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I live in UK on property development with approximately 180 apartments. The property development has voted to change property factors (roughly, a property manager) due to incompetence, poor financial management and all round ineptitude. The property factors we are leaving are charging a £40 exit fee per apartment. This feels extortionate as they will get more than £7k for us leaving.

The charge is declared on their website and it appears to be a common practice for other property factors but this seems a criminal amount to charge. A £40 charge in total seems more reasonable not per appartment.

Does anyone have any feedback suggestions or experience in this area?

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  • 1. Your question risks being closed because it seems to ask for advice for real circumstances, which is off-topic here. Try rewording more generally. 2. "Property factor" is a thing in Scotland - try Shelter Scotland for free advice. 3. There is a decision by the Homeowner Housing Panel available online that, while against the property factor in some respects, says £55 per property is not excessive. Try searching for Scotland property factor termination fee.
    – Lag
    Commented Dec 30, 2023 at 12:25
  • 'ask for advice comment' is fair, I am looking for any feedback around the law in this area. I will interpret any law statements and not treat as advice and make own decision on how to proceed. I will try shelter Scotland. I saw that HHP response, which was disappointing. Thanks for feedback.
    – sfwgeek
    Commented Dec 31, 2023 at 18:40

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£7k in damages for you breaking a relatively large contract seems pretty reasonable

Yes, I said “for you breaking” because terminating the contract before it expires is a breach of the contract by you. When you break a contract the other party is entitled to damages - to be placed in the position they would have been in if you hadn’t broken the contract.

While described as an “exit fee” it appears that the £40 per unit is actually a liquidated damages clause - a pre-agreed figure of the damage the breach will cause to save the cost and time involved in actually working out the actual damages, through the courts or otherwise. These are totally enforceable providing they represent a genuine pre-estimate of the loss - £40 per unit doesn’t seem like a lot - and anyway, the time to object to such a clause is when you enter the contract, not when you try to leave.

You refer to “incompetence, poor financial management and all round ineptitude” (be careful what you say because defamation is a real thing) but unless and until this is a breach of their obligations under the contract, the law doesn’t care. If you can point to their acts and omissions and how these fail to meet their obligations under the contract, then they will be in breach and you would be entitled to damages for that breach. However, unless the contract specifically allows for termination for those breaches or unless those breaches amount to failure of consideration (i.e. they have done virtually nothing they were contracted to do), it will not give you a right to terminate.

So long as they have done the bare minimum that the contract requires, whether or not you find that satisfactory, they are not in breach and you don’t have a right to terminate. That’s why you terminating is a breach - breach by one party does not justify breach by the other.

Next time, make sure the factor’s obligations and your expectations are aligned in the contract.

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  • 40 bucks covers about one hour of office work per unit. That seems to be a reasonable time to wrap up whatever accounts and work was still open per unit. For ship parts liquidated damages for single parts (like, a propeller) are more likely 5 to 6 digits, just to cover materials that went into their manufacture!
    – Trish
    Commented Dec 30, 2023 at 20:09
  • @Dale More background, I should've added in OP. Its a termination of agreement. Once enter factor contract there is no end date its a perpetuity contract. My development has taken them to tribunal with mixed results at significant effort and some cost. All factors terms and conditions are written in such a way they have plenty of wiggle room and hard to hold to account. Thanks for feedback you have given me some ideas.
    – sfwgeek
    Commented Dec 31, 2023 at 19:00

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