The Property Factors (Scotland) Act 2011 comes into force on 1 October 2012. The Act requires Scottish Ministers to prepare and maintain a register of property factors in Scotland and to make it an offence to act as a property factor without being on the register. It further provides for the resolution of disputes between homeowners and property factors.
Registration of Property Factors
A person who is or intends to be a property factor must apply to the Scottish Ministers for entry into the register. There is a fairly standard application procedure. Applications are subject to the fit and proper person test and are also subject to compliance with the property factor code of conduct. Where the Ministers consider refusing an application they must give notice to the property factor that refusal is under consideration and allow the person to make representations in their defence. Once a property factor has been placed on the register the registration is valid for 3 years from the date on which the entry is made.
A property factor can be removed from the register where they fail to meet any of the requirements for approval of application to the register. Where a property factor fails to register or is removed from the register they are no longer able to recover costs in respect of work instructed or charges incurred. Furthermore, a homeowner is able to appoint a new property factor in this situation.
A person who operates as a property factor while unregistered is guilty of a criminal offence. However, it is a defence for the person to show that there is a reasonable excuse for acting in the way charged. A guilty property factor will be liable on summary conviction to a fine not exceeding £5,000 or to imprisonment for a term not exceeding 6 months or both.
Dispute Resolution
Part Two of the Act establishes the Homeowner Housing Panel, to which a homeowner can apply for determination of whether a property factor has failed to carry out a property factor’s duties and whether a property factor has failed to comply with the property factor Code of Conduct. An application requires inclusion of the homeowner’s reasons for considering the property factor’s failure, written notification from the homeowner to the property factor explaining the complaint and the property factor’s refusal to resolve the homeowner’s complaint.
Where an application is referred to the committee the Homeowner Housing Panel must decide whether the property factor has failed to carry out its duties or comply with the Code of Conduct and if so whether to make a property factor enforcement order. This is an order requiring the property factor to execute such action as the Homeowner Housing Panel committee considers necessary and where appropriate make reasonable payment to the home owner. The order must specify a period within which action is required and may specify particular steps to be taken.
Draft Consultation: Code of Conduct for Property Factors
Under the Property Factors (Scotland) Act 2011 the Scottish ministers must prepare a Code of Conduct setting out the minimum standards of practice for registered property factors. A draft copy of the code has now been published and is open for consultation until 16 December 2011. It has been proposed that the Code of Conduct will apply unless the property title deeds conflict with the Code or the Code contradicts the contractual agreement between the property factor and the home owner.
The Code of Conduct requires all property factors to provide a written statement of their responsibilities to existing homeowners at the time of registration. Property factors must also issue a written statement to new homeowners, where change of ownership occurs in a property already managed and where the property factor makes any changes to the written statement.
The Code of Conduct states that there must be a clear separation between the property factors’ bank account and the account holding funds belonging to the homeowner. Private sector property factors must hold funds in client trust accounts. If a homeowner seeks to terminate the contract then the property factor must make available all financial information that relates to their account. A property factor must provide to the home owner in writing at least once a year a detailed financial breakdown of the charges made. The property factor is also required to have a clear written procedure for debt recovery.
Under the Code the property factor must have a clear written complaints resolution procedure including provision for complaints against contractors. When this process is exhausted the final decision should be confirmed with a senior manager before the home owner is informed in writing. This letter should also provide information to the homeowner about access to the Homeowner Housing Panel. The property factor must not charge for handling complaints and must keep a written record of all complaints.
If you would like to discuss any of the issues raised in this article please contact a member of our housing team.
