Profit or reputation first?

We’ll here is a right conundrum and it sheds a completely new angle on the role of managing agent and resident companies.

To make things as clear as possible to the less informed a resident company or RMC is set up to look after the shared areas of a development, this is done by the collection of service charges as set out in the lease. It is usual practice that the RMC will employ the services of a managing agent to both collect service charges and ensure that the RMC is run in accordance with all rules, regulations and by the terms of any lease.

So what would happen if the directors of the RMC were to instruct the managing agent to not only collect service charges contrary to the lease but also to apportion charges incorrectly?

You could argue that the overall responsibility lies with the directors of the RMC and that as long as those instructions are recorded in writing along with the managing agent’s argument the managing agent may cover themselves. The question is would the courts or LVT if ever service charges were challenged and whose feet would they lay the blame at the volunteer resident directors or the professional, employed managing agent?

You may think that this is just a hypothetical scenario unfortunately this type of situation is faced by managing agents on a regular basis and one that I had to face recently.

The conundrum being do you put profit before professionalism and reputation?

I am sure there are no doubt managing agents who would have taken the business I however took the decision not to on the grounds that it may have benefitted my company in the short term but long term it could have tarnished my business reputation and would go against my otherwise professional and transparent business approach.

I think I made the right decision, do you?