# Director of Management Company (Residential Apt Block)



## candyman (29 Oct 2009)

Hi,

I have the opportunity of joining the board of directors for my management company for the apartment block i own an apt in. The current directors (2 developers) are stepping down at the upcoming agm. 

Does anybody have any practical experience in this role that could advise me on what, in reality does the role entail? 
Tasks, expectations, powers etc? 

I'm particularly keen to understand any personal liability I may be taking on by adopting this role.

Many thanks


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## round1 (30 Oct 2009)

You will find a lot of good information on [broken link removed]


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## censuspro (30 Oct 2009)

The personal liability of the directors of a management company is usually €2. This can be checked in the Memo & Arts of the company which you can get from the CRO website.

In general, the responsibilities are to make sure that the proper accounts are maintained and that the best interests of the company and members come before the directors interests. You may have to sign off on annual accounts and attend AGM's.

If you own an apartment in the building then it is in your best interests to be a director.


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## J_C (31 Oct 2009)

Hello...

I was a Director of a Property Mangagement Company for 3 years... I was the first Owner-Director after the Developer exited the Management Company. When I became a Director, I inherited a situation whereby the Management Company was de facto insolvent but continuing to trade (which, unless I acted quickly to turn things around, was illegal), and anti-social behaviour by some Residents of the Development was out of control. Over a period of 2 years, I turned the company around from a situation of year-on-year financial deficit, to stable year-on-year financial surplus, and I also firmly dealt with the anti-social behaviour and got the trouble-makers out of the Development (almost always, such Trouble Makers are Tenants rather than Owners, but such behaviour by Tenants often results from negligent Landlords, who don't bother to vet, monitor, or control their Tenants... the attitude of such Landlords often seems to be one of "I don't care what my Tenants do, so long as I get paid the Rent every month"). Criminal Behaviour was also a huge issue, as Drug Dealing was going on in the carparks every night, and a fatal shooting also took place one night, related to Drug Dealing. So I have quite a lot of experience of Property Management, and some of the challenges which face Owner-Directors... particularly the first Owner-Directors who join the Board after the Developer exits. Depending on how the Developer has behaved when it controlled the Management Company, the Owners can be left in a good (rarely) or very bad (common) situation.

At the very minimum, you should download a booklet from the Deloitte (Ireland) website, entitled "Duties & Responsibilties of Directors"... because it needs to be borne in mind that even though Owner-Directors of Property Management Companies are voluntary and usually unpaid, you will still be held fully accountable under the Companies Act, to the Company Members, and you can also be held accountable by the Office of the Director of Corporate Enforcement if the Companies Act is not being complied with.

Being an Owner-Director can be both challenging and fulfilling, but under no circumstances should anyone become a Company Director unless they properly understand their duties & responsibilities, and are prepared to diligently fulfill both. If, for example, the Management Company starts to go downhill and one of the Owners decides to sue you for negligence, the fact of you being voluntary and unpaid cannot be used as a viable defence in Court... once you sign a B10 form, you unconditionally agree to be bound by the Companies Act. 

It is NOT sufficient simply to sign off on the Annual Accounts and attend AGMs... you must ALSO diligently run the Management Company, to the best of your ability, and put in place Management Strategies which will ensure that the company remains commercially viable and protects the Development, both in terms of Property Values and Quality of Living. And if your Management Company employs a Managing Agent, you must ensure that the Managing Agent understands and accepts that he / she reports to the Management Company, NOT the other way round, as is the case with some Managing Agents. Ultimately, it is the Directors of the Management Company who will bear legal responsibility for the state of the Management Company... not the Managing Agent.

So, by all means, it is a good thing to become an Owner-Director of your Property Management Company, but be clear about what you are taking on, both in terms of Corporate Governance, Directors Liabilities, and also the commercial state of the company, in terms of both historical performance and also ongoing operations & the associated financial management. Make sure that you know what work the Developers have left undone in terms of ensuring that the company is commercially stable, and what they have done in terms of ensuring that a proper Corporate Governance framework is in place for the Management Company. And as I said, be particularly careful of the Management Company-Managing Agent relationship... do NOT allow the Managing Agent to de facto exercise Executive Powers which are the legal remit of the Directors of the Property Management Company.

