# Receiver sharp practice due to Mgm Agent error - way forward?



## Tea and Toast (29 Jan 2015)

Long time lurker, first time poster!

We are in a relatively new estate built during the Tiger with 1/2 houses sold due to the developer going belly-up.  The unfinished houses remained unfinished/unsold until recently but the management company/agent continued on as best it could, and did a reasonably good job.

The problem is that while the Receiver agreed to pay maintenance fees for unfinished houses (gardens/parking spots/other costs), the management company incorrectly twice apportioned a cheque received from the Receivers for outstanding service charges due.

The Solicitors for the Receivers argue they paid the service charge debts as per the Requisition on Title documents 37/ MUD Act replies as individual properties were sold. They also argue the Management agent incorrectly calculated and undercharged for the service charges for the relevant years and that we were now asking them to make it up.

Records show that they were initially correctly invoiced (!) and the Management Company’s Solicitors contend that that money is still due irrespective of the admin mistake.  The Management Agent then notified the Receivers that they would be billed for the total outstanding debt when they look for MUD Act replies on the remaining unsold properties.  The Receivers are obviously not very happy with that.

A deal is being spoken of whereby the Receivers solicitors are saying they will pay the correct service charges on the remaining unsold properties as originally agreeed but only 33% of the oher debt (for arguments sake EUR10,000 of EUR30,000).  The estate hasn't yet been taken in charge by the Council but we exect this to happen within 6 months.  Some on the Committee fear the Receivers will simply walk away when the estate is taken in charge and only legal action (and consequent legal fees we can ill afford) will resolve this.


In summary through the management company's error, the Receivers are trying to take advantage.  Is this normal sharp practice by Receivers?  (As further background, the Committee has also sent legal letters to other residents for unpaid fees stretching back years but not approaching the level of this debt.  The Committee will obviously have to justify whatever approach is taken at the next AGM i.e. justifying a large write-off but chasing our neighbours for unpaid fees)

Has anyone any suggestions on how to plot a way forward?


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## Leo (29 Jan 2015)

Take legal advice. The receivers will do all in their power to get the best return possible, that is their job, it's what they must do. You need to get clear advice as to how best to move forward to minimise the cost of the past errors.


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## lantus (29 Jan 2015)

Very complicated scenario and existing law was never meant to deal with this which makes it even harder.

Unless the taking in charge process results in the end of the OMC as outlined in the contract lease then there is nothing to worry about in that regard (too much!) What will the coco take in charge? Has the process started? Is there a bond? You will need to push your local authority on this. The receiver will be looking to get the bond as much as possible.

IF your OMC will remain in place after the taking in charge which is very likely (and I will assume so) then the most critical issue is the taking in charge process for all the common areas. Depending on when the receiver was appointed they should probably of done this already. If your solicitor has any good sense they will be using the unsold units as leverage to ensure the receiver completes this. Typically there is a common ground lease agreement contract which will outline several conditions as to the limiting time limit. That could be a major issue so I would investigate this and start applying as much pressure to bear as possible.

Once those units are sold your leverage will drop to zero and the law will become very grey...The receiver may not even have any legal responsibility to undertake the transfer subject to their court appointment. Get good legal advice on this.

In terms of fees it sounds like you have a relatively compliant receiver who is suffering from very bad paper work, agent & directors. How could such a major error of been made? Get advice because without seeing every piece of paper issued and when there is no way to make any judgement whatsoever.


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## Tea and Toast (29 Jan 2015)

Thankss for the reply.  The Management Company's/Committee's solicitor has advised negotiations/meetings/talking but admin errors happen in every walk of life, correct invoices issued and we do have the leverage of remaining houses.

Estate management company will remain in place as there will be some common areas.  The CoCo will take over the roads once they're completed - to my untrained eye they're 99% done with perhaps only top-layer tarmac & road-markings remaining.  I think the taking-in-charge process is/was runnign smoothly enough - the question really is the service charges due on houses already sold.


