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96. Part 5 of the Bill deals with a variety of miscellaneous and technical matters affecting real burdens. It does, however, contain provisions on one major topic - the subject of manager burdens.
97. The minor topics covered by Part 5 include the effect on outstanding court proceedings of the extinction of a burden, the requirements to grant a deed where the owner has not completed title and the duty on former burdened proprietors to disclose the identity of the owner of the property. Section 56 abolishes the right of irritancy. Irritancy means that, in certain cases, if the burden is breached the whole of the burdened property may revert to the ownership of the owner of the benefited property. This is clearly a draconian response to a breach, and the Bill makes it clear that this can not happen in future. It will not be possible to create irritancies in future, and it will not be possible to enforce any which were created in the past.
The Executive welcomes these useful proposals.
Manager burdens
98. The major provisions in Part 5 are, however, those which deal with manager burdens. The Commission have suggested a new framework for burdens which can be used by property developers in situations where they would previously have been able to use feudal burdens to control a site while they were developing it.
99. Burdens providing for the appointment of managers are currently commonly used. The Bill makes it clear that they are valid burdens, and provides rules as to how they should operate. Part 2 of the Bill contains provisions for the management of communities. Manager burdens are different. When property developers are developing a site, they sometimes appoint a manager to manage the site, and to administer and enforce the burdens imposed. If the developer wishes to retain control of the site, he will sometimes reserve the power to appoint a manager. While the developer is still selling properties, the manager is there principally to protect the interests of the developer, not to provide a way for the community to manage itself. The residents may well benefit from the enforcement of burdens, but they do not themselves have control over the manager or his appointment. Sometimes the owners may regard the imposition of a manager as oppressive. For example, in some sheltered housing complexes, the individual owners resent the power of the manager, and would like to appoint someone else.
100. The Commission believe that it is acceptable for the power of appointment of a manager to be reserved whilst a site is being developed. This is because a builder has a strong interest in the condition of the development that he is trying to market. They have recommended, however, that there should be some limitations on this power. Section 53 of the draft Bill defines manager burdens and provides conditions limiting their use. Section 55 makes it clear that the existing appointment of managers under current manager burdens is valid.
The Executive agrees that it should be competent to create manager burdens.
101. The first condition which would apply to manager burdens is that the right to appoint a manager would be extinguished with the sale of the last property unit. This is to meet the concern that developers retain control over schemes for excessive periods, and that some residents do not have sufficient say in decisions over charges etc. The proposals in this area are designed to answer these complaints. Section 53(8) makes special provision to prohibit the developer from retaining control artificially by permanently holding on to a flat used by the warden in sheltered housing.
102. The second restriction in section 53 is that the manager burden would generally be extinguished after a maximum of 10 years even if the developer continues to own some of the units. It would be possible to provide for a shorter period in the constitutive deed. The period would be increased to 30 years for local authority housing sold under the right to buy legislation. Both periods run from the date of registration of the burden. Local authority sales often occur over a long period, so 30 years would allow councils and other social landlords to ensure that repair and maintenance of common areas such as roofs and stairs were managed on a coherent basis, despite individual sales under right to buy.
103. These proposals apply to both existing and new burdens. So if an existing burden provides for the nomination of a manager in perpetuity, it will fall if the last unit of the development has been sold, or if the burden was registered more than 10 years ago (30 for former public housing stock). If the manager burden was created 5 years ago, and the developer still owns at least one unit, the developer's power to appoint the manager would have at most 5 years to run.
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Discussion Point 23 Do you think the set period of 10 years for manager burdens is right? Would 5 or even 3 years be better? Is the condition of continuing to hold a unit available for sale acceptable? Do you agree that local authority developments should be subject to a different time limit, and if so is 30 years a suitable period? |
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Discussion Point 24 Manager burdens are likely to be utilised for business parks, sheltered housing developments, residential housing estates and local authority housing. Do you foresee their use in other circumstances? Will they operate satisfactorily in your situation? |
Dismissal of the manager
104. If there is a manager burden stipulating that a developer can appoint a manager, the owners cannot dismiss the manager while the manager burden is enforceable (until the last unit is sold or the 10 or 30 year period is up). But they are free after that to dismiss him if they wish. If there is no manager burden, they are free to dismiss a manager at any time.
105. The majority required for dismissal will vary depending upon the circumstances. Under the proposals for community burdens discussed in Part 2 of this Consultation Paper, the owners of a simple majority of units may dismiss a manager, provided the title deeds make no contrary provision. But sometimes the title deeds will specify that the consent of a greater proportion of owners is necessary - perhaps even all the owners. Section 54 provides that even if the title deeds specify a larger majority, a manager may be dismissed by a two-thirds majority of owners. The two-thirds calculation would not, as section 54(2) is currently drafted, include units still owned by the holder of the former manager burden (the developer or the local authority). This may have undesirable results where the original developer or local authority still owns most of the properties. If for example, a local authority has sold only 30% of the units on an estate, after the expiry of the manager burden the effect of the rule would be to hand the power of dismissal over to two-thirds of that 30%. They would then be able to dismiss the manager. If the burdens affected the whole development, control would thus have passed to the owners of 20% of the estate even though the local authority still owned 70% of the estate. If the burdens only affected the units which had been sold then there might be conflict between the different management regimes in the sold and unsold parts of the estate.
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Discussion Point 25 The Executive would welcome views on the two-thirds majority default rule. Do you think that it is appropriate for former local authority stock? Do you think that units still owned by the developer or local authority should be excluded from the calculation? |
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