only works or services performance to a reasonable standard can be charged.

91
Q

When dealing with a dispute, what is security of costs?

A

When a claim is raised and a sum of money is held from the Claimant to cover costs. Under the Arbitration Act 1996 and the Civil Procedure Rules. It isnt stated how the security should be assessed or where is should be deposited.

92
Q

What is a Calderbank offer?

A

An offer to settle the dispute, which if rejected and further costs are incurred the opposing party may pay a proportion of the party’s costs.

93
Q

When may an arbitrator be instructed?

A

If there is a service charge dispute between freeholder and leaseholder.

94
Q

Why is arbitration better than litigation for certain parties?

A

Because the case is kept private and confidential and is not annouced to the public.

95
Q

Where are the section 20 consultation requirement found?

A

Schedule 4 of Service Charges (Consultation Requirements) (England) Regulations 2003.

96
Q

What are qualifying works?

A

Works to a building where any one leaseholder will conribute more than £250

97
Q

What is stated in a notice of intention?

A
  1. Description of works proposed and time and place to inspect the description
  2. Landlord’s reasons for considering the works necessary
  3. invitation of observations
  4. specify ; the address to sent observations, that they must be delivered in the relevant period and the date of which the period ends.
  5. Invitation to nominate a contractor
98
Q

How many estimates do the Regulations require the landlord to obtain?

A

at least 2.

  1. 1 from a contractor wholly unconnected
  2. at least 1 from nominated contractors from a tenant and recognised tenants association
99
Q

What is include in the Statement of Estimates?

A
  1. Estimated costs from at least 2 contractors, including VAT.
  2. Summary of observations
  3. Specify a place and time to view estimates
  4. invite observations
  5. address and date for observations.
100
Q

What is a Notice of Reason?

A

When a contract is entered into that isnt the a nominated contractor nor lowest price then this notice must be served within 21 days of entering into the contract.

101
Q

What is included in the Notice of Reason?

A
  1. The Landlords reason for entering into the contract and where these reasons can be inspected.
102
Q

What are qualifying long-term agreements?

A

An agreement entered into by or on behalf of the landlord or superior landlord, for a term of more than 12 months, to which one leaseholder will contribute more than £100.

103
Q

What isnt an agreement a qualifying long term agreement?

A
  1. when the contract is for employment
  2. when it is a management agreement made by a local housing authority
  3. If the parties to the agreement are a part of the same holding company
  4. If there are no leaseholders when the contract is entered into and it does not last for more than 5 years.
104
Q

What are the three notices for qualifying long term agreements?

A
  1. Notice of intention
  2. Notice of proposals
  3. Notice of reasons
105
Q

For a QLTA what does the NoI include?

A
  1. Description of relevant matters and time and place to inspect the matters
  2. Landlord’s reasons for considering the agreement necessary / if the agreement includes works, state the reasons.
  3. invitation of observations
  4. specify ; the address to sent observations, that they must be delivered in the relevant period and the date of which the period ends.
106
Q

If a QLTA is required for a managing agent then, what must it include?

A

An additional statement which includes proposals related to the agents membership to any professional body.

107
Q

How can managing agents avoid having to consult for management agreements?

A

Make the duration for a fixed term of a year or less.

108
Q

What are variable service charges?

A

Section 18 LTA 1985 - an amount payable by a tenant of a dwellant.

109
Q

What is the history of S20?

A
  1. First - Section 20 of LTA 1985
  2. Commonhold and Leasehold Reform Act 2002 introduced new framework and S20ZA and QLTA. The framework is Service Charges (Consultation Requirements (England) Regulations 2003 and came into effect on 31 October 2003
110
Q

Under which schedule in Service Charges (Consultation Requirements (England) Regulations 2003 details the following

  1. QLTA no public notice
  2. QLTA public notice
  3. QW under QLTA
  4. QW
A
  1. QLTA no public notice - Schedule 1
  2. QLTA public notice - Schedule 2
  3. QW under QLTA - Schedule 3
  4. QW - Schedule 4
111
Q

What is the document detailing how VAT liability should be applied for residential domestic service charge?

A

“HMRC - VAT Exemption for all domestic service charges

VAT information sheet 07/18 - applying the correct VAT liability on residential domestic service charges. “

112
Q

In relation to service charge, what is taxable?

A

Yes - supplies made from a third party that does not hold or supply an interest in the residential property cannot be making VAT excempt supply of an interest in land.
Thus, 3rd party including RMC or RTM, who arent detailed on the lease and management costs.

113
Q

Does an RMC pay VAT?

A

No, but only not if they acquire the freehold or a superior interest in the land, they will become the landlord and will be making an exempt supply of property to the individual leaseholder.

114
Q

What are the legal rights an RRA has?

A
  1. can request service charge costs summary
  2. can inspect accounts
  3. consultation in respect of the appointment of managing agents
  4. consultation in respect of major works - can nominate contractors/make observations
  5. request a summary of insurance
  6. appoint a surveyor to advise on service charge related matters
115
Q

What are the changes detailed in Companies Act 2006?

A
  1. Abolished requirement for private companies to hold an AGM
  2. Use of email for communication with shareholders and members
  3. display of company information to the public including registered name and office of company.
116
Q

What does the Companies Act 2006 say about AGMs?

A

Abolished the current obligation for private companies to hold AGMs. Still required if need to dismiss a directors, or an auditor before end of their term in office.

117
Q

What is a Person of Significant Control?

A
  1. owns 25% of company’s shares
  2. holds more than 25% of the company’s voting rights
  3. holds the right to appoint or remove the majority of directors
118
Q

What do RMCs need to do annually?

A
  1. File company accounts and annual company return
  2. File confirmation statement
  3. Check and confirm Companies House information inc. secretary, directors and registered office.
119
Q

Under what act are managing agents required to prevent money laundering?

A

Proceeds of Crime Act 2002

120
Q

What procedures do BEL have in place to prevent Money Laundering?

A
  1. Customer Due Diligence checks when sums over £10,000 is paid. Rare.
  2. Training to increase awareness
  3. Appoint a AML officier
  4. Produce records and procedures to provide evidence compliance
  5. risk assessments
121
Q

What are the three Money Laundering Offences?

A
  1. Section 327 - concealing, disguising, converting, transferring
  2. Section 328 - entering into an arrangement you know is not legal
  3. Section 329 - acquiring/using criminal property

RICS APC - Residential (22 decks)

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