Property Factors (Scotland) Act 2011: property factors - code of conduct

1.1   A property factor must provide each homeowner with a comprehensible WSS setting out, in a simple, structured way, the terms and service delivery standards of the arrangement in place between them and the homeowner.  If a homeowner makes an application under section 17 of the 2011 Act to the First-tier Tribunal for a determination, the First-tier Tribunal will expect the property factor to be able to demonstrate how their actions compare with their WSS as part of their compliance with the requirements of this Code.

1.2   A property factor must take all reasonable steps to ensure that a copy of the WSS is provided to homeowners:

• within 4 weeks of the property factor:-
• agreeing in writing to provide services to them; or
• the date of purchase of a property (the date of settlement) of which they maintain the common parts.  If the property factor is not notified of the purchase in advance of  the settlement date, the 4 week period is from the date that they receive notification of the purchase;
•  identifying that they have provided misleading or inaccurate information at the time of previous issue of the WSS
•  at the earliest opportunity(in a period not exceeding 3 months) where:
•  substantial change is required to the terms of the WSS.

Any changes must be clearly indicated on the revised WSS issued or separately noted in a ‘summary of changes’ document attached to the revised version;

1.3   At all other times, a copy of the latest WSS must be made available by the property factor on request by a homeowner.

How the Code applies to different types of land ownership

1.4   The requirements in relation to the content of the WSS will depend on who owns the land which is factored.  Unless otherwise stated, section 1.5 below will apply to all property factors.  However, if land is owned by a land maintenance company or a party other than a group of home owners, Section 1.6 on Authority to Act applies rather than Section 1.5 A.

1.5   The WSS must make specific reference to any relevant legislation and must set out the following:

A.  Authority to Act

(1)    a statement of the basis of the authority the property factor has to act on behalf of all the homeowners in the group[1].   Property factors operating under a custom and practice arrangement with no formal appointment should clearly indicate this arrangement to homeowners in the WSS.  Where this is the case, homeowners and property factors may wish to consider formalising their appointment.

(2)    where the property factor has purchased the assets of another property factor, a clear statement confirming whether the property factor has taken on the outstanding liabilities of the previous property factor, and any other implications of the takeover for homeowners;

(3)    where applicable, a statement of any level of delegated authority, for example the financial thresholds for instructing works and the specific situations in which the property factor may decide to act without further consultation with homeowners.

B. Services Provided

(4)    the core services that the property factor will provide to homeowners.  This must include the target times for taking action in response to requests from homeowners for both routine and emergency repairs and the frequency of property visits (if part of the core service);

(5)    the types of services and works which may be required in the overall maintenance of the land in addition to the core service, and which may therefore incur additional fees and charges (this may take the form of a ‘menu’ of services) and how these fees and charges are calculated and notified to homeowners.

C. Financial and Charging Arrangements

(6)    the management fee charged by the property factor, including any fee structure and also the property factor’s policy for reviewing and increasing or decreasing this management fee;

(7)    what proportion, expressed as a percentage or fraction, of the management fees and charges for common works and services that each homeowner is responsible for.  This is likely to be set out in the title deeds for the property.  If management fees are charged at a flat rate rather than as a proportion, then this should be clearly stated;

(8)    any arrangements relating to payment by homeowners towards a deposit, float or floating fund, confirming the amount, payment process and repayment policy (at change of ownership or where the service is terminated by homeowners or by the property factor) (see section 3 of the Code: Financial Obligations);

(9)    any arrangements for collecting payment from homeowners for sinking or reserve funds, specific projects or cyclical maintenance, confirming amounts and payment process;

(10)  the timing and frequency of billing and by what method homeowners will receive their bills;

(11)  how the property factor will collect payments, including timescales and methods (clearly stating the payment methods available to homeowners).   Any charges relating to late payment must clearly state the period of time after which these charges would be applicable (see Section 4 of the Code: Debt Recovery);

(12)  the property factor’s debt recovery procedure which must be made available on request (see section 4 of the Code: Debt Recovery).

D. Communication and Consultation

(13)  how homeowners can access information, documents and policies/procedures that they may need to understand the operation of the property factor;

(14)  procedures and timescales for responding to enquiries and communications received from homeowners in writing and by telephone (including details of the property factor’s standard working hours);

(15)  the property factor’s complaints handling procedure[2];

(16)  the property factor’s privacy notice and their registration details with the Information Commissioner’s Office’s Data Protection Public Register.

 E.  Declaration of Interest

(17)  a declaration of any financial or other interests which the property factor has in the common parts of property and land to be managed or maintained, for example as a homeowner (including where the property factor  is an owner or acting as a landlord but not where it is undertaking letting agency work in respect of a property[3]).  If no interest is declared, then this must be clearly stated.

F.   Information about the 2011 Act and the duties it places on property factors.

(18) this will include the duty to Register, the use of a Property Factor Registered Number and the duty to comply with the Code.

G.  How to End the Arrangement

(19)  clear information on when and how a homeowner should inform the property factor of an impending change in ownership of their property (including details of any reasonable period of notice which is required by the property factor to comply with its duties under this Code. This information should also state any charges for early termination/administration costs;

(20)  clear information that homeowners may (by collective or majority agreement or as set out in their title deeds) terminate or change the service arrangement including signposting to any relevant legislation, for example the Title Conditions (Scotland) Act 2003 and the Tenements (Scotland) Act 2004.  This information should include any “cooling off" period or period of notice;

(21)  a clear statement confirming the property factor’s procedure for how it will co-operate with another property factor to assist with a smooth transition process in circumstances where another property factor is due to or has taken over the management of property and land owned by homeowners; including the information that the property factor may share with the new, formally appointed, property factor (subject to data protection legislation) and any other implications for homeowners.  This could include any requirement for the provision of a letter of authority, or similar, from the majority of homeowners to confirm their instructions on the information they wish to be shared.

