If you are the director or the manager of a residential management company, then you will undertake certain legal responsibilities while carrying out your duties.
In this post, we will explore what these responsibilities are, along with some ideas on how you can ensure you stay compliant in your role.
What Does a Residential Management Company Director Do?
The director or a residential management company (RMC) or a right to manage (RTM) company is chiefly responsible for overseeing the daily operations of a property. This can include making key decisions about finances and governance, while also liaising with contractors, residents, owners, and other concerned parties.
How Many Managers or Directors Should a Property Have?
A property may have a single manager or director, or it might appoint a committee of multiple managers or directors, who will share the responsibilities between them. The company’s articles of association should specify the correct procedures for appointing managers or directors, and for challenging them or removing them when necessary.
Key Responsibilities of Residential Management Company Directors
Below we will outline some of the key responsibilities of a residential management company director, in turn.
Company Finances
The company’s director or manager is responsible for ensuring the company’s funds are properly managed, and allocated accordingly.
Key responsibilities may include:
- Budget planning and record keeping.
- Setting, collecting, and recording service charges.
- Holding all collected service charges in trust.
- Allocating budgets to maintain the property while enhancing its value.
- Maintaining and filing annual accounts, along with a confirmation statement, with Companies House.
Communal Area Maintenance
The company’s director or manager is responsible for overseeing the maintenance and development of all communal areas of the property. This means ensuring that they are clean, well-lit, and maintained to regulatory standards.
This may include:
- Entrance doors and hallways.
- Stairs, elevators, and fire escapes.
- Outdoor areas, including gardens, pathways, and car parks.
- Fencing and boundary walls.
Governance
The company’s director or manager will ensure that the property operates in compliance with all applicable leasehold regulations and legal requirements (Companies Act 2006). They must remain totally impartial. Among other things, this means they must not accept any benefits from any third parties as a result of their work.
Key responsibilities may include:
- Staying up to date with the legislative landscape, to ensure that there are no inadvertent breaches.
- Communicating all legislative requirements, along with any changes, with all relevant stakeholders.
- Hosting up to four directors’ meetings a year, along with an AGM.
- Representing the best interests of leaseholders when making decisions, setting charges, or allocating budgets.
- Creating a culture of transparency and impartiality in all communications and decision-making procedures. The director will also have a legal responsibility “to exercise reasonable care, skill, and diligence” in their role.
- Avoiding conflicts of interest – i.e. situations where the manager or director’s own interests may conflict with the company’s overall interests, such as appointing a contractor in which they have a financial interest.
Engagement and Communication
Finally, the company’s director or manager will liaise between any parties who may have a stake in the property. This may include leaseholders, residents, property owners, management teams, and contractors.
If conflicts arise, the director or manager may act as a mediator. And as we mentioned above, they have a legal duty to ensure that any decisions made or actions taken are in the best interests of the leaseholders.
Personal Liabilities For Residential Management Company Director
Just like any director for any other company, RMC and RTM directors can incur civil and criminal personal liability for their acts or omissions when running the company. Any failures, oversights, or breaches could result in prosecution, or in costly claims from leaseholders or other stakeholders.
The right insurance can cover you for these personal liabilities, along with any claims that may arise.
James Hallam is an independent Lloyd’s broker with a dedicated team of experienced insurance professionals who care about protecting your assets.
If you are a RMC or RTM manager or director, we can help you get the specialist cover you need at a competitive price. This can include dedicated Directors and Officers (D&O) or Management Liability insurance, to cover you for the unique risks you will face as a RMC or RTM director.