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Property Factors (Scotland) Act 2011
Grant Hunter
21 March 2013
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Property Factors (Scotland) Act 2011
Overview
Established a compulsory public register of property factors in Scotland ( maintained by the Scottish Ministers)
Required the Scottish Ministers to develop a Code of Conduct with minimum standards of practice for registered property factors
Introduced a dispute resolution procedure for homeowners who feel that a property factor has failed to carry out its duties or to comply with the Code of Conduct
Introduced offences for non-compliance with the Act
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The Public Register
All persons or organisations that were, or intended to be, a “property factor” had to apply to the Scottish Ministers for entry into the register by 1 October 2012.
Operating as a property factor without registration is made an offence
No grace period was allowed for failure to register.
The Register is now up and running.
http://sedsh119.sedsh.gov.uk/propertyfactorregister
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The Public Register
Test for applicants - to be “a fit and proper person”
This excluded those who have :
a) criminal convictions involving dishonesty, violence and/or drugs
b) been found to practice unlawful discrimination of any protected characteristics of the Equality Act 2010
c) contravened any provision of the law relating to tenements, property or debt
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The Public Register
A registered number was issued to all factors on the Register ( eg. PF000203)
Factors are now obliged to submit an Annual Return to the Scottish Ministers of properties factored during the year, or confirmation of no change since the last return ( to be completed within 3 months of financial year end)
Registration lasts for 3 years following which re-application is mandatory
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Who is a “property factor” ?
Persons, (individuals, sole traders, partnerships, companies) who in the course of their business and local authorities and housing associations which:Manage the common parts of land used to any extent for residential purposes and owned -
(i)by two or more other persons, or
(ii)by the local authority or housing association and one or more other person
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Who is a “property factor” ?
Ormanage or maintain land which is available for use by – (i)the owners of any two or more adjoining or neighbouring residential properties, or
(ii) the local authority or housing association and the owners of any one or more such properties but only where the owners of those properties are required by the terms of the title deeds to pay for the cost of the management or maintenance of that land.
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Code of Conduct
http://www.scotland.gov.uk/Resource/0039/00397542.pdf
The Code sets out minimum standards of practice for registered property factors:
Written Statement of Services to be issued to homeownersCommunication and consultation obligations with homeownersFinancial obligations of factors to be set outA written debt recovery procedure to be issuedMaintenance of insurance (professional indemnity and buildings/contents) is to be explainedRepairs and Maintenance arrangements to be statedA complaints resolution procedure to be issued
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Code – Written Statement of Services
Explains the responsibilities of the property factor and sets out their authority to act (eg. named in the Title Deeds as the property factor, appointed by a decision of a majority of homeowners on a given date, operating by custom and practice if no formal appointment exists).
To be issued to existing homeowners ( by 1 October 2013) any new homeowners when factors agree to provide services
to them at change of ownership of a property which factors already
manage if there are any changes to the terms of the written statement
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Code – Statement of Services
Must include :Terms and conditions and service delivery standards
The services that the factor will provide, target times for repairs, frequency of property inspections
Cost of those services
Monetary arrangements, frequency of billing, any joint and several liability, late payment charges
The management fee charged and processes for reviewing the feeDetails of how to end the arrangement with homeowners
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Code - Communication
Obliges factors :not to provide misleading or false informationto set a procedure to consult with homeowners to obtain written authority prior to carrying out certain works in addition to core servicesto establish delegated authority for works up to an agreed thresholdto provide contact details including out of hours contactsto provide contact details for homeowners to seek financial adviceto provide a route for feedback on services
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Code – Financial Obligations
Separation between bank accounts between the property factors' bank account and the account holding funds belonging to the homeowner
Procedures for dealing with payments made in advance
On termination, the Factor is to provide all financial information that relates to the person’s account
Annual financial breakdown issued to owners plus vouching if requested
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Code – Debt Recovery
A clear written procedure is to be put in place. Highlights include :
Late payment charges to be explained
Detailed explanation of how services and charges will be affected if another homeowner does not pay
Procedures for monitoring payments and issuing timely reminders
Requirement to keep other homeowners who are jointly liable for co-owners informed
Provision that no legal action will be commenced without giving notice of intention to do so
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Code - Insurance
Factor to maintain adequate professional indemnity insurance.
For buildings and/or contents insurance ( only if the factor agrees to arrange these)
Clear information to be given to homeowners including premiums, administration fees and commissions and excesses
Procedure outlined for submitting homeowner claims. Keep homeowners informed of progress of the claim
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Code – Repairs/Maintenance Obligations
Procedures in place for homeowners to report repairs Keep homeowners informed of progress of repairs, estimated
timescales, etc Detail out of hours emergency procedures Be able to justify the contractors’ appointment Programme of works for annual inspections Contractors to have public liability insurance Factor to disclose any financial interest with contractors Factor to pursue contractor to remedy any defect for inadequate
work or service
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Code - Complaints
Factors’ complaints procedure to be included in the written statement of services
Factor must notify the homeowner of availability of the Homeowner Housing Panel (HHP)
Factor must not charge for handling complaints unless in Title Deeds or other contract
Factor must maintain record of all complaints for up to 3 years
Factor must comply with any requests from HHP
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Dispute Resolution
A homeowner may apply to the Homeowner Housing Panel (HHP) for a determination that the property factor has failed to: Carry out their duties To ensure compliance with the Code of Conduct
Homeowner to set out reasons for application.
Application only possible after Factor is notified in writing and Factor has refused to resolve (or unreasonably delayed in resolving).
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Dispute Resolution (cont.)