G (20) and (21) do not apply to situations where homeowners do not own factored land.

The following requirements apply where the land is owned by a land maintenance company or a party other than the group of homeowners

1.6      The WSS must make specific reference to any relevant legislation and must set out the following in terms of authority to act:

A.  Authority to Act

(1) a statement of the legal basis of the arrangement between the property factor and the homeowner;

(2) a description of the use and location of the area of land to be maintained, including a map where possible (this information must be updated to reflect any changes):

• within 4 weeks of the change; 
• within 4 weeks of the property factor identifying that they have provided misleading or inaccurate information at the time of previous issue; or
• at the earliest opportunity (in a period not exceeding 3 months) where substantial change is required.

(2)    where the property factor has purchased the assets of another property factor, a clear statement confirming whether the property factor has taken on the outstanding liabilities of the previous property factor, and any other implications of the takeover for homeowners;

(3)    where applicable, a statement of any level of delegated authority, for example the financial thresholds for instructing works and the specific situations in which the property factor may decide to act without further consultation with homeowners.

B. Services Provided

(4)    the core services that the property factor will provide to homeowners.  This must include the target times for taking action in response to requests from homeowners for both routine and emergency repairs and the frequency of property visits (if part of the core service);

(5)    the types of services and works which may be required in the overall maintenance of the land in addition to the core service, and which may therefore incur additional fees and charges (this may take the form of a ‘menu’ of services) and how these fees and charges are calculated and notified to homeowners.

C.  Financial and Charging Arrangements

(6)    the management fee charged by the property factor, including any fee structure and also the property factor’s policy for reviewing and increasing or decreasing this management fee;

(7)    what proportion, expressed as a percentage or fraction, of the management fees and charges for common works and services that each homeowner is responsible for.  This is likely to be set out in the title deeds for the property.  If management fees are charged at a flat rate rather than as a proportion, then this should be clearly stated;

(8)    any arrangements relating to payment by homeowners towards a deposit, float or floating fund, confirming the amount, payment process and repayment policy (at change of ownership or where the service is terminated by homeowners or by the property factor) (see section 3 of the Code: Financial Obligations);

(9)    any arrangements for collecting payment from homeowners for sinking or reserve funds, specific projects or cyclical maintenance, confirming amounts and payment process;

(10)  the timing and frequency of billing and by what method homeowners will receive their bills;

(11)  how the property factor will collect payments, including timescales and methods (clearly stating the payment methods available to homeowners).   Any charges relating to late payment must clearly state the period of time after which these charges would be applicable (see Section 4 of the Code: Debt Recovery);

(12)  the property factor’s debt recovery procedure which must be made available on request (see section 4 of the Code: Debt Recovery).

D. Communication and Consultation

(13)  how homeowners can access information, documents and policies/procedures that they may need to understand the operation of the property factor;

(14)  procedures and timescales for responding to enquiries and communications received from homeowners in writing and by telephone (including details of the property factor’s standard working hours);

(15)  the property factor’s complaints handling procedure[2];

(16)  the property factor’s privacy notice and their registration details with the Information Commissioner’s Office’s Data Protection Public Register.

 E.   Declaration of Interest

(17)  a declaration of any financial or other interests which the property factor has in the common parts of property and land to be managed or maintained, for example as a homeowner (including where the property factor  is an owner or acting as a landlord but not where it is undertaking letting agency work in respect of a property[3]).  If no interest is declared, then this must be clearly stated.

F.   Information about the 2011 Act and the duties it places on property factors.

(18) this will include the duty to Register, the use of a Property Factor

Registered Number and the duty to comply with the Code.

G. How to End the Arrangement

(19)  clear information on when and how a homeowner should inform the property factor of an impending change in ownership of their property (including details of any reasonable period of notice which is required by the property factor to comply with its duties under this Code. This information should also state any charges for early termination/administration costs;

(20)  clear information that homeowners may (by collective or majority agreement or as set out in their title deeds) terminate or change the service arrangement including signposting to any relevant legislation, for example the Title Conditions (Scotland) Act 2003 and the Tenements (Scotland) Act 2004.  This information should include any “cooling off" period or period of notice;

(21)  a clear statement confirming the property factor’s procedure for how it will co-operate with another property factor to assist with a smooth transition process in circumstances where another property factor is due to or has taken over the management of property and land owned by homeowners; including the information that the property factor may share with the new, formally appointed, property factor (subject to data protection legislation) and any other implications for homeowners.  This could include any requirement for the provision of a letter of authority, or similar, from the majority of homeowners to confirm their instructions on the information they wish to be shared.

G (20) and (21) do not apply to situations where homeowners do not own factored land.

The following requirements apply where the land is owned by a land maintenance company or a party other than the group of homeowners

1.6      The WSS must make specific reference to any relevant legislation and must set out the following in terms of authority to act:

A. Authority to Act

(1) a statement of the legal basis of the arrangement between the property factor and the homeowner;

(2) a description of the use and location of the area of land to be maintained, including a map where possible (this information must be updated to reflect any changes):

• within 4 weeks of the change; 
• within 4 weeks of the property factor identifying that they have provided misleading or inaccurate information at the time of previous issue; or
• at the earliest opportunity (in a period not exceeding 3 months) where substantial change is required.