Freehold Management Companies – What Is The FME1 Form?

Many people have heard that service charges are payable when a property is leasehold. Did you know that service charges may also be payable if the property is a freehold?

It is becoming quite common for a freehold property to have an arrangement with a freehold management company. The freehold management company will carry out various services and the freehold property owners will be required to cover the cost of these services by payment of a service charge.

These arrangements usually come around when there is a new development built, and the developer will create a management company to be responsible for maintaining communal areas and services.

The developer may appoint managing agents who take over the responsibilities. There are also instances where the property owners of the estate may become the directors of the management company and are responsible for ensuring the obligations of the management company are carried out.

The details of any freehold management company and the obligations and responsibilities of the management company and property owners can usually be found in the deeds.

What happens when selling the property?

When the property is being sold, it is usual for potential buyers to want to obtain information in relation to the freehold management company, such as the amount of service charges paid, what is covered, whether there are any expected increases, etc. This is usually obtained in the form of the Law Society Freehold Management Enquiries ( FME1) Form, but management companies can use their own version. This pack will need to be obtained by the seller and provided to the potential buyer for their solicitor to review.

No two management companies are the same and the information in the pack will vary for each property. The cost to obtain the information pack from the management company will also vary.

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For further advice and guidance if you are looking to buy or sell a property that has a management company involvement, or are appointed as a director for a management company and are looking for some legal guidance on what information to provide when a property is sold, please contact our Residential Property Team.