A bank reconciliation is a routine check that should be carried out on any bank account to ensure that the cheques written leave and clear the account and that cash paid in is received by the bank. Monies that have not been received (i.e. perhaps lost in the banking system) must be deducted from the cashbook ledger and the payee pursued for duplicate funds. Cheques posted to the cashbook ledger which remain uncleared should be physically stopped and/or a replacement cheque issued.
What is a certificate of compliance?
A certificate of compliance is a document required by the Land Registry to confirm that all the covenants of the lease have been complied with. This is required if a restriction against transfer is registered the title register and no conveyance can be completed on such affected properties without the necessary certificate of compliance. A certificate of compliance is usually provided by the person in charge of the ownership registers.
When can a company be dormant?
A company can be dormant when it does not trade. In a property context definition not trading is that ground rent is not received, no assets are bought or sold and that no interest is received to the company as principle. As the SMSU operates your management company through a "client account" the money is deemed to be held in trust and therefore the company has no transactions in its own right. A dormant company takes certain benefits such as being able to fund simplified accounts and can therefore be cheaper to run.
What are debentures?
A debenture is statement of a sum loaned to the company and how it will be paid back. Debentures may also impose a 'floating charge' over the assets of the company or a fixed charge. A copy of any debenture must be kept at the Registered Office. A copy must be sent to Companies House within 21 days of issue.
What is a deed of covenant?
A deed of covenant is essentially a promise. It is a promise by the buyer of a lease to abide by the covenants stated in the lease and if usually entered into as a condition of any sale in the lease post the original first sale.
What is a Licence to Assign?
A Licence to Assign is in simplist for permission to sell the property in question. Licence to assign is granted by the Freeholder to the current Leaseholder. Where a lease requires a Licence to assign before the lease can be sold it would be a breach of lease to sell the property without such consent.
What is a special resolution?
A Special resolution would be required for any change to the Company Memorandum and Articles of Association. Such motions must be passed by a 75% majority.
Where and how do you keep service charge monies? How are they administered and who receives any interest?
All client funds are held in interest-bearing client accounts administered in accordance with Royal Institution of Chartered Surveyors (RICS) Client Money Protection Scheme. All interest accrues to the leaseholders. All accounts are managed according to the RICS Code of Practice for Residential Managing Agents and are reconciled every 5-6 weeks.
What is an annual general meeting?
An annual general meeting AGM is a meeting that is required by the Companies Acts to present the accounts to the shareholders of the business, approve accounts, elect/re-elect directors, appoint and set the remuneration of the auditors. An AGM must be held within 15 months of the last AGM, unless the company has unanimously adopted the de-regulation package of the 1989 Companies Act.
When is an annual return required?
An annual return is required every year annually on the birthday of the company i.e. the anniversary of the date on which the company was incorporated.
What is an annual return?
An annual return is the name used for Form 363 that is required to be submitted to Companies House annually to register the directors, company secretary and shareholders of the company on the anniversary of the date the company was created. This is a requirement for all companies including resident management companies or right to manage companies.
What is an extraordinary general meeting (EGM)
An EGM can conduct much the same business as an AGM and can be called at anytime.
What is an Elective Resolution?
An Elective Resolution would be required to change the activities of the Board. Typical resolutions include dispensing with AGMs, dispensing with the obligation to lay accounts before an AGM, Altering voting rules.
What is an Extraordinary Resolution?
An example of an Extraordinary resolution would be a resolution to wind up the Company.
What is an ownership register?
An ownership register is the legal register of who currently owns the lease at a certain point in time. A lease will always set out the original parties when it was first created, thereafter the lease is (assigned) to each subsequent purchaser. It is the registration of each "transfer" that is key to effective management.
How do I go about making alterations to my property?
Contact the SMSU Legal Services team who will advise further. Factors to be taken into account is what is permitted by the lease, are the proposed alterations structural, what possible harm could be caused if they were not carried out effectively.
What are dormant company accounts?
Dormant company accounts are simplified accounts that can be sumitted to companies house to fulfil the legal obligation to file annual accounts. In simplist form dormant company accounts for a non trading company comprise the balance sheet (statement of assets and liabilities). For a resident management company this may be the share capital only.
What is forfeiture?
Forfeiture is essentially an action to terminate a lease in accordance with the Landlord and Tenant Act 1954. Since February 2005 for residential properties it is a requirement to first seek sanction that the proposed act you intend to rely on to forfeit a lease is a "breach of covenant" without first seeking this sanction any forfeiture action would be invalid.
Do we have to hold AGMs?
It is possible to de-regulate a resident management company so that AGM's are not held. Even if the 1989 Companies Act de-regulation package is adopted any leaseholder can call an Extraordinary General Meeting EGM to discuss any business that would otherwise be discussed at an AGM. The de-regulation package must be unanimously adopted.
What means do you use to collect service charge?
Our in-house Legal Services team monitor the collection of service charges. Arrears reach the litigation stage within the quarter in which they are billed.
What if the defaulting tenant lives outside the UK?
Our legal Team may be able to secure UK jurisdiction. Good management of ownership registers would seek a service charge deposit from an overseas buyer.
What is the reserve fund for?
Reserve funds are built towards future cyclical expenditure (such as the replacement of the lift of the re-covering of a roof and/or general block redecoration). Collecting a reserve fund helps spread costs as the due date approaches. Only if the lease allows should a reserve fund be used to fund the cost of routine services. Legislation assures that the money held in the reserve fund is held on trust. At the SMSU reserve funds are held in your own private interest bearing Client account. The interest accrues to you the lessees collectively.
What is service charge?
Service Charge is the term used for the funds collected from lessees for day to day service charge items. It is collected on the due dates specified in the lease.
How can we become exempt from a CT600 service estimate corporation tax return?
Since the Self-Assessment for tax legislation was brought in many resident management companies have suddenly been presented with corporation tax returns. Because an SMSU supported management company or right to manage company will generally be a non-profit making, not trade in its own right, and as service charge revenue will be below the taxable threshold a corporation tax return exemption can be claimed. If granted this generally lasts for a 5 year period. The SMSU's Legal Services team can lodge a request with the Inland Revenue for a waiver.
What is a register of directors/members and shareholders?
This is a simply a register of who is control of the company i.e. the directors and should reflect the records held at Companies House as any appointments or resignations have to be referred to them by completing them a 288A form.
What if the defaulting tenant lives outside the EU?
Usually jurisdiction is allowed in the country of residence of the defaulting Tenant. However, if our legal team is able to serve the Defaulting Tenant while they are in the UK we will do so. The alternative is to apply for special jurisdiction which would be time-consuming and costly. Given this, the ideal is to serve a Section 146 Notice to the tenant but this can only be done with full DirectorsÕ approval and would necessitate (post February 2005) to be a sanctioned by the First Tier Tribunal first.