You often hear of these with a residential sale or letting – a ‘management pack’, or sometimes ‘lettings pack’ being needed.
In short, it’s a set pack of information about a property that any proposed new owner or tenant wants in order to gain a better understanding of issues at a property. Almost a form of MOT, as with a car, to find out if a property has a clean bill of health.
Alternatively you can have Replies to Enquiries which are on a similar line of requesting information, but more of a questionnaire that the seller or landlord completes.
The packs are more ready-made, and therefore arguably easier to issue. Hence the frustration by some at the perceived high costs of these, sometimes hundreds of pounds for what appears to be a simple administration task.
And there’s a lot of truth to this - however for more reasonably-priced packs there should still be some effort involved, and a way to ensure that any unique issues and accounting for that particular property in question are still addressed.
In terms of what information you actually see in these, here are some of the main ones to consider, whether you’re preparing to issue them or checking that what you receive is correct. Whilst Replies to Enquires do follow a certain format, these packs do tend be uniquely shaped by each person who issues them, often a managing agent.
1. Insurance Certificates
Details and actual copies of insurance cover is key, particularly the communal buildings policy, but also, say, public liability for any communal pieces of land.
And make sure these are up to date, with all the relevant parties and cover noted on them.
2. Insurance Claims
Details of any actual claims are often requested as well, which can be difficult to establish, not only by noting what has been directly involved with, but if any direct claims have been made by any individual interests that you’re not aware of.
Clarifying the extent of any knowledge and investigations is therefore worth doing.
3. Service Charge Budgets
Including the service charge budget is a classic, ideally with any supporting narrative and apportionment per unit, and making sure it’s for the current year.
4. Service Charge Accounts
The textbook answer is to have completed accounts signed-off by an authority like an accountant for at least the last 3 years. Reality can be different though, with limited or older years if the current ones have not yet been completed.
In these situations then a ray of hope is often needed as to when these are expected to be issued and for what periods.
5. Future Works
This can open a whole can of worms, yet from a prospective new owner or occupier an absolute must.
Any proposed project works and more importantly costs need clarifying, along with any ancillary issues such as Section 20 notices for residential interests. The knock-on effect for, say, service charge budgets and recharges may also be requested.
6. Reserve or Sinking Funds
These are stashed-away monies through a service charge for future costs, and therefore it’s handy to know what these amounts are. Be careful though of the date of these costs, ideally being as current as possible although possibly older from when the last service charge accounts were completed.
There is often an administration cost for issuing consent to a sale or letting, with a clear basis of this as a total figure with VAT along with what it includes, for example completing a Deed of Covenant between parties, issuing a Certificate of Compliance, or simple receipt of a transactions notice.
Remember that this is applicable from now onwards, with the fees due for first issuing this management pack already needing to be agreed.
8. Other Interest Details
Watch out for other interests needing to be referred to in these, which may or may not be part-and-parcel of what one party is supplying.
A typical one is the freeholder, which a management company dealing with communal areas may not be involved with.
9. Ground Rents
Information on these in terms of what’s charged and then what’s actually due is common, whether directly or through another party as above.
10. Management Company
If these are involved then you often need technical company information to be supplied, for example Articles of Association and Memorandums.
Linked to this is a new party’s role with such an interest through, say, membership or shareholding, and then any elected roles like Directors. These are actually different company matters to the property legal title and contract ones and require separate documents like Share Certificates, Stock Transfer Forms, and application forms.
11. Occupier & Owner Communication
Whether this is a formal Residents Guide, or correspondence with commercial interests, this forms part-and-parcel of communicating important rules and regulations for managing the property day-to-day.
On a similar line you may need to supply more formal meeting or AGM minutes of regular updates and gatherings as well.
You can’t beat a good ol’ plan to help communicate what a property actually looks like, whether a formal ownership or tenancy-demise plan or one for ancillary issues such as car parking.
The point of last redecorations both internal and external are often asked as well, with even rough years being helpful to explain where information is limited.
14. Compliance Documentation
Two popular ones are as Asbestos Survey, which won’t be necessary for newer properties, and a Fire Risk Assessment.
Where they are applicable, it may not be appropriate to issue these as they don’t directly affect an area in question, although further questions and documentation may still be requested for example if action-points have been completed and other interests like insurers informed about.
15. Draft Documentation
So whatever these are, for example a Deed of Covenant or Licence of Alterations, then copies of these for use may well be requested.
16. Accounts Summaries & Arrears
Knowing what people actually owe is critical, and therefore a report from an appropriate accounting systems can not only show what any end due-monies are, but a detailed history of what has been charged and paid over time.
Make sure that the reality of accepted-payments matches the actual invoices and charges raised, so even though they may show arrears on paper with being raised in advance over the rest of the year for example, everyone may well have agreed to a monthly payment-plan over time.
17. Owner & Occupier Issues
So any issues regarding the current parties and interests involved can be important, whether that’s unauthorised alterations, niggly nuisances, or general poor behaviour.
Although these may relate more to the unique behaviour of the current people involved, it’s still important to declare these as they may have wider property and accounting consequences.
18. Site & General Issues
A final point is any more bigger-picture and general issues that would be good to know about, after all it all may have an effect on this property interest somehow.
Cooking Up the Management Pack’s Secret Ingredients
As you go through the above pointers of what should ideally be involved with a set management or lettings pack for a property being sold or let, then you’ll soon start gaining a taste for what these entail.
The secret then is to make sure that you not only receive all or the majority of this, but that it actually makes sense and is applicable to the property. A careful scrutiny is therefore often required, not only by a solicitor but ideally a managing agent or other property person to help see some common-sense issues.
And remember that this must note what isn’t included as much as what is – so as an example, any important compliance documentation rather than just a standard ‘we don’t know’ type of answer.
You’re then on the right road to cooking up a nice management pack.
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