In regard to relevant Law, you should also have some high-level appreciation of - 

* Company Law - The Companies Act - You just need a high-level appreciation of the Act, and the Deloitte document I mentioned will give you that - but I think that reading that document is essential, and also, you can view the Act itself by going to the Oireachtas.ie website
* Contract Law - this is relevant in regard to dealing with Property Owners within the context of the Head Lease which they have signed with the Management Company, when they bought their Apartments / Duplexes in your Development. My experience is that many Owners do not comply with the terms of their Lease... some infractions are minor, some are major... the Head Lease is the 'bedrock' on which the operation of the Management Company is founded, and you must know it in detail if you become a Director. Also, you must have detailed knowledge of the Articles of Association of the Management Company, as these are the 'Operating Rules' which the Management Company must be run by, under the Head Lease, and are therefore extremely important for the Directors to be aware of and to comply with
* Tort Law - Nuisance, in particular - relevant Acts are the Environmental Protection Agency Act (Section 108) and also the Residential Tenancies Act 2004; in regard to Tort, Defamation can also be an issue - sometimes, angry Owners can make dangerous statements on Internet Bulletin Boards and also at AGMs, and they sometimes skirt dangerously close to Defamation - I myself was defamed by an Owner who refused to comply with the terms of his Head Lease, by repeatedly bringing Disruptive Tenants into the Development - resulting from which I am going to sue said Owner for Defamation
* The Residential Tenancies Act 2004 - very relevant in regard to dealing with Landlords in your Development, and bearing in mind that any dealings which the Management Company may have with the Private Residential Tenancies Board (eg, in the event of having to deal with Problem Tenants), will be directly dealt with under the auspices of the Residential Tenancies Act 2004
* The Multi-Unit Developments Bill - this is not yet enacted in Law, it is still only a Bill - but it will have substantial impact on the future shape of the Property Management Market in Ireland, and I think that it is important that you should know about it.

I say that it is important that you should have some high-level appreciation of the Law as it pertains to the role of Directors of Property Management Companies, as should things go wrong in the future and (in the worst case) you ended up in Court, having been sued by one of the Owners at your Development, the Courts would not take much notice of your being voluntary and unpaid.... it is the old story... "Ignorance of the Law is not an acceptable excuse for having breached it".

Bottom-line, being an Owner-Director of a Property Management Company can be very fulfilling, and gives you substantial power over how your Development evolves in the future, but you need to be very clear about your duties & responsibilities as a Director prior to signing a B10 Form and becoming a Director.

If you have further queries, you can contact me on apartmentadvice@gmail.com.

I hope this helps.


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## 10amwalker (3 Nov 2009)

Directors and Officers Liability Insurance is in my view essential if you are embarking on a role as a director of a management company. It does not cost very much, roughly €700 p.a. but it ensures that you are not personally held liable for any costs that could arise due to litigation by another member or by a decision taken by you in good faith. 

As the role of a director is voluntary I feel it is the least the company can do for someone prepared to manage the company. To put it another way I would not countenance taking the role of director without this insurance in place.

Look on www.apartmentowners.ie or attend some of the meetings and you will learn a good deal on the role of directors.


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## J_C (3 Nov 2009)

Yes, I agree with that statement... Liability Insurance for Directors is ESSENTIAL... I always ensured that such Insurance was in place when I was a Director. However, such Insurance does not compensate the Directors for loss of earnings if they end up in Court, being sued by one or more Apartment Owners, for Negligence... regardless of the outcome of any such possible Court Case.

So, Liability Insurance is a GIVEN, but also, advance knowledge of the duties & responsibilities of Directors, and at least a high-level knowledge of the relevant areas of Law, is (in my experience), ESSENTIAL.

Also, it must be borne in mind that Directors MUST, under the Companies Act, prepare and distribute an Annual Report... it is not sufficient just to sign off on the previous year's Audited Accounts and attend AGMs. Based on what I have found in quite a number of other Management Companies (other than the one that I myself ran), many Directors do NOT prepare an Annual Report, and they DO think it is simply sufficient to attend the AGM and sign off on the Audited Accounts. Such a belief is mistaken and is a direct breach of the Companies Act.

So... it's certainly worthwhile to become an Owner-Director... but if you do so, make SURE that you are fully informed of your duties as a Director... Strategic, Commercial, Operational, Financial... and your obligations under Law.

Best wishes.


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## Cruiser1427 (3 Nov 2009)

I've been there and done it before, unless you've alot of spare time your looking to fill then i'd give it a miss... Can be a nightmare thats very hard to get out of once your in, especially if anything happens during your tenure!


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## 10amwalker (5 Nov 2009)

Cruiser, while I completely understand your sentiment, at least you did become involved and played an active role in the management of your company. 
Yes it is time consuming (and never dull). If members do no become active directors, the complex will stagnate even with the best managing agent in the world !! ( Oh, how I would like to find one of those)

Active directors play a vital role in shaping the future direction of the management company and your complex over time will improve by having structures and processes in place. 

It is my belief that all members should be involved for a period in their management company, either as a director or as a committee member. Members do not realise what is involved until you have the "t shirt" yourself.

The other point to remember is that you are not alone- you should ensure that there are several directors and committee members to share the work with.
Go for it !!


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## candyman (10 Nov 2009)

Some good information here. Thanks JC for the in depth breakdown. Appreciated.

Would like to hear any other stories from people who have/are directors of their management companies?


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