# Becoming directors of mgmt. co.



## NewbieAL (18 Jul 2011)

Hi

Quick question that I need help with please....

Management agency wants owner occupiers to become directors of management company. It's a very small complex and everybody is very reluctant to take this on for various reasons, mainly inexperience.

The existing directors were the owners of the company who built the estate, now gone into receivership. In fairness to the management agency, they do organise annual meetings and approval for budgets etc so there is plenty of contact between agency and owners of the apartments.

I'm wondering do the owners HAVE to take on Directorship? If so, what happens if people are reluctant to take this on, can it be enforced? And if we do take it on, legally what are we liable for?

Has anybody got any advice or perhaps been through a similar situation.

Thanks


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## zenga (19 Jul 2011)

Every owner in the developement has a share in the management company. It is essential for some of the owners to become directors of the management company for a number of reasons

The directors of the management company decide everything regarding the day to day running of the developement. i.e whether to provide certain services, carry out certain projects, preliminarily agree the budget etc. The managing agent then acts on these decisions and ensures that they are carried out. This is essential to ensure that the developement is ran smoothly, effectively and that the owners are getting a proper service.

If you dont have an owner(s) on the board of directors you can have service charges levied on all the owners for services that may either not be provided or will be provided insufficiently

Another issue is having a developer as the directors of the company. A lot of the recently completed developements in and around the dublin area constructed during the boom were completed to a insufficient standard. This has resulted in a lot of structural repairs being carried out 10 - 20 years earlier than expected. This issue is a particulary hot topic this year as the MUD act which came into effect in April has instructed that all common area's (i.e the apartment block structure and all gardens etc) must be handed over within six months of it being enacted (End Sept 11). In order for this to happen the management company must take responsibility for the upkeep of said common areas. If you have no owners on the board of directors this will result in the common areas being handed over to the management company (the owners) in a substandard state, resulting in greater costs to the management company in the future.


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## NewbieAL (19 Jul 2011)

Thanks a million for the detailed reply. 

If I chose to be a director, what reponsibilities do I have, aside from instructing the management agent / involvement in budgets etc. I am liable for any bad debt in the complex? I know that there are a number of residents not making any attempts to pay fees, where does this leave the directors?

Tks again.


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## mathepac (19 Jul 2011)

NewbieAL said:


> ...   I know that there are a number of residents not making any attempts to pay fees, where does this leave the directors? ...


Issue instructions to the managing agent to begin legal  proceedings against them and have judgements registered against  the properties of defraulters. This prevents sale of the properties until the judgements are discharged. They may also have specific services removed from them if they are in arrears.

For specifices on the duties and responsibilities of management company directors, refer to [broken link removed] and the memorandum and articles of association of the management company.


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## zenga (19 Jul 2011)

NewbieAL said:


> Thanks a million for the detailed reply.
> 
> If I chose to be a director, what reponsibilities do I have, aside from instructing the management agent / involvement in budgets etc. I am liable for any bad debt in the complex? I know that there are a number of residents not making any attempts to pay fees, where does this leave the directors?
> 
> Tks again.


 
You have your role in a nutshell here really. As the other poster stated, if you instruct the managing agents to send them to debt collection etc they will do all this from you. You are protected by Directors and Officers Liability insurance and I would ensure that this is in place before taking office.

If the managing agent is worth their salt they will already be following all this up already. A lot of these issues can be dependant on how the lease was drafted (this is the legal document you sign when you buy the property stating house rules, how the management company will be ran etc). 

For managing agents this is their bread and butter and they are generally happy to advise and do the best thing for the developement.


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## bertie1 (20 Jul 2011)

I own a property in a gate complex .The builders had a management agent running it , but the owners were unhappy with the service & over 50% stopped paying the fees. We took over ourselves , halved the management fee over time from 1500 a year to 700 this year( that still includes 200.00 per unit in the sinking fund, took on a lot of the work ourselves like organising cleanup days for the common area 2/3 times a year , painting , clearing weeds etc. now 95% have paid up the other defaulter has been chased through the courts. In general the owners are a lot happier , have less charges, contribute a lot more and at the end of the day , it is their place they live there .


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## zenga (20 Jul 2011)

bertie1 said:


> I own a property in a gate complex .The builders had a management agent running it , but the owners were unhappy with the service & over 50% stopped paying the fees. We took over ourselves , halved the management fee over time from 1500 a year to 700 this year( that still includes 200.00 per unit in the sinking fund, took on a lot of the work ourselves like organising cleanup days for the common area 2/3 times a year , painting , clearing weeds etc. now 95% have paid up the other defaulter has been chased through the courts. In general the owners are a lot happier , have less charges, contribute a lot more and at the end of the day , it is their place they live there .


 
That sounds like a very good success story, However I would feel you are the exception that proves the rule.  Everything you state is 100% true, if people living in the developement took a little more personal responsibility regarding their own property and surrounding areas you could easily cut down on the management fee as repairs and maintenance, landscaping, cleaning and window cleaning can be major budget items. There is also an awful lot of time spent by the management company trying to mediate between two different owners over noise disturbances etc

However, where a developement is extremely large, for example it would be incredibly difficult to get some owners to pull their weight and it would be incredibly hard to manage it anyway.

I would guess from your comments that you are living in a mainly if not exclusively owner occupied developement and that the developement is mainly houses or duplex units??


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