After some discussion, Shesells and I are going to do a series of posts on living in multi-owner developments and how to deal with management companies and management agents.
The following is written with the caveat that:
I am not a lawyer or an accountant, so am open to correction. I am an actively involved owner occupier director of my management company. Discussion is made in general terms because each company will have small differences in things like voting rights, apportionment of fees, policies for dealing with non-payment, etc. Make sure to read your own lease and memorandum and articles of incorporation.
I believe every owner and potential owner should read Robert Gogan’s book: An Essential Guide to Apartment Living in Ireland.
Basic difference:
Management company: company owning the development, each owner is a member. Likely called something like “Our development Ltd”
Management agent: appointed by the management company to run the day to day business of the development. This entity will also be a “company” and this had led to much confusion. Examples of management agents (by no means an endorsement) would be Wyse Property Management, ODPM, Smith Property Management.
In greater detail:
Any multi-owner development (mostly apartment blocks but increasingly housing estates too) will have a management company. This is a limited company, subject to the same rules as any other limited company in the State. It is very important to read the memorandum and articles of incorporation, these can be obtained from your managing agent, if you don’t have them with your purchase paperwork, or from the CRO for a small fee. They will give details of how to change things within the company, i.e. appoint new or different directors, voting rights at an AGM, etc.
Each owner is a member of this management company. When you purchase (for convenience I’m going to use apartment here to mean any property in a multi-owner development) an apartment, you will get a long lease from the management company, usually 999 years. READ THIS LEASE THOROUGHLY. It should tell you how much your management fees are, how they are apportioned, detail a parking space if you are entitled to one, etc. Some apportionments are done on space, some are done on the number of bedrooms. Please also note that if you are not the first owner, this fee may be in Irish Punts and bear little resemblance to the figure you are now paying. ONCE YOU SIGN THE LEASE, YOU ARE AGREEING TO PAY WHATEVER SERVICE CHARGE IS BILLED. More on service charges below.
The management company will likely have 2 directors – more are better.
In the initial building phase, the directors will (again usually) be the developers or their associates. It can take several years to get the common areas of the building handed over to the management company from the developers.
The company is obliged to issue yearly budgets and accounts and call an AGM. These accounts are not required to be audited by law but it is advisable and they are submitted to the Company Registration Office annually.
There should be an AGM every year with not more than 16 months between them.
The AGM should be run by the board of directors, not the managing agent. 21 days notice must be given in writing. An agenda will usually be sent out, along with proxy voting forms and details of how to submit items for discussion or new director nominations. A budget may or may not be enclosed with the AGM notice. Often, members with outstanding debt will not be entitled to vote at the AGM.
Ideally, there will be a committee involved in running the development, made up of
a)[FONT="] [/FONT]directors
b)[FONT="] [/FONT]the managing agent
c)[FONT="] [/FONT]owner occupiers
Tenants cannot technically be involved but all valid input should be welcomed.
Committees can be as formal or informal as the members like but it is advisable to keep minutes of meetings. The frequency of meeting will depend on how much active involvement of directors is required but every 4 – 6 weeks is standard. On a personal level, I find there’s plenty of email & phone contact between meetings.
Service charges
As I said above, once you sign the lease, you are committed to paying your service charge, whatever the amount. If you have signed, it is too late to whine about the cost. If you do not pay, the managing agent may be instructed to withhold services (such as meter readings, extra fobs, not replying to solicitor requests during a sale or more serious measures like removing your name from the block policy). Most leases will have a clause stopping you from selling a property until all debts are discharged. The management company can also pursue you through the courts and force you to pay. Most management companies will be happy to take payment in instalments during the year (e.g. a quarterly standing order).
Where management of the development has been lax, these debts mount up and become much more serious.
What does your service charge cover?
It covers a lot, many of which you would automatically fund yourself if you lived in a house. An non-exhaustive list would be insurance, common area lighting, internal and external painting, gutter, window and general cleaning, landscaping, rubbish collection, roof maintenance, fire alarm maintenance, etc. The obvious two things you would not have to cover in a separate house are lifts and your managing agent’s fee. Lifts are costly but essential in multi-storey blocks. The more lifts, the higher the cost. The managing agent may charge a percentage of the budget or it might be a monthly agreed fee. If you are not getting value for money, don’t forget you can shop around and get a new managing agent. The directors have control of this sort of decision but it can and should be discussed at board meetings and AGMs.
