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173. The Executive has received many representations from residents of sheltered housing schemes and this Chapter explains how the Bill will affect them. The term sheltered housing includes retirement complexes. Many of the proposals in this Consultation Paper affect sheltered housing, but this Chapter attempts to draw them all together. As a result, there is some repetition between this Chapter and other Chapters, particularly those on Parts 2, 3 and 5 of the Bill.
174. As the foreword to this Paper explains, the Title Conditions Bill is part of a large programme of property law reform. The first part of the package was the Abolition of Feudal Tenure Act (referred to in this Paper as the 2000 Act), which was passed by the Scottish Parliament in 2000, and which abolished feudal tenure. That Act also affected sheltered housing.
175. In many sheltered housing complexes the developer who builds the complex creates burdens (or conditions) to control the use of the property. Often these are feudal burdens. Some feudal burdens give the developer the power to appoint a manager. The general effect of the abolition of the feudal system and of the Title Conditions Bill will be to remove control from the developer, and to give it to the owners.
The problem
176. The Executive has received many complaints about the management of owner occupied sheltered housing developments, mainly related to owners not being consulted on proposals for the maintenance of their properties, service charges and the appointment of wardens. The Executive published a voluntary code of good management practice for owner occupied sheltered housing in February 2000.
Managers
177. Developers of sheltered housing complexes often appoint a manager. Appointing the manager allows developers to retain control of the complexes after they have started to sell off units to private owners. The manager enforces the burdens which have been imposed by the developer to deal with various matters affecting the scheme such as maintenance and restrictions on use. Developers may give up their right of appointment when the last unit is disposed of, at which point power of appointment passes to the owners.
178. But sometimes the developer reserves the power to appoint a manager without time limit. The Commission has concluded that this sort of real burden, which perpetually deprives owners of the right to appoint the manager, is probably unenforceable, on the grounds of repugnancy with ownership. In other words, it is possible that, if tested in court, a superior might be prevented from appointing a manager in perpetuity. The Bill saves existing burdens which may be unenforceable for this reason. But it also restricts the period within which the developer retains a power of appointment. For the future, the Bill will not allow a developer to appoint a manager forever.
Manager burdens
179. The legitimate commercial interests of developers and the ability of owners to regulate their own property have to be carefully balanced. The Commission believe that while the developer is still marketing the properties, he has a strong interest in the condition and maintenance of the property as a whole. At that stage, the manager protects the interests of the developer. The manager can perform valuable services for the sheltered housing complex, ensuring individual owners keep their property in good repair or preventing any anti-social behaviour. Although this spares owners from involvement in day to day management issues, the owners may increasingly regard the imposition of a manager as oppressive. Individual owners may wish different policies to be adopted for the running of the scheme or want to manage the property themselves. Over time the balance changes, and the role of a manager is not then to protect the interests of the developer, but to help the community to organise itself.
180. Sections 53 to 55 of the draft Bill allow developers to appoint managers but provide that owners can eventually override the developer's choice of manager. The developer will no longer be able to control the appointment of a manager after the last unit has been sold, or, even if a unit is retained, after 10 years from the creation of the power of appointment.
181. If an existing burden provides for the nomination of a manager in perpetuity, or any period longer than 10 years, it will be extinguished if the last unit of the scheme has been sold, or if the manager was appointed more than 10 years ago. The warden's flat does not count as a unit for this purpose. If the manager burden was created 5 years ago, and the developer continues to own at least one unit, the developer's power to appoint the manager would have at most 5 years to run. In summary, any manager burden affecting sheltered housing would be extinguished after 10 years at the very latest, even if the developer continues to own some of the units within a development. In practice, a developer is likely to have sold all the units in a sheltered housing development (excluding the warden's flat) before 10 years have elapsed.
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Discussion Point 38
The Executive agrees that residents should eventually be able to override the developer on the appointment of a manager. What are your views? Do you foresee any difficulties? Is 10 years the right set period? Would a shorter period of 5 or even 3 years be better? Is the condition of continuing to hold a unit available for sale acceptable? Do you feel that the proposals for manager burdens will operate coherently and efficiently for sheltered housing? |
Dismissal of the manager
182. Once the developer's right to keep a manager in place has lapsed, the residents may dismiss the manager. The majority required for dismissal will vary depending upon the circumstances. In many sheltered housing complexes, the title deeds will not provide for the dismissal of a manager. In that case, the Title Conditions Bill provides (in Section 26(1)(d)) that the owners of a simple majority of units may dismiss the manager. In other cases, however, the title deeds might have a special provision specifying the size of the majority required. Some title deeds may specify that the consent of more than 50% - possibly even 100% - of the owners is required before a manager can be dismissed. In that case, section 54 provides that irrespective of the provisions contained in the title deeds 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 developer.
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Discussion Point 39
Do you agree with the two-thirds majority default rule? Do you think that units still owned by the developer should be excluded from the calculation? |
Enforcing burdens in sheltered housing
183. The bulk of this Consultation Paper is about real burdens. These are types of conditions which have been placed on properties when they were sold. Flats in sheltered housing are often subject to burdens. Typical burdens in sheltered housing complexes might stipulate that the owners would have to maintain their properties regularly, that they could not keep pets, or that they could not use their properties to conduct business.
184. These burdens will usually apply to all the individual properties, and they will have been stipulated by the developer when the complex was sold. Section 46 of the Bill provides that in future the individual properties will be 'benefited properties', and that the sheltered housing complex will be treated as a 'community', with all the burdens becoming 'community burdens'. They will therefore be treated in the same way as other community burdens under the provisions in Part 2 of the Bill.
185. In practice what this means is that in future the owners of the complex will be able to control what happens to it, and they will be able to do so by majority rule. This is a change from the arrangements in many complexes at present, where the developer has been able to exercise control.
186. The proposals for community burdens also provide a number of default rules where the title deeds do not provide for decision making with regard to issues such as common maintenance, management issues and the resolution of disputes. Most sheltered housing schemes are likely to have some sort of provision in the title deeds to supersede these rules.
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