Hold the handover!

A case that The Property Ombudsman (TPO) was asked to review came from a leaseholder concerned with the estate not being finished to a satisfactory standard after it had been handed over from the developer to the management company. The managing agent, working on behalf of the managing company, was instructed to investigate whether the estate was ready for handover and thereafter to manage communal areas on behalf of the management company. The managing agent accepted responsibility for the majority of the estate on behalf of the management company, leaving a couple of areas of landscaping to be completed by the developer.

The estate was not finished to a satisfactory standard and there were snagging issues.

The leaseholder said that the estate was not finished to a satisfactory standard and there were numerous snagging issues. He complained that the managing agent should not have accepted handover from the developer whilst these issues were outstanding, meaning residents are paying an estate management charge for a poor quality service, incomplete projects, and for below par materials. He also complained about their slow response to resolving issues, with a lot of work still remaining incomplete. In response, the managing agent said that the snagging issues were the responsibility of the developer and claimed a snagging report had been prepared so that the partial handover could progress whilst any outstanding issues could be addressed by the developer.

They acknowledged that their communication could have been better by providing more timely updates but refuted the allegation that they were not maintaining the estate to a good standard.

Investigation

One the duties of the managing agent included investigating whether the estate was ready for handover. It was therefore expected of them to have identified any issues that required further attention before advising the management company whether to accept, in accordance with their obligation under the TPO Codes of Practice to provide a service consistent with fairness, integrity and best practice. There was a risk that any issues that came to light after the handover would become the responsibility of the management company rather than the developer, and the cost of resolving them falling to the leaseholders via the estate management charge.

That said, it would have been the management company’s decision whether to accept handover and upon what terms. No documentation was provided concerning the terms of the handover.

The Ombudsman’s role in this case was to determine whether the managing agent carried out their duties with a reasonable degree of due diligence, whether they progressed issues in a timely manner, and whether they communicated clearly with all parties.

Email correspondence was submitted showing the developer enquiring whether the managing agent was prepared to accept the handover. In response, snagging issues in relation to landscaping were raised and they confirmed they would be prepared to accept on the condition those works were attended to – which both sides accepted.

Following handover, the developer carried out the landscaping work requested and enquired whether the managing agent would accept full handover. They said they would accept responsibility for areas completed but went on to raise concerns brought to them by local residents about other issues on the estate, such as kick rails, signage and kerb stones. As these had not been previously mentioned, the developer said they would have to be addressed at the managing agent’s cost, although they offered to assist.

Additional issues were raised by the Leaseholder and a site visit followed with the both the managing agent and developer in attendance.

Following this, the managing agent wrote to the developer, saying that they were responsible for finishing the site to an appropriate standard. A further meeting then took place and the developer agreed to attend to more of the snagging problems. While it was evident that the developer completed some issues raised, a number remained unresolved, partly due to Covid related delays.

Decision

The Ombudsman was not satisfied that the managing agent was clear in their communication which led to disputes with the developer over who was responsible for what which led to a delay in the resolution of the issues.

The Ombudsman was also critical for the time it took responding to the developer’s correspondence, which again contributed to the time taken to deal with matters.

There were also concerns about whether the managing agent checked that the estate had been finished to a satisfactory standard before recommending to the management company to accept handover. For example, there was no indication that concerns were raised about the signage, kick rails and kerb stones not being completed to planning specifications before accepting handover, only afterwards.

The Ombudsman was critical of them for this and supported the complaint. An award of £100 was made in compensation to the leaseholder.