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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3774
Experience:  Solicitors 2 years plus PQE
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, I am the Secretary of a small management company.

Resolved Question:

,
I am the Secretary of a small management company. It is a block of six flats and the owners run the company themselves. The owner of one flat is currently selling it, he seems to be doing the conveyancing himself. We are providing him with documents, but we have not yet heard from the buyer.
Normally we would have contact with both, through their respective solicitors.
We do not know how to proceed in a case such as this. Is there a danger that the company could be involved in a legal dispute if mistakes are made in the transfer?
Submitted: 2 years ago.
Category: Law
Expert:  Alex J. replied 2 years ago.

Thank you question and welcome.
My name is ***** ***** I will assist you. I am a company law expert.
What documents are you sending to him? Have you been asked to complete management inquiries?
Kind regards
AJ
Customer: replied 2 years ago.

Alex,

Documents: so far, just accounts, insurance, and the Memorandum & Articles.

I do not understand the second part of your question.

Purchasers need to agree to become members of the Company, there is a 'restriction' in the register. How can we trust the seller to inform the buyer, and to tell us the truth?

Expert:  Alex J. replied 2 years ago.
,
Thank you.
the accounts, insurance and memorandum and articles you do not need to be concerned - the company will not be subject to a specific contractual liability just these items.
In relation to the restriction on Membership - would it be an issue if the purchaser did not become a member?
Kind regards
AJ
Customer: replied 2 years ago.

Alex,

My statement about the register was not clear.

The Land Registry will not Transfer Title without a certification from the Management Company that the prospective purchaser "has agreed to become a member of the Management Company when required to do so".

How can we say that the purchaser 'has agreed' when we have contact only with the seller (so far)?

Expert:  Alex J. replied 2 years ago.
,
Thank you.
To be completely frank that is their problem.
Once they have exchanged contracts (but before completion) - it will be their responsibility to come to you/the company and arrange the appointment of the purchaser as a member.
Is the purchaser's right of membership conditional upon their ownership of a lease? Can their appointment be done automatically or do the articles require a resolution of the members?
As a starting point have you asked the seller to return his membership certificate to you?
Kind regards
AJ
Customer: replied 2 years ago.

My understanding is that membership certificates are optional (1985 Act)

we do not seem to have issued any.

Appointment of a member just requires name, address, and signature in the Register of Members.

Only leaseholders can be members.

If people come to me, how do I know who they are? I have never met or seen the current flat owner.

We trust that solicitors will have made identity checks of their clients.

It all seems, to me, to be lacking the usual safegaurds against, fraud, tax evasion, money laundering, and so forth.

Perhaps this is all too complex online format, but I wanted to try it out. I think it has helped me to focus on what concerns me.

Have we gone as far as we can? Do you think we should stop here?

Kind Regards, Vincent

Expert:  Alex J. replied 2 years ago.
,
Thank you.
You are correct - certificates are not essential - if you do not use them then fine - that should make it easier as you do not have to chase the seller to return documentation.
If the buyer comes to you, I would accept the following as proof ID and ownership:
- Confirmation from his solicitor (in writing on headed paper of the solicitor) that he has purchased the flat and his identity verified;
- A copy of the transfer deed or assignment document;
- A certified copy of his passport or driver's licence.
To cover your own back I would then just ratify his appointment as a member via member resolution.
I am happy to discuss any points of company law until you are satisfied.
Kind regards
AJ
Customer: replied 2 years ago.

,

Thank you. That clarifies things.

Two quick points:

1. What if the buyer is also doing his own conveyancing, or the seller is doing it ?

2. What rights does the Company have to require proof of ID?

Expert:  Alex J. replied 2 years ago.
,
Thank you.
If the buyer is doing his own conveyancing then I would ask the following:
- See the transfer deed or assignment;
- See his passport (keep a copy records and note you have seen the original in a board minute);
- See proof of his last address (utility bill etc).
It is not about what rights the company - it is about the fact that the company has an obligation to verify the identity of a member. It is a perfectly reasonable condition to demand that an incoming member proves their identity.
To discharge your obligation as secretary you need only take reasonable steps to satisfy yourself of his identity - see a passport or driver's license is perfectly reasonable.
Kind regards
AJ
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