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## lantus (29 Jan 2015)

If when selling their units the receiver made a MUD act requisition and the OMC provided details of any outstanding fees and these were paid in full by the receiver then its more than a simple invoice error if these occurred on multiple units. The receiver is no longer the owner of the sold units and has no legal liability as they are no longer a member of the company. The new owner will throw these new bills in the bin as they were confirmed as cleared by the OMC and all solicitors upon the property changing hands. You can't just conjure up more money and if it went to court I doubt the court would look favourably on the OMC in this matter.

Non payment by existing unsold units is slightly different. Again its going to depend on all the paper work. If the correct invoices were issued then how can there be this issue unless there invoices were re-issued with different amounts later on? If I was the receiver I would probably try to force this issue to court as by the sounds of it I'd have a good case to refuse payment of wrongly invoiced service fee bills. What will happen in reality is that they simply wont pay and force the OMC to peruse a costly case against them. You will need a water tight case to win against a receiver.

I'd be more angry with the idiots who put together all the wrong bills. If this was the agent I'd be screaming down his throat and getting ready to cancel his contract. Its not rocket science. The occasional wrong invoice happens but large scale errors is gross incompetence.

Keep getting good legal advice but I wouldn't count on seeing all that money again!


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## Tea and Toast (29 Jan 2015)

Thanks Ianthus.

The Receiver has sold some of the units but has others left unsold - they are still members of the company.  I'm unsure of the exact process; it has seemed to me that invoices issue in the normal (routine) manner for services supplied but then under a MUD act requisition ... and here I am very ignorant ... a cert of sorts is supplied by the OMC stating that all dues are paid, in respect of ... who exactly .... a) the relevant house or b) the seller?  If b); then could we not simply recoup the unpaid fees on these houses?

(If I could complicate matters further slightly, the Directors were appointed by the Receivers as at the time of appointment they (the Receivers) had most shares in the Company (1 share per house (sold or unsold)). The Directors more-or-less take their cues from the Residents Committee. Actual residents now make up the majority of shareholders in the company and within a few months, the Committee will be formally appointed as Directors).  So far, so normal .... !?


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## lantus (29 Jan 2015)

lets say I own 2 units and I sold one in 2010. I am still a member of the OMC and liable for fees on the unit I own. The OMC realises they have made a mistake on past fees and sent me a letter for fees owed on a property I no longer own. I don't own that unit anymore and have no legal connection to it. The ship has sailed and it is way to late. I do still own my current unit but the only fees I am liable for are the fees attributed to that unit. Please take legal advice but I would be gobsmacked if you could make me pay fees for a sold unit by adding them to another unrelated unit. If it were me I would throw them in the bin and let the OMC waste money trying to take me to court. I would simply say that I don't own the unit in question and the case would end.

New Debt recovery process no requires a very extensive paper trail to be produced by the OMC to justify their case.

Presumably if I sell a car then the owner can come after me to pay for his insurance and tax as well? No, because it is not mine anymore.

Sounds like a right mess and to be honest its not clear what has happened except someone has messed up and you didn't get money owed at the point of sale. If the OMC stated that no fees were due then too late if that is the case. The OMC made a legal declaration and that will almost certainly stand unless the OMC wants to go to court to try to rectify its mistake. You can't have any liability after you sell something.


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## Dermot (29 Jan 2015)

Wish you well Tea and Toast and lantus has been through the mill and knows what he is talking about from reading his posts over the past while.  I am just sick of the way the whole Management Co thing being run by the busted developer/ the busted developer will not hold meetings/fees not being collected and no work being done. No work was being done when the fees were being collected but the money was disappearing. Council will not take over the development/developer will not co-operate with the council either. Most owners not willing to bother about. Banks who own properties cannot talk because of data protection. Management will not respond to anything. Management Co accountant will not correspond with members. Corporate enforcement have been given the facts but are no help. Oh what a mess. Just a bad experience that is ongoing.


