Edinburgh 0131 200 1200
Aberdeen 01224 49 80 80

News + Events

Latest news from Balfour+Manson

Property Factors (Scotland) Act 2011

This new act comes into force on 1st October 2012. There are three main provisions:-
(a) Establishment of a public register of property factors – it will be an offence for an unregistered person to operate as a property factor
(b) Provision of a Code of Conduct (to be prepared by the Scottish Ministers)
(c) Establishment of a new system of Alternative Dispute Resolution
Who will the new act affect?
The definition of a property factor is contained in section 2 of the Act and includes;
a) a person who, in the course of that person’s business, manages the common  parts of land owned by two or more other persons and used to any extent for residential purposes and
b) a person who, in the course of that person’s business , manages or maintains land which is available for use by the owners of any two or more adjoining or neighbouring residential properties (but only where the owners of those properties are required by the terms of the title deeds relating to the properties to pay for the cost of the management or maintenance of that land)
Only residential property factors are affected, so commercial property factors are not included.  There are further exclusions contained in the act. There are some interpretational issues to be resolved regarding the wording of the act.
Public Register
Anyone (including companies and firms) who acts as a property factor must apply and be granted registration. Failure to do so is a criminal offence. The applicant must be “a fit and proper person to be a property factor”. Registration will last for three years and is renewable. A registration number will be issued to the Property Factor and this number must appear on any letters and communications sent to the owners of the property being factored. Property Factors will also have to make an annual return detailing the properties which they look after.
Code of Conduct
The Scottish Ministers have produced the Code of Conduct after a consultation period. It is expected that a final version will be available for the act coming into force. The terms of the code will be wide ranging and will include requirements for property factors to:-

set out their terms of engagement with full information regarding their fee charging;
the legal basis for their authority to act e.g. authorisation specified in the relevant title deeds;
how their appointment maybe terminated;
the requirement for Professional Indemnity Insurance;
procedures for tendering for repairs;
debt recovery procedures;
information to be provided to homeowners to assist the homeowner;
complaint procedures.
Although factors must comply with the code, it is not a criminal offence to breach it, however a factor who doesn’t comply can be brought before the new homeowner housing committee and may have difficulty in renewing its registration.

Alternative Dispute Resolution
Where a complaint or dispute cannot be resolved by the factor’s complaint procedures, the homeowner will be able to refer the matter to a “homeowner housing panel” or “homeowner housing committee”. If the factor has failed to comply with a contract term or with the Code of Conduct, the committee may issue a “Property Factor Enforcement Order”. A homeowner has no power to enforce but if the factor does not comply it is a criminal offence and a ground for the factor being struck of the Register. There is a limited appeal procedure to the Sheriff Court.
In light of the new legislation care will have to be taken to ensure that any dealings on behalf of a client in relation to property management is with a registered property factor to ensure the client as homeowner has the benefit of the protection of the legislation.
Property Factors would be well advised to take legal advice regarding registration requirements, compliance with the code of conduct and the legal basis for their authority to act.
For further information and advice relating to the Property Factors (Scotland) Act 2011 please contact Ken Robertson.