Property
Management Company is most commonly used to own and manage a property
that has been divided in to two or more units. The property may be commercial
or residential.
When
there are two or more flats/units in a property and each unit is sold
on long a long lease (normally 99-year). Under the 1993 Act, leaseholders
can buy the freehold from the landlord. It is more practical to setup
a limited company to own & manage the whole property.
Each
leaseholder may also hold shares in a management company that owns the
freehold (or lease) of the entire building. As shareholders, the unit
owners have their say in running this company.
Normally,
the company’s constitution (M&A) will say that shareholders
who sell their flats must also transfer their shares to the new owners.
This ensures that - at any given time - the limited company represents
the interests of all the current unit owners. However, it remains a
separate legal entity regardless of who holds its shares from time to
time.
However,
the company is also often used for collecting a central pool of cash
for carrying out repairs and maintenance to common parts of the property.
It
is normally a condition of buying a flat that the buyer becomes a member
or shareholder of the company. In some cases all flat owners automatically
become directors.
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