As a factor, how can you ensure your factoring paperwork is legal. Should you use deeds of conditions or a written statement of services?

The establishment of the Homeowner Housing Panel (HOHP), provides a forum for homeowners to challenge whether their property manager / factor has failed to carry out their factoring duties, or breached the Code of Conduct. The most important decision from the HOHP thus far can be found in a recent case brought by Mr Park against Hacking and Paterson  (the Factor).

The application to the HOHP, which contended that the factor had breached the Property Factors Code of Conduct, was based on two grounds:

-The factor's written statement of services outlined a different method for the removal of the factor from that set out in the Deed of Conditions; and

-The factor had unilaterally increased the float payable by homeowners to £200, whilst the Deed of Conditions set this figure at £100 and provided that the sum could only be varied with the approval of the homeowners.

The case before the HOHP, therefore, turned on a relatively simple point: did the Factor derive authority from the Deed of Conditions or from their written statement of services, established through custom and practice.

It was the HOHP's view that the Factor?' management of the development should be governed by the Deed of Conditions alone and, as such found Mr Park's application to be successful. This was due to the Factor:

• not consistently operating on the basis of 'custom and practice'
• generally acting in accordance with the Deed of Conditions,

This decision of the HOHP is important. It makes clear a factor must:

• have regard to the terms of title deeds
• cannot unilaterally impose alternative conditions by the issue of their statement of services, unless such a statement codifies genuine custom and practice or reflects the appropriate decision making of the relevant owners

The case also demonstrates that 'style' statements of services that do not take into account the particular conditions relating to a development will inevitably mean you are in breach of the Code of Conduct.

If you are a factor looking for advice on preparing your own written statement of services in line with the recent decision of the HOHP and want to ensure your factoring paperwork is legal, our property department would be delighted to help.