Restrictions on title: management companies

Understanding the role of title restrictions in communal property management

Many residential properties are subject to obligations to fund the cost of communal maintenance, and as such, fund a management company who it is hoped will perform to a satisfactory standard. On occasions, a management company may need to be replaced and this can cause problems on a subsequent sale/purchase or re-mortgage.

Replacing a management company: the impact on title restrictions

A restriction may be found on the title to the property, which needs to be amended into the name of the newly appointed management company. They are used to protect the position of persons who had or continue to have an interest in the land, for example, to protect covenants and financial liabilities.

A title restriction registered against the property in favour of the original management company is there to protect the collection of the estate management charge and will prevent any transfer deed from being registered by the Land Registry without the consent of the management company being given. Such consent will only be given if the estate management account payments are up to date.

If the current title restriction is in favour of the former management company, this would need to be removed and replaced with a new restriction in favour of the new management company. It is a simple enough process if the former management company will co-operate.

If they do not co-operate, there may be outstanding fees owing to them and, until resolved, a conveyancer will be unable to advise a client to proceed. Your conveyancer should seek full details of the current situation in order to directly contact the former management company in an effort to expedite a resolution.

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