# Management Company mess



## George (1 Dec 2005)

Hi 

I've just been talking to my solicitor about the management company who run the development we are buying the house in.

He says it is a mess and does not recommend we purchase the house.  There is no 'block policy' etc, the management company is very ad hoc

Unfortunately, we are not really in a position to pick and choose and really want this house.

Our solicitor is going to tell our bank that the deed is not perfect due to this issue.  Will they retract their offer of a mortgage now do you think?

Thanks for you help
George


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## Vanilla (1 Dec 2005)

If the mge company is in a mess, then why would you want to buy? They are responsible for maintenance and general upkeep ( which aside from the obvious will also affect resale values), the insurance ( so what happens if there is no insurance and there is a personal injury action), the yearly accounts (if the accounts arent filed, the company will be struck off- this is the company that OWNS the common areas, stairwells, roof etc etc and it can be very expensive to reinstate). If it is very ad hoc is the annual service charge even being collected? If you buy and become a member of the management company are you willing to sort it all out? Look at the real picture here before you do something rash.


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## George (1 Dec 2005)

I would think that a management company or lack of a proper one can be fixed and fixed quickly.

My primary worry is that the bank will now not agree to lend us the money as the deed is not quite right... 

The reason we want to buy the house is that it is the best and probably the only one we can buy in our price range that suits our needs.


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## Vanilla (1 Dec 2005)

> I would think that a management company or lack of a proper one can be fixed and fixed quickly.


 
What would you do to fix it?


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## George (1 Dec 2005)

My understanding is that it is run by a residents association.  It would appear that they need to be made aware of the issues my solicitor has raised.  

Perhaps this is naieve on my part but surely it would be in the residents interests to sort this out asap!


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## asdfg (1 Dec 2005)

It appears that this is a development of houses (not apartment block). It is normally a condition of planning that a management company is to be set up as estates are no longer being taken over by councils. The minister responsible (Dick Roche - I think is currently looking at this situation as it is his opinion that the planning condition is illegal. The management of the development lies with the developer until they complete the estate and pass it over to the management company (house owners). You may have to pay the first years management charge in advance (paid when handing over final cheque to builder). The builder should also provide a detailed breakdown of costs. 

You are responsible for insuring your house and property in the normal way. 

The management company takes over the responsibilities of the council i.e.

pay public liability insurance
build up a fund to provide for unforseen circumstances (burst pipe on road)
Grass cutting of public areas etc

Thats my understanding of it, but legal contributors may be able to give additional info.

I misread the original post. I thought they were buying a new house in a new development.


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## Vanilla (1 Dec 2005)

All management companies are indeed run by the residents once the estate is completed. So although you mention making them aware of the problems, they are in fact the cause of the problems already. To have a successful management company you need to either have a committed residents association ( this means you AND others) or outsource the work ( which may mean a higher service charge). As one resident you will find it difficult to resolve all of the problems yourself. And then remember that the same issues will arise year after year. Often these things are left up to the same people year after year as noone else can be bothered. And it is not a rewarding task, it is often time consuming and frustrating as more and more mge companies come up against the problem of residents not paying their service charge etc. If the mge co is in a mess, this means that there are no committed residents. Your solicitor is doing you a favour- listen.


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## MOB (1 Dec 2005)

I agree with Vanilla but just want to take up one small point:  the solicitor says "there is no 'block policy' etc,"   but if this is not an apartment development there is no "block" to insure;   Of course, if there was a "block" and it wasn't insured, I would indeed run a mile.

Dept of Environment appear to be moving to a policy of requiring local authorities to take housing estates in charge (if Dick Roche is to be believed).  I don't think that I would qualify my certificate of title to a lender on the basis only of public open space etc. not being properly administered by the management company.  However, even if I did, I don't think a pragmatic lender would withdraw finance for this reason.    It is not terribly different to a decision about buying a house in a rough area - matter for client (and lender) to make an informed judgment.


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## ClubMan (1 Dec 2005)

MOB said:
			
		

> I agree with Vanilla but just want to take up one small point: the solicitor says "there is no 'block policy' etc," but if this is not an apartment development there is no "block" to insure;


 I have come across non apartment townhouse developments which have block insurance. In some cases individual townhouses only and in others including some two story houses over a separate basement unit.


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## ZEGAR (1 Dec 2005)

Dont let the excitment of buying the house cloud your judgement and lead you to make a poor financial decision


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## ruthf (1 Dec 2005)

Public liabilty insurance is required for common area's in any residential development run by a management company.
If there is no insurance in place and an accident happens in a common area all property owners are liable, not a situation you want to get yourself in to. 
Im not in insurance but have had recent experince in attempting to purchase a property where the management company had been struck off.......our solicitor advised us to steer well clear!
If the management company is as bad as you think then they could well be behind in submitting annual accounts and could also be struck off somewhere down the line, not a straight-forward situation to rectify to say the least.


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