The following is written with the caveat that:
I am not a lawyer or an accountant, so am open to correction. I am an actively involved owner occupier director of my management company. Discussion is made in general terms because each company will have small differences in things like voting rights, apportionment of fees, policies for dealing with non-payment, etc. Make sure to read your own lease and memorandum and articles of incorporation.
I believe every owner and potential owner should read Robert Gogan’s book: An Essential Guide to Apartment Living in Ireland.
Basic difference:
Management company: company owning the development, each owner is a member. Likely called something like “Our development Ltd”
Management agent: appointed by the management company to run the day to day business of the development. This entity will also be a “company” and this had led to much confusion. Examples of management agents (by no means an endorsement) would be Wyse Property Management, ODPM, Smith Property Management.
In greater detail:
Any multi-owner development (mostly apartment blocks but increasingly housing estates too) will have a management company. This is a limited company, subject to the same rules as any other limited company in the State. It is very important to read the memorandum and articles of incorporation, these can be obtained from your managing agent, if you don’t have them with your purchase paperwork, or from the CRO for a small fee. They will give details of how to change things within the company, i.e. appoint new or different directors, voting rights at an AGM, etc.
Each owner is a member of this management company. When you purchase (for convenience I’m going to use apartment here to mean any property in a multi-owner development) an apartment, you will get a long lease from the management company, usually 999 years. READ THIS LEASE THOROUGHLY. It should tell you how much your management fees are, how they are apportioned, detail a parking space if you are entitled to one, etc. Some apportionments are done on space, some are done on the number of bedrooms. Please also note that if you are not the first owner, this fee may be in Irish Punts and bear little resemblance to the figure you are now paying. ONCE YOU SIGN THE LEASE, YOU ARE AGREEING TO PAY WHATEVER SERVICE CHARGE IS BILLED. More on service charges below.
The management company will likely have 2 directors – more are better.
In the initial building phase, the directors will (again usually) be the developers or their associates. It can take several years to get the common areas of the building handed over to the management company from the developers.
The company is obliged to issue yearly budgets and accounts and call an AGM. These accounts are not required to be audited by law but it is advisable and they are submitted to the Company Registration Office annually.
There should be an AGM every year with not more than 16 months between them.
The AGM should be run by the board of directors, not the managing agent. 21 days notice must be given in writing. An agenda will usually be sent out, along with proxy voting forms and details of how to submit items for discussion or new director nominations. A budget may or may not be enclosed with the AGM notice. Often, members with outstanding debt will not be entitled to vote at the AGM.
Ideally, there will be a committee involved in running the development, made up of
a)[FONT="] [/FONT]directors
b)[FONT="] [/FONT]the managing agent
c)[FONT="] [/FONT]owner occupiers
Tenants cannot technically be involved but all valid input should be welcomed.
Committees can be as formal or informal as the members like but it is advisable to keep minutes of meetings. The frequency of meeting will depend on how much active involvement of directors is required but every 4 – 6 weeks is standard. On a personal level, I find there’s plenty of email & phone contact between meetings.
Service charges
As I said above, once you sign the lease, you are committed to paying your service charge, whatever the amount. If you have signed, it is too late to whine about the cost. If you do not pay, the managing agent may be instructed to withhold services (such as meter readings, extra fobs, not replying to solicitor requests during a sale or more serious measures like removing your name from the block policy). Most leases will have a clause stopping you from selling a property until all debts are discharged. The management company can also pursue you through the courts and force you to pay. Most management companies will be happy to take payment in instalments during the year (e.g. a quarterly standing order).
Where management of the development has been lax, these debts mount up and become much more serious.
What does your service charge cover?
It covers a lot, many of which you would automatically fund yourself if you lived in a house. An non-exhaustive list would be insurance, common area lighting, internal and external painting, gutter, window and general cleaning, landscaping, rubbish collection, roof maintenance, fire alarm maintenance, etc. The obvious two things you would not have to cover in a separate house are lifts and your managing agent’s fee. Lifts are costly but essential in multi-storey blocks. The more lifts, the higher the cost. The managing agent may charge a percentage of the budget or it might be a monthly agreed fee. If you are not getting value for money, don’t forget you can shop around and get a new managing agent. The directors have control of this sort of decision but it can and should be discussed at board meetings and AGMs.
