Management Company Director

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director_mc

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Looking to become a director of our management company;

  • 100 units (houses, no apartments)
  • Two of the original developers are directors
  • They don't attend AGMs
  • Issues with our sewage treatment plant (it smells), there are suggestions that the plant shouldn’t have been approved for the 100 units (the estate was built in two phases)
  • The current ad-hoc committee have an 'agreement' with the property management company to approve budgets etc and the directors just sign off.
  • Common areas & sewage treatment has been handed over to our management company
  • We are in arrears of approx 30K, I understand it is down to 5 members (some owner/occupiers, some are landlords leasing their properties)
  • Our managing agent used to list each members arrears, but now I understand this is against Data Protection
  • What's the responsibilities of the directors?
  • Can directors be accused of neglect?

Going forward as a director am I liable for anything?
I understand our current management agent has pursued for arrears legally, but they say that when a member makes an effort to pay (usually a once off payment of 100 euro), it resets the whole legal steps again and the management absorbs any legal costs.

Question for directors on here, how successful have/can you be collecting arrears? In an estate of houses there are no services that can be withheld by the managing agent to encourage members to pay their arrears.

Would appreciate any advice going forward as a director. Thanks.
 
Directors can be liable but if you take reasonable steps to do the job then it is incredibly hard for anyone to assign such liability. Make sure you have directors insurance in place which provides legal cover if needed.

If you are only houses then what primary services does the company provide?

Landscaping.
sewerage plant upkeep

and......?

I would say that if you currently have an agent then you could potentially get rid of them and assume direct control. Appoint a landscaper and a company to look after the sewerage plant. The agent probably has a fee of 10k which would be saved realising cheaper service fee's. This makes payment easier.

In terms of arrears it is a tough job but get a very good solicitor and keep up the pressure. Pick one or two good cases where people have jobs and can afford it but don't and pursue them relentlessly.

Judgements against people can affect credit ratings do the new car or loan they need to go on holiday every year is jeopardised.

Once you have the members list you will need to check to make sure it is being kept up to date and that people have not moved away and forgotten to tell you. service fee bills could be just being posted into the ether and you ay not know about it.

Where people are renting check the PRTB register to make sure they are listed. If not then I would inform them. However, don't use this as leverage as it would be seen as a threat.

Finally I would get the other directors off the board and replaced with residents if at all possible. You must have control of the accounts and budgets. Make sure you need two signatures for all cheques and withdrawals. Without it there is no oversight.
 
Thanks for the reply lantus.

The management agent provide landscaping, treatment plant maintenance, repairs & maintenance (replacing street light bulbs to unblocking drains in the common areas).

At our last AGM the consensus was we would stick with an agent, but shop around for value for money. I understand if we were to switch to another agent we would need some residents to become directors as our only communication (if any) with the current directors is through our present management agent.
 
what you have described is 3 or 4 contracts to be awarded on an annual basis. Your agent will do this anyway but is probably taking 10k for the pleasure of this task. Why not just tender and appoint these contracts your self and cut out the middle man?

Yes you will need residents to become directors to make any real progress. The original developer probably has a very 'close' relationship with any agent and will have very little incentive to reduce costs or consider the long term future of the estate. Get your articles of association from the CRO.ie and see what they say regarding director appointments.

Of course you could be in a wealthy estate and service fee cost be a minor priority?!?
 
lantus said:
what you have described is 3 or 4 contracts to be awarded on an annual basis. Your agent will do this anyway but is probably taking 10k for the pleasure of this task. Why not just tender and appoint these contracts your self and cut out the middle man?

Yes you will need residents to become directors to make any real progress. The original developer probably has a very 'close' relationship with any agent and will have very little incentive to reduce costs or consider the long term future of the estate. Get your articles of association from the CRO.ie and see what they say regarding director appointments.

Of course you could be in a wealthy estate and service fee cost be a minor priority?!?
Click to expand...

It maybe an option in a few years to 'cut out the middle man' but for the moment I need to get familiar and comfortable in the role.

What are people's (in the role of director) success rate at retrieving arrears from residents? Some of the residents haven't paid in over 5 years, as outlined earlier I understand if they pay a minimum amount this resets the whole legal process - is this correct? If this is true I'm thinking there is no point in wasting money/effort chasing these few residents, who obviously just don't want to pay!
 
The AON has a good presentation on debt recovery. The statute of limitations is six years typically. It is important to use a solicitor to start debt recovery proceedings against non payers.

It is a more expensive process than imagined and while you should always aim to recover legal fees you may not. Select a few choice targets. People with jobs, cars and holidays who obviously can afford it. If they are the sort of people to shoot their mouths of then even better as they will provide free advertising that legal action will ensue. This should motivate a lot of other people to pay as well.

There may well be people who cannot afford it and are literally poor. However, this is not the directors fault. It not the job of the directors to decide a persons level of affordability or asses their finances. The courts will decide that. Hope that helps when the time comes to make difficult choices.

You can get further judgements called judgement mortgages and rent receiver which may provide incentive.

Obviously any bill that is not enforced wont be paid. I wouldn't pay any bill if I thought I could get the services for free without consequence.
 
Thanks lantus, any chance you have a link to that presentation?

Statute of limitations, six years - stupid question time, does that mean we can only pursue a legal channel for the past six years?
 
Presentation referred to by Lantus:
[broken link removed]

If only 5 of 100 members are in arrears, you are probably in a better position than the vast majority of schemes. It means that you can focus your endeavours of debt recovery. If there has not been very active engagement with these debtors and solicitors or debt collectors have not been involved, your first step should be to write to these members requesting the overdue fees be paid or that they engage with the management company to arrange a payment plan. You can notify them that if they fail to engage, legal channels will be pursued and the MC will seek to recover all legal costs from them.

For the landlords you could pursue having an equitable receiver assigned to collect the rent. Not an easy way to get your service charge but in some cases the threat is enough to encourage payment.
 
In my experience the directors really must work closey with the solicitor.

It is definitely much easier when you do not have an agent as you are dealing directly with solicitor and most will impart knowledge to you. Be careful of the fees etc as with any profession.
 
Just a thank you to ontour for posting up that link! The site has some very useful info including this. Also monthly meetings which you can attend.
 
If becoming a Director be sure that there is Directors and Officers Insurance in place. It is a protection in the event of a legal case being taken against the Directors
 
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