The Basics

THE BASICS: What to look out for in your deeds when changing factor

When considering changing the property factor, your title deeds are crucial as they contain specific provisions that outline the process and legal requirements. These should always be followed to avoid giving the outgoing factor any reason to dispute your majority vote to remove them.

Here's what you should look for in your title deeds:

1. Voting Requirements

• Majority or Unanimous Decision: The title deeds will specify the number or proportion of owners required to agree to the change. This could be a simple majority, two-thirds, or even unanimous consent, depending on the deed's provisions.
• Quorum for Meetings: The deeds will state the minimum number of owners who must be present (or submit proxy votes) to meet the quorum for a valid decision at a meeting. Make sure you meet this threshold.
• Format of Meeting/Voting: This can sometimes be unclear. While many processes have moved online, your title deeds may still require a face-to-face meeting for a valid vote to be taken.
• How to Gather Votes: It's crucial to ensure all owners have been given the opportunity to vote. Not all will participate, but the outgoing factor may challenge the vote if there is evidence that some owners were not properly informed.
• Votes can be collected in advance via proxy, allowing owners to email their vote or complete a voting slip, which will count towards the quorum and the final vote at the meeting if they cannot attend.
• If a face-to-face meeting is not specifically required, other methods of gathering votes could include holding a Zoom meeting, conducting a WhatsApp poll, or going door-to-door to collect signatures.
• It's advisable to keep a clear record of who voted, including signatures where possible, as this documentation may be requested by the outgoing factor.

2. Notice for Meetings

• Notification of Owners: The title deeds will specify how and when owners need to be notified of a meeting to vote on changing the factor. This could include notice periods (e.g., 14 days or 28 days before the meeting).
• Proxy Voting: Check if the deeds allow for proxy votes and how these should be submitted. This can be important for reaching the necessary quorum or majority.
• All owners must be notified: If you are arranging the meeting without the involvement of the current property factor, you must ensure ALL owners (proprietors), not just the tenants, have been notified about the meeting and the intention to change factor.

3. How to give Notice for meetings

• Send emails/letters: You can notify owners via email or letters regarding an upcoming meeting. However, posting letters through letterboxes is not adequate as tenants may not necessarily know their landlord to pass on.
• Notification on Group FB page/WhatsApp Group: This can be used to make people aware of an upcoming meeting but you would need to check all owners have access to these channels.
• Ask Factor to Notify Owners: You may need to request your current factor to notify owners that a meeting has been called if you do not have contact details for all the owners (proprietors). Allow additional time for this exercise — it is unlikely they will do this quickly for you.

4. Appointment and Removal of Factor

• Process for Removal: The deeds might detail a specific process for removing or replacing a property factor. This could include a formal vote, notice period, or other procedural steps.
• Appointment of a New Factor: If the deeds specify, you may need to formally appoint a new factor in a particular manner, such as through a meeting resolution or at a specific time, e.g. at your AGM.

5. Notice Period for Terminating the Factor

• Required Notice to Current Factor: The title deeds may include a required notice period you must give to the current factor before terminating their services. This notice could range from a few weeks to several months, and it is important to follow this timeline.
• Method of Termination: The deeds may specify how termination notices must be given (e.g., in writing), and any details such as who should receive the notice (e.g., the factor or their representative).
  • It is always recommended to send a signed-for letter in addition to any email notifying the outgoing factor of their termination.
  • If possible, include the signatories of those that have voted in favour to remove them as this may be requested and will avoid any delays.

6. Maintenance and Repairs

• Obligations for Maintenance: The deeds often outline each owner's responsibilities for maintaining common areas. Changing the factor does not change these obligations, but you must ensure the new factor is aware of and can manage these responsibilities as outlined.
• Shared Costs: The title deeds will specify how maintenance and repair costs are shared among owners. This typically continues with a new factor, but understanding this helps in assessing how the new factor will manage cost allocation.

7. Authority for Management Decisions

• Delegated Authority: Some title deeds grant specific decision-making powers to the property factor or the owners' association. Ensure the factor is aware of these powers when being appointed.
• Limits on Authority: Check for any limits on what decisions can be made by a simple majority or what requires special approval. For example, major changes or capital expenditure might require more owner involvement or higher thresholds.

8. Legal Obligations for Common Property

• Common Responsibilities: The title deeds will clarify the collective responsibilities owners have for the building's communal areas, such as stairwells, roofs, gardens, or car parks. Ensure that these communal areas will continue to be managed appropriately under the new factor.
• Legal Liabilities: If the title deeds make owners jointly liable for certain decisions, ensure the new factor is equipped to manage these legal obligations effectively.

9. Sinking Fund or Reserve Fund

• Management of Sinking Funds: If your title deeds require the creation or maintenance of a sinking fund (a reserve fund for large, infrequent repairs), check how this is managed and ensure the new factor is prepared to take over this responsibility.
• Transfer of Funds: You'll also want to ensure that any sinking funds currently held by the outgoing factor are transferred properly to the new factor.

10. Contracts and Service Providers

• Existing Contracts: The title deeds may outline obligations related to existing service providers (e.g., for cleaning, landscaping, or lift maintenance). When changing the factor, you'll need to consider whether to continue with these service providers or put these services out to tender.
• Tendering Process: Some title deeds may specify whether services must be put out to tender periodically. If changing the factor, this could be an ideal time to review and renegotiate contracts with contractors.

11. Insurance Requirements

• Block Insurance: The title deeds often include provisions about block insurance and how this should be arranged. If the current factor manages this, you'll need to ensure the new factor takes over or provides suitable cover that complies with the requirements in the title deeds.

12. Dispute Resolution

• Dispute Resolution Procedures: Some title deeds include provisions for resolving disputes between owners or between owners and the factor. These procedures should be followed when discussing the change in factor to avoid legal challenges.
• Appeal or Objection Rights: If a minority of owners oppose the decision to change the factor, check whether the deeds allow for any formal appeal or objection rights, and how these must be handled.

13. Common Ownership Structure

• Owners' Association: If the deeds reference an owners' association, this body may have specific powers or responsibilities in the process of changing the factor. Ensure that the association is involved where required.

14. Cyclical Works

• Cyclical work requirements: It may be noted in your deeds that certain works must be carried out on a cyclical basis, e.g. external and internal painting — ensure the incoming factor is aware of these requirements.

By carefully reviewing these elements in your title deeds, you can ensure the process of changing the property factor complies with legal obligations and runs smoothly.

Alternative factors should be in a position to help you navigate the transition and ensure you are complying with all your obligations within the deeds.

If anything is unclear, it is advisable to seek legal advice to interpret the specifics of your deeds.