The Property Factors (Scotland) Act 2011 established the requirement for a detailed Code of Conduct which property managers must adhere to. This is a summary of the Code of Conduct.
Written Statement of Services
A property factor (manager) must issue a Written Statement of the services they provide:
- within four weeks of being notified of a new owner moving in or being retained, or of the factor being appointed
- within four weeks of becoming aware of misleading or inaccurate information given at the time of issuing the current Written Statement of Services
- as soon as possible after any major change is made to the services (but no longer than three months after)
- in all other circumstances, at an owner’s request
The statement must include:
The factor’s authority to act
- how initially employed – this may be because:
- they were named in the title deeds by the developer
- they were named through a valid decision of the owners
- they were already acting as a property manager and have done for quite some time without objection (known as ‘custom and practice’)
- the current factor took over the factoring business of a different factor
- delegated authority – what they can do without seeking agreement from the owners (this usually covers the factor commissioning repairs up to an agreed value)
Services provided
- what the factor will do and the target times for taking action in each case (the ‘core’ services)
- other additional services the factor may provide at an additional fee (the amount of additional fee should be given)
Financial and charging arrangements
- the management fee and how it is reviewed
- each owner’s share of the fee, service charges, and common repair costs
- how debts will be dealt with
- the float – amount and how it is managed
- how they will collect payments (timescales and methods) for repairs not covered by the float
- how often they will send bills (and by what method) and how you can pay, late payment charges, etc.
Some of these details may be set out in the factor’s debt recovery procedure, which must be made available to an owner upon request.
Consulting over additional work
Procedures for consulting with owners about any work that will incur an additional cost should agree with what your title deeds say. It should cover whether owners need to have meetings or whether the property factor can take a vote from owners in writing, the majority required, etc.
Communications
- how owners are to communicate with the factor and access documents/policies
- procedures and timescales for dealing with enquiries (usually split into routine and more complex issues)
- in-house complaints procedure
- how to complain to the First Tier Tribunal (FTT) if an owner isn’t satisfied after following the in-house complaints procedure
- the property factor’s private notice and data protection registration details
In dealing with you, your property factor (manager) should not be:
- misleading
- abusive or threatening – saying that they may take legal action, in reasonable circumstances, is not considered threatening
Declaration of interest
- whether they (or a close relative or related business) own or act as landlord in respect of any flats in the building, or have some other financial interest in the building etc.
Property factors duty
- the obligation on the factor to comply with the 2011 Act and the Code of Conduct
How to end the arrangement
- how to change your property manager/factor
- notice period
- information on when and how an owner should inform the factor of an upcoming change in ownership
- any penalty for early termination
Further details
Below are further details on some of the matters covered in the Written Statement of Services.
Financial obligations
This covers how owners’ funds are protected and how your maintenance account is managed. There must be procedures for dealing with advance payments.
Commercial managers must have separate bank accounts for home owners’ maintenance accounts and their own business accounts. The property manager may have one combined bank account for all his clients’ funds.
Housing associations and local authorities may keep owners’ funds with their own but must have an arrangement for identifying funds of individual owners.
If the owners have a building reserve fund, it must be kept separately in its own interest-bearing account.
The property factor must provide a detailed annual round-up of accounts and supply supporting documents or invoices. These can also be requested at other times (the factor can charge for providing a further copy but must make the owner aware in advance).
When owners change factor, the former property factor must:
- provide information on the final account position within three months of being given notice (but there is leeway for bills for repair work or services which arrive late, or in other reasonable circumstances)
- return any float or excess funds
Debt recovery
Property factors must have systems in place to monitor payments, issue reminders about outstanding payments, and have a clear written procedure for recovering unpaid bills. This must include how the factor will deal with disputed debts.
Factors must inform non-payers of their intent to take legal action before doing so to provide sufficient time to make payment. They must not use threatening behaviour to recover debts – this applies to anyone, such as sheriff officers acting on their behalf.
Factors must advise owners what the implications are for them if other owners do not pay. They must take all reasonable steps to recover debts before charging other, jointly liable, owners.
Charges for late payment must not be unreasonable or excessive (related to any cost the factor incurs rather than a penalty cost) and must be clearly identifiable on the relevant invoice.
There must be a procedure for dealing with disputed debts and this must be applied consistently to all owners. If an owner goes to the First Tier Tribunal about the disputed debt, the factor cannot charge interest on the payment while the case is being resolved.
Common insurance
If your property factor arranges your common insurance they must:
- give owners clear information on how their share of the insurance premium is calculated, the sum insured, the premium paid, any excess that applies to the policy, etc.
- tell owners what commission or any other benefit the factor receives from taking out the insurance
- have a procedure for dealing with claims (if the factor provides this service)
- give owners all the information they require for making their own claims for internal damage (if applicable)
- show owners any competitive quotes for insurance they received (if any) on an owner’s request
- advise owners how frequently property revaluations are undertaken (recommended to be at least once every five years)
Repairs and maintenance
Your factor must:
- have proper procedures for owners to notify them of any repairs or other works required, including emergency and out of hours contact details if this forms part of the service provided
- keep owners informed of repair progress and likely timescales
- show owners how contractors were appointed (on request)
- ensure contractors have public liability insurance
- disclose any commission paid by successful repair contractors and any financial interest they have with a repair contractor
- pursue defects or cases of inadequate work
- where appropriate, ask for collateral warranties (allowing owners to act directly if there is a problem with a contract)
- if the factor has agreed by contract to undertake fire safety works, the factor must instruct suitably qualified contractors
If your property factor is paid to make periodic property inspections (this may be at an additional cost), then they must also prepare a programme of works.
Complaints
Your factor must have a clear written complaints procedure and not charge for dealing with complaints (unless specifically allowed by the title deeds). Owners must follow this procedure before taking their case to the Housing and Property Chamber of the First Tier Tribunal for Scotland, which replaced the Home Owner Housing Panel. The property factor should investigate complaints and where issues are unable to be resolved, inform owners in writing that the complaint cannot be resolved and that the owner can take the complaint to the Housing and Property Chamber.
The factor must at some point during the process ask the owner to put their complaint in writing.
Where you ask to see supporting documents, the property factor should make them available free of charge if you go to their offices, but may make a reasonable charge for sending out copies.
