This is a post for information only regarding some queries that have arisen with several OMCs over the past months.
In particular - The legal standing and rights of an OMC to operate prior to the transfer of common areas.
Why is this important?
The normal process in most cases envisaged the developer providing the maintenance through service fee collections and then once the transfer of common areas takes place the OMC would take over. Most leases specify this distinction.
Why it ISNT a problem though....
The reality is that unless the lease specifically prohibits the OMC running the estate they are legally entitled to do so as the 'beneficial owner of the common areas'. They can collect fee's, undertake debt collection and enforce the lease as they see fit. Many developers use the OMC prior to the transfer anyway to undertake maintenance as they are the directors from its inception.
Estates in receivership
This is even more important when a developer is in receivership. In that situation there is no developer and the rights of the receiver are 'minimal'. They have no obligations towards running the estate, only in selling the assets. The residents if not already should ensure they use their OMC to run the estate, provide maintenance and enforce lease provisions.
Expecting the receiver to do this would be 'folly'.
Directors have the full backing of company law and assuming they act in good faith would be considered no differently to a development where the transfer has completed.
Things to note
The block insurance should note that the transfer has not yet taken place to ensure clarity and compliance.
Any questions?
In particular - The legal standing and rights of an OMC to operate prior to the transfer of common areas.
Why is this important?
The normal process in most cases envisaged the developer providing the maintenance through service fee collections and then once the transfer of common areas takes place the OMC would take over. Most leases specify this distinction.
Why it ISNT a problem though....
The reality is that unless the lease specifically prohibits the OMC running the estate they are legally entitled to do so as the 'beneficial owner of the common areas'. They can collect fee's, undertake debt collection and enforce the lease as they see fit. Many developers use the OMC prior to the transfer anyway to undertake maintenance as they are the directors from its inception.
Estates in receivership
This is even more important when a developer is in receivership. In that situation there is no developer and the rights of the receiver are 'minimal'. They have no obligations towards running the estate, only in selling the assets. The residents if not already should ensure they use their OMC to run the estate, provide maintenance and enforce lease provisions.
Expecting the receiver to do this would be 'folly'.
Directors have the full backing of company law and assuming they act in good faith would be considered no differently to a development where the transfer has completed.
Things to note
The block insurance should note that the transfer has not yet taken place to ensure clarity and compliance.
Any questions?