Participation Agreement

It is a matter of personal choice whether you as a block of flats hoping to claim your Right to Manage choose to create a Participation Agreement. Generally the larger the block, the greater the need to do so.

A Participation Agreement is simply an agreement under contract law. It sets out your obligations along with the rest of the group bringing the claim, (or those signed up at this stage) and what share they are responsible to contribute.

A good Participation Agreement will usually require regular payments whilst the claim progresses to fund the costs and also to contribute a share of the purchase price (when ascertained). The Participation Agreement should provide that the participants will not do anything to invalidate the claim and that if a leaseholder should withdraw then they accept responsibility for their share of the costs.

In Right to Manage claims, legislation provides that the participating tenants are liable to the landlord for all costs incurred from the claim notice until the claim is withdrawn. Liability for costs is “joint and several”. This means the landlord can recover its costs from any participating tenant so the importance of the Participation Agreement is to protect you as one individual leaseholder from being presented with a claim from the landlord for all the costs in the case if there was no Participation Agreement and other flat owners refuse to pay.

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