Why didn’t they tell us?
Most owners rarely think about their property factor until something goes wrong. When things do go wrong very frequently it’s a case of “Why didn’t they tell us?”
Clear, timely communication isn’t just good practice – in many cases, it’s a legal requirement. Scotland’s system for regulating property factors sets specific responsibilities for what and when factors must communicate to owners.
Good communication from your factor gives you confidence that your money is being used properly, ensures you know what’s happening in your tenement or development, and allows you to have an appropriate say in decisions before they’re made; decisions aren’t just a fait accompli. Poor communication leads to disputes, confusion, suspicion, and probably more changes of factors than anything else.
A minimum expectation
I’ll come on to the legal obligations around communication in a moment, but first what are the common sense basic expectations that owners should reasonably have:
- You should know what your factor is doing and why.
- You should receive advance notice of repairs, estimates, and potential costs.
- You should be given clear billing and evidence of what’s been spent.
- You should be able to contact your factor easily and receive a timely reply.
- You should receive an annual financial statement showing income and expenditure.
If you aren’t getting even this, then it’s high time that you, or your Owners Association had a “challenging conversation” with your factor
What the Law Requires
The Property Factors (Scotland) Act 2011 and its associated Property Factors Code of Conduct create legally enforceable rules that all registered factors must follow.
A Written Statement of Services (WSS)
Every owner must receive a Written Statement of Services shortly after they purchase the property, or when the factor changes. This must set out:
- services provided
- charging arrangements
- how repairs are instructed
- how to complain
- how to end the relationship
If your factor hasn’t given you a WSS in an appropriate timescale, they are in breach of the Code of Conduct.
Transparency Around Costs and Repair Decisions
Before instructing work (unless it’s an emergency), the factor must:
- set out the process for obtaining quotes or tenders
- explain how decisions will be made
- tell owners in advance if costs may exceed agreed limits
For large repairs, you should normally see at least two quotes unless your building’s Title Deeds explicitly state otherwise.
Invoicing and Accounting Duties
Factors must issue:
- clear invoices that separate their management fees from maintenance and repair costs
- annual statements showing how money has been spent
A failure to provide accounts is one of the most common breaches upheld when owners make referrals to the First-Tier Tribunal.
Insurance Information
If your arrangement with the factor includes them arranging a common building insurance, they must give each homeowner (annually and within 3 months following a change in insurance provider) clear information demonstrating:
- the basis upon which their share of the insurance premium is calculated;
- the sum insured;
- the premium paid;
- the main elements of insurance cover provided by the policy and any excesses which apply;
- the name of the company providing insurance cover; and
- any other terms of the policy.
This information may be supplied in the form of a summary of cover, but full details must be made available if requested by any homeowner.
Homeowners must be notified of any substantial change to the cover provided by the policy.
Insurance Commission & “Kickbacks”
The Property Factors (Scotland) Act 2011: Code of Conduct for Property Factors, is very explicit about the need for disclosure of commission, sweetheart deals and “kickbacks” with brokers & insurance companies. Here’s an extract:
A property factor must disclose to homeowners, in writing, any commission, administration fee, rebate or other payment or benefit that is paid to them or anyone in control of the business or anyone connected with the factor or a person in control of the business, in connection with the policy. They should also disclose any financial or other interest that they have with the insurance provider or any intermediary. A property factor must also disclose any other charge they make or apply for arranging such insurance.
This transparency and full disclosure is really important, not least because insurance is likely to be one of your highest costs. A statement on the factors website that they don’t take a commission isn’t good enough. I’d want an explicit written statement along the lines of the Code of Conduct, “commission, administration fee, rebate or other payment or benefit”.
Responding Within a Reasonable Timescale
The law doesn’t specify an exact number of days, but the Code of Conduct requires:
- acknowledgment of enquiries within a reasonable period
- updates when delays occur
- clear communication channels
Factors cannot simply ignore emails or take months to reply. If it comes to it the First-Tier Tribunal will judge “reasonable” on common-sense grounds.
Complaints Procedure
Every factor must have a defined process for complaints.
They must tell you:
- how to complain
- how long they’ll take to respond
- how the matter can be escalated internally
If they fail to deal with a complaint properly, you can take the matter to the First-Tier Tribunal.
Times When The Factor Must Communicate
Here are some times when the property factor must communicate.
Repairs and Maintenance
- Emergencies: They can act immediately but must notify owners quickly afterwards.
- Non-urgent repairs: They must consult owners according to the Written Statement of Services, explain costs, and get approval if required (Title Deeds)
Financial Matters
- when issuing bills
- annually, through formal accounts
- when significant overspends are foreseeable
When Requested by an Owner
If an owner ask for documents or information that the law or theie Written Statement of Services entitles them to, they must provide it.
Documents a Factor Must Provide
There are certain documents that a factor must provide, some are one-offs, others on a regular basis. They are:
- Written Statement of Services (start of arrangement or when changed)
- Annual accounts (every year)
- Insurance documents (every year and when there are significant changes)
- Complaints procedure (on request and included in Written Statement of Services)
- Repair quotes/tenders (before major work)
- Invoices from contractors (on request after work)
- Final invoices for repairs (after work is complete)
And Ones They “Should” Provide
- maintenance schedules
- periodic updates on ongoing repairs
- newsletters or summary reports
- online portals allowing easy document access
When Things Are Going Wrong
Is it you or is it the factor? If you sense that communication isn’t quite what it should be then maybe ask yourself:
- Do you understand what you’re being billed for?
- Do you receive repair updates before and after work?
- Are annual accounts clear and complete?
- Is the factor easy to contact?
- Do they follow the Written Statement of Services they gave you?
If “no” they it’s time to start asking questions.
- Raise it politely, but firmly in writing. Ask for documents, explanations, or timelines. Keep copies of your letters and emails, and make a note of phone calls.
- Use the factor’s complaints procedure. Are they adhering to the timescales they’ve put in their Written Statement of Services. Again keep notes on everything
- If your complaint doesn’t resolve it, or they just don’t respond in the appropriate timescale (not uncommon in my experience), you can apply to the First-tier Tribunal. You don’t need a solicitor, it’s a “fairly” informal process where it’s quite usual for owners to represent themselves. But you’ll need all of the paperwork, you’ll need to be able to demonstrate that you’ve followed the process, to the letter. And above all you’ll need resilience! I’ll be writing about the First-Tier Tribunal process elsewhere.
Some Useful Links
Poor communication is probably the single biggest issue with factors.
