Tens of thousands of leaseholders who self-manage their own property, or control it through a residents’ management company, could unknowingly be breaking the law, according to Midlands property consultancy Curry & Partners.

Partner Bob Simonds, who specialises in residential service charge management, explained: “Lessees have to recognise that service charge monies they pay as part of the terms of their lease are trust funds under landlord and tenant legislation and must be held in a ‘ring-fenced’ bank account.

“In many instances, funds are held in a volunteer’s own bank account or, in the case of a residents’ management company, in the company’s bank account. This is wrong and could open up volunteers or the directors of an RMCo to charges of breach of trust, particularly if the funds are lost to a creditor or liquidator.

“Correct practice is to maintain a separate account with trust or client in the name operated by the volunteer, the company or by their managing agent on their behalf.”

Further information on accounting for leaseholder funds can be downloaded from the publications page of www.arma.org.uk or by emailing Bob Simonds at Curry & Partners on rsimonds@curryandpartners.com

For more information on the current article, you can contact Bob Simonds using the Contact Us page