# Mgt Fee in Arrears, withhold Insurance Claim?



## uptomyeyesin (21 May 2018)

Hi all,

Would anyone have any view on this potential situation.

Member of OMC owes over five years in back fees. 
Member is making very small payments towards the arrears, if they continue at this rate they will never pay off the arrears. 
Member has made a claim on the OMC block policy. 
If the claim is paid -  

Can OMC deduct any or all of this claim to help clear the arrears?

Or would this be illegal?

thanks


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## Palerider (21 May 2018)

What is the basis of the claim, is it likely to be paid out.

The insured party is the OMC who pay the premium on behalf of all owners who are obligated to pay their levied service charges from where the insurance us paid, this person wants to claim against a policy they should be paying into but are not.

The cheek of some people.

Not sure you can hold back a payout however you can tell them they have not paid the premium so how do they expect to make a claim that will potentially mean increased premiums for the future which the other owners will have to pay for.

If it were me as a Director they would have to pay up their arrears before cooperation would be assured, that is the equitable way to progress this, as you are the insured party you should take this opportunity to get things current in any way possible.


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## uptomyeyesin (22 May 2018)

Thanks for the reply. 
It is very likely the claim would be paid out as it is damage between apartments.
The advice we were given after this post is that we cannot withhold funds as the insurance company would pay these to repair the damage so the funds must be used for that purpose. 
I would like to refuse to allow the claim until it was paid up, but the arrears sum is so significant that we do not believe the member is in a position to clear it. 
We are going to use the opportunity to encourage the member to increase their repayments to a higher value, that might over time get them up to date with current years fees (although it will not clear the previous years fees). 
thanks again for your reply.


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## dereko1969 (22 May 2018)

Could you repay the claim at the same rate as the recalcitrant owner is paying the fees? Say a fiver a week? Might be childish but could work.


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## Palerider (22 May 2018)

You should consider getting a judgment by consent for the current full arrears prior to moving forward, the unit owner is not contributing, have they rental income from the unit ?, why are they not contributing their share ?

Despite your advice I would not cooperate, let them issue legals against the OMC, you have a duty to all members, do not be soft.

Us Irish can gave a unique take on paying service fees, having recently been a director of an OMC I have learned that, I sold my unit and will not buy an apartment in this country again.

You must stand your ground if you ever want this resolved to the benefit Of all owners and the block generally.


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## lantus (30 May 2018)

An omc contract will typically have an overusing clause that services are dependant on payment of fees. 

I would absolutely be happy to process the claim once the debt is settled. 

Once word gets out that members can make no payments and get full services akin to cash withdrawals then don't expect anyone to keep paying. 

A firm but fair approach is required. 

Your difficulty may be that the claim resides on a boundary that may affect a member who is fully paid.


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## dublinaam (27 Mar 2019)

I had this problem before. I did process the claim but then deducted the arrears and paid balance to the owner. In hindsight I regret this as the block premium doubled and they went straight back into arrears the following year. Now at every AGM I stipulate in the pack no claims will be entertained if fees are outstanding at the time of claim.


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## lantus (31 Mar 2019)

What is the damage if I can enquire? Plus repair value. 

Can the fee payers damage be processed independently? What is the policy excess?

I would be looking to only allow a claim from a non payer when they paid up in full. 
It's great to not pay any fees and then make claims. Your premium will likely increase as these are high risk packages.


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## L_earner (11 Jul 2020)

uptomyeyesin said:


> Hi all,
> 
> Would anyone have any view on this potential situation.
> 
> ...


How did this end up? Is it still ongoing?
If the arrears are still not paid up, check the lease agreement for a clause that covers unpaid management fees. Ours stipulates that all overdue fees attract an interest rate of 4% above the "A Rate" of bank interest rates in a given year at compound interest. If the owner falls further and further into arrears, it is tough but you (i.e. the directors) are legally obliged to protect the affairs of the company, and that includes the assets of the owners, i.e. the development that they jointly own. Your annual Financial Statement will have to show this underpayment which is not good, but on the plus side, when the owner sells their apartment, the purchaser's solicitor will write to your company secretary asking if the vendor is up to date with their fees, so you get all the arrears plus compound interest back from the owner when they sell their apartment.


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