Property Factors (Scotland) Act 2011 & The Code of Conduct: A Brief Guide

The new act came into force on 1 October 2012, and introduced a raft new rules and regulations for property factors and managers – including a requirement to be registered and to comply with a Code of Conduct. The act applies to virtually anyone who manages property on behalf of another owner, and not just to “traditional” factors and property managers. It also introduces a new dispute resolution procedure for complaints arising from factoring problems or allegations of a failure to comply with the Code of Conduct. The code of conduct aims to set minimum statutory standards of practice for the management of land and property. Registered property factors will be legally required to comply with the code and failure to do so will be a criminal offence.

What actions are required by the code?

1. Written Statement Of Services

Homeowners are entitled to a written statement setting out the terms and service delivery standards of the factoring arrangement. If a homeowner applies to the homeowner housing panel, the Panel will expect you to be able to show how your actions compare with the written statement. There are strict timescales in which the statement must be provided to the resident, and the written statement should set out:

• A statement of the legal basis of the arrangement between you and the homeowner;

• Details of the services that you will provide, and an outline of the minimum service delivery standards that can be expected;

• Details of the Financial and Charging Arrangements;

• Details of your in-house complaints handling procedure and the procedure for making an application to the homeowner housing panel (if owners remain dissatisfied after completing the in-house procedure); and,

• Details of how to change or terminate the service arrangement, including signposting to the applicable legislation. This requirement may seem somewhat unusual to many.

2. Communication And Consultation

The code regards good communication as key, and requires the following:

• Information should not be misleading or false.

• Communication must not be abusive, intimidating, or threatening (other than reasonable indication that you may take legal action).

• Factors must provide homeowners with contact details (including out-of-hours details).

• There must be a procedure to consult with homeowners and seek their written approval before providing work or services in addition to the core service.

3. Financial Obligations

The code seeks transparency in financial matters relating to the services, and its overriding objectives are:

• Protection of homeowners’ funds

• Clarity and transparency in all accounting procedures

• Ability to make a clear distinction between homeowners’ funds and a property factor’s funds

4. Debt Recovery

The code requires that homeowners are aware of the implications of late payment and factors must have clear procedures to deal with this situation. Factors must have systems in place to ensure the regular monitoring of payments due from homeowners, and must issue timely written reminders to inform individual homeowners of any amounts outstanding. Furthermore, any charges that may be imposed must not be unreasonable or excessive, and factors must not take legal action against a homeowner without taking reasonable steps to resolve the matter and without giving notice of their intention.

5. Carrying Out Repairs And Maintenance The Code requires there to be procedures to allow homeowners to notify factors regarding requiring attention, and factors are further required to keep owners updated with the progress. Factors must also be able to show how contractors are appointed.

6. Complaints Resolution The Act allows homeowners to make an application to the homeowner housing panel for a decision as to whether a factor has failed to carry out their duties, or comply with the Code. It is a requirement of the Code that homeowners receive a copy of the in-house complaints procedure.

Advice

We are happy to discuss, and give more detailed guidance, on particular cases on a no obligation basis.

This guide is current 16th October 2012 and is our understanding of the position described at that date. It does not constitute legal advice. Legal advice ought to be taken before relying on its terms (particularly to ensure the law has not changed).