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When is an RTM Company not an RTM Company?

In a clear illustration of the grave consequences that can arise from apparently trivial legal mistakes, flat dwellers’ hopes of taking over management of their block were almost stymied by their failure to include the letters ‘RTM’ as part of the name of the corporate vehicle that they set up for the purpose.

FlatsIn christening their company, the tenants had left out the three critical letters and the block’s freeholders, who were anxious to retain their management powers, argued that omission was fatal to the tenants’ case.

It was submitted that a combination of the relevant provisions of the Commonhold and Leasehold Reform Act 2002 and the RTM Companies (Model Articles) Regulations 2009 meant that the company’s name had to include the three capital letters or it could not be viewed as an RTM Company.

The tenants were granted the right to manage the block by the Leasehold Valuation Tribunal, but the freeholders challenged that decision before the Upper Tribunal on the single ground relating to the company’s name.

In dismissing what it described as the freeholder’s ‘purely technical’ appeal, the Tribunal noted that the constitution of the tenants’ company was substantially in the form prescribed by the regulations and that it ‘appeared to satisfy the description’ of an RTM Company.

If the absence of the letters ‘RTM’ from the company’s name could be regarded as an inconsistency between its articles of association and the prescribed articles then, on a correct interpretation of the regulations, the omission was of no effect. If the letters were indeed essential, they were inferred to be included in the company’s name ‘because it is an RTM company’ and because the regulations provided that the prescribed articles were to have effect whether or not they were adopted.