HHP – President to sift applications.
President can refer application to Homeowner Housing Committee (HHC) or reject the application.
Grounds for rejection
a) frivolous/vexatious;
b) Factor not afforded reasonable opportunity to resolve;
c) identical or substantially similar application recently made
d) dispute already resolved
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Dispute Resolution (cont.)
If rejected by President of HHP (application to be dealt with within 14 days) the President must give notice or rejection, give reasons for rejection and explain appeal procedures.
If complaint referred to the Homeowner Housing Committee (HHC) it must decide on a failure to carry out duties.
HHC may reject the complaint or issue a Property Factor Enforcement Order (“PFEO”). If so they must first give notice to the factor and allow parties an opportunity to make representations.
Appeal on a point of law committee to a Sheriff within 21 days of the committee's decision.
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Property Factor Enforcement Order (PFEO)
The factor is to execute such action as the Committee consider necessary.
If appropriate, factor to make payment to the homeowner as the Committee considers reasonable.
PFEO must specify a timescale for completion.
PFEO may specify particular steps to be taken.
Subject to any appeal the Court cannot adjudicate on any matter adjudicated upon by the HHC
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Property Factor Enforcement Order (PFEO)
Variation/ Revocation of PFEO:
HHC can vary “in such manner as they consider reasonable”
HHC can revoke it “where they consider the action...is no longer necessary.”
HHC must vary the Order if satisfactory progress towards its compliance is made and a written Undertaking from the factor to complete by a satisfactory date is given.
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Failure to Comply with PFEO
It is the HHC who decides whether a Factor has failed to comply with a PFEO and issues a Notice of Failure to the Scottish Ministers.
A determination of a failure to comply is not possible unless period specified for compliance has ended; or if HHC satisfied that failure to comply is due to a lack of necessary rights (of access etc), that the factor has taken reasonable steps to acquire access rights ; or any action is likely to endanger persons.
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Dispute Resolution - Appeals
Decision of the President of the HHP or the decision of the HHC appealable to the Sheriff.
Appeal to be made within 21 days of the decision given.
Appeal to the Sheriff is FINAL
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Removal from the Register
Power to remove a property factor from the Register lies with the Scottish Ministers
Where they consider the factor;
a) is no longer a fit and proper person;
b) has failed to comply with s13(3) – ie. to include its registered number in any document sent to a homeowner or in any other specified document;
c) has failed to demonstrate compliance with the Code of Conduct or any PFEO made against it
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Removal from Register
Prior to removal the Scottish Ministers must first give notice: a) that removal is under consideration ; b) allow the factor an opportunity to make representations to them.
Scottish Ministers’ Notice must be accompanied by a written statement of the reasons for proposing to remove
Scottish Ministers must not remove, after considering representations made to them, unless the criteria in the previous slide apply.
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Effect of Removal from Register
On refusal of an application to register or on removal of the factor from the Register then after the relevant date :
a) No costs incurred by the factor instructed after the relevant date are recoverable.
b) No charge imposed relating to a period after the relevant date is recoverable
c) Homeowners may appoint new factors.
d) No NPLC can be lodged by the factor for works instructed after the relevant date
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Appeals against Refusal to Register or Removal from Register
Within 21 days after notice of refusal or removal an appeal lies to the Sheriff by Summary Application.
Hearing fixed – Sheriff can then require the Scottish Ministers to enter the appellant into the Register
Relevant considerations – a) the appellant is a “fit and proper person” ( where no previous registration has occurred) or b) the conditions in section 4 (4) (b) – ie compliance with the Code of Conduct, any PFEO issued and compliance with the registration number requirements.
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Appeals against Refusal to Register or Removal from Register
Sheriff to give written reasons for his/her decision.
Appeal lies on a point of law to the Sheriff Principal.
Appeal to be made within 21 days of the Sheriff’s decision.
No appeal beyond Sheriff Principal to the Inner House of the Court of Session.
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Offences Under the Act
A person who specifies in the application for registration information which he knows to be false in a material particular or knowingly fails to specify information required for the registration is guilty of an offence.
Penalty – a fine not exceeding level 3 on the standard scale (£1000)
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Offences Under the Act
A factor who, without reasonable excuse, fails to comply with a PFEO commits an offence.
“Reasonable excuse” – Factor is unable to comply because of a lack of necessary rights ( of access or otherwise) despite having taken reasonable steps to acquire those rights or any action required by the Order is likely to endanger any person.
Generality of “reasonable excuse” preserved as a defence.
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Offences Under the Act
Factor cannot be guilty of an offence unless the HHC issuing the PFEO have decided that there has been a failure to comply.
Decision of HHC does not create the presumption that an offence has been committed.
Summary conviction – fine not exceeding level 3 of the standard scale (£1000)
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Offences Under the Act
Factor commits an offence when operating whilst unregistered.
Defence – a “reasonable excuse” exists for acting in the way charged.
Sentence – a fine not exceeding level 5 or imprisonment up to six months or both.
Who is fined or goes to prison ......?
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Offences Under the Act
If offence committed by a company , partnership or unincorporated body then if offence committed with the “consent or connivance of or was attributable to the neglect of a relevant individual or an individual purporting to act in that capacity then they are along with the company, partnership or unincorporated association guilty of the offence.
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Offences Under the Act
“Relevant individual”
a) A director, manager, secretary of similar officer (if a company)
b) A partner ( if a partnership)
c) A person who is concerned with the management or control of the association ( if an unincorporated association)
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Property Factors (Scotland) Act 2011
Grant Hunter
21 March 2013
