Residential common land "company" director - liabilities?
Discussion
Asking more on behalf of family more than anything else, but my sister lives in a small development that consists of 8 freehold properties that surround a common area.
The common area is basically the access road, parking spaces and a small amount of shrubbery and tree patches.
Now that the development is more or less finished, the deeds of their properties requests that a "management company" is formed and a "company director" is appointed.
I guess this is standard practice on such developments that have common areas - in order that they are maintained with mutual interest and shared expense etc.
Last time I was round there visiting she asked if I knew about the liabilities of becoming a company director, as the developers have now stated that responsibility now passes to the residents to run the 'management company', whereby they are to appoint a 'company director'.
So I thought I ask you guys; what would be the typical responsibilities and liabilities of such a "company director" of a small residential development common area "management company" ?
Say for example one of the residents or their visitors were to fall over (or crash in to one of the trees, etc. etc.) in the common area and then put in a claim. Is it the 'company director' that would be held liable?
In addition to that are such "management companies" required to have liability insurance covering common areas?
She, and I must admit I, do not have any experience on the above. Any answers from you guys can hopefully start to piece things together and she can decide if she wants to take up the position. She is thinking that if she is at least the "company director" then she will have the most important say so on what occurs where she lives.
The common area is basically the access road, parking spaces and a small amount of shrubbery and tree patches.
Now that the development is more or less finished, the deeds of their properties requests that a "management company" is formed and a "company director" is appointed.
I guess this is standard practice on such developments that have common areas - in order that they are maintained with mutual interest and shared expense etc.
Last time I was round there visiting she asked if I knew about the liabilities of becoming a company director, as the developers have now stated that responsibility now passes to the residents to run the 'management company', whereby they are to appoint a 'company director'.
So I thought I ask you guys; what would be the typical responsibilities and liabilities of such a "company director" of a small residential development common area "management company" ?
Say for example one of the residents or their visitors were to fall over (or crash in to one of the trees, etc. etc.) in the common area and then put in a claim. Is it the 'company director' that would be held liable?
In addition to that are such "management companies" required to have liability insurance covering common areas?
She, and I must admit I, do not have any experience on the above. Any answers from you guys can hopefully start to piece things together and she can decide if she wants to take up the position. She is thinking that if she is at least the "company director" then she will have the most important say so on what occurs where she lives.
Edited by ZeroGroundZero on Wednesday 13th November 11:34
Often, with residential management companies, ALL of the owners of the leasehold properties are appointed as directors.
The issue with legal responsibility is that the directors of a limited company have prime responsibility (and exposure to risk) of all decisions made by the company (or lack of decisions made, in some cases). Best that these responsibnilities are shared.
The issue with legal responsibility is that the directors of a limited company have prime responsibility (and exposure to risk) of all decisions made by the company (or lack of decisions made, in some cases). Best that these responsibnilities are shared.
Thanks, that does make sense.
I'm guessing also that such management companies have to pay for liability insurance to be in place at all times?
One additional complication in her situation is that the development still has one final plot of land to build up on. But this has been sold off to another builder to complete.
Works have not yet started and my sister is wondering what implications this would have on the liabilities of the management company if the new builders needed to dig up parts of the common area to install services etc for the new property yet to be built?
Is this something she'd have to delve in to her property deeds to find out? Or should it be set out in the management company's "operation documents" - if there would be such a thing?
(Hope my ignorance on the subject matter is not too confusing)
I'm guessing also that such management companies have to pay for liability insurance to be in place at all times?
One additional complication in her situation is that the development still has one final plot of land to build up on. But this has been sold off to another builder to complete.
Works have not yet started and my sister is wondering what implications this would have on the liabilities of the management company if the new builders needed to dig up parts of the common area to install services etc for the new property yet to be built?
Is this something she'd have to delve in to her property deeds to find out? Or should it be set out in the management company's "operation documents" - if there would be such a thing?
(Hope my ignorance on the subject matter is not too confusing)
Have a look at www.arma.org.uk for some advice on management companies and (if necessary) their agents
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