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## lantus (30 Jan 2015)

Totally agree Dermot. There are far too many grey areas when you involve receivers, liquidators, banks and bankrupted developers, unfinished estates and missing bonds both legally and practically. The government has really done nothing to address these and the MUD is insufficient as it currently stands. The ODCE only handle company law enforcement which is NOT the MUD act so already things are breached over inconsistent boundaries of responsibility. All he various issues above are highly bunkered and almost never want to talk to one another.

A lot of issues stem from the use of a standardised company structure to create the OMC. We don't use normal loans to buy a property, we have highly specialised custom products called mortgages. However, the company that looks after and maintains and insures your unit and ultimately makes sure it has a value and can be sold is an off the peg company solution. If the same company that sells plastic coat hangers goes bust we may not really care but if an OMC gets struck off it affects potentially hundreds of people and potentially millions in mortgage packages.

Without a doubt there needs to be additional and specialist statutory mechanisms put in place as an addendum to the companies act to re-enforce management companies where they are responsible for domestic property. The MUD act also needs an overhaul to provide consequences for non compliance as currently while it may be the law that a member always provides their most up to date address there is no consequence if they fail to do this. A bit like saying its against the law to drive at 200mph but no points or fine if you do.

OMCs should have the power to make requests for addresses to mortgage providers, the PRTB, revenue and other bodies with data protection act amended accordingly to allow this. There should also be some sort of determent to it happening in the first place like a fine that can be added to the service fee.

Receivers needs to be legislated with regards to their obligation and duties when they are appointed over a developer where an OMC has been created for any development they have built.

Ultimately service fees should be tied into mortgage payments as they do in America and the cost and future rises made to be part of the affordability when buying. With the bank collecting the money and paying it direct to the OMC it solves a huge number of problems in asking residents to effectively enforce payment from fellow neighbours. It also ensures that people think much more carefully about buying such units. We don't want cowboy investors who know from day 1 they will be able to get away with not paying.

Report is being written as and when I get a few minutes.


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## mtp (2 Feb 2015)

U are indeed in a very complicated area .

1 The Receiver OWNS no House - THE DEVELOPER DOES. Under our lease the developer liable to perform all maintenance until common areas transferred to the OMC.

2 Not clear at all what u mean by words - 'the management company incorrectly twice apportioned a cheque received from the receivers fro outstanding service charges due '  From who? The new owners of the unsold houses? Or were the payment by receiver passed back on to the existing homeowners ? .

2 Receiver is arguing that owner had been undercharged. ??

3 Under our lease                                                               

(1) Service charge payable to the LESSOR/ Developer) NOT the OMC making the OMC accounts in fact DEVELOPER ACCOUNTS for this estate. This may explain the deal mentioned in your message - receiver will pay one third BUT under our lease Developer liable for maintenance of the land until the common areas are transferred to the OMC. They still are not.

(2) The developer/lessor set the service charge each year for 0.2percent of the maintenance cost of the previous year. The final arbiter Auditors certificate.That was the case until MUD Act came into force and Member Annual Meeting now set service charges pursuant to S17 18 and 19 of the MUD Act

3 the Statement of Income and expenditure attached to OMC  filed financial statement ..from  02 to 07 (when developer went to bank that apptd receiver) revealed that we were overcharged - 0.2 per cent of the total expenditure of a year much less then the invoiced s charge

4 in dec 07 excess of fund in member account of over 50 grand (but mixed monies ) This may explain this deal u talk about - receiver liable for one third. If your lease the same ie developer set the s charge and collected them thru the OMC then in fact mixed monies - developer monies - his decision and service charge payments but overcharging under lease. I suggest u get the handbook for OMC published by the ODCE. See chapter 6.13 p 21.

5 In 08 Arrears of service charge cropped And continued to rise but the auditors were unable to furnish list of RECEIPTS of service charge for 11 last time developer  auditors also audited the OMC accounts. ?????

6 Then list of o/s balances from the Developers AGENTS in July 13 did not agree with the statement sent by the same agents to the same homeowners for the same period. In short the statement of o/s balances send by agent to OMC advised of arrears to the tune of 600.00 in one case but the homeowner statement from the agent for that same time quoted a 00 balance.

7 Ur problem is all about service charges and only people with control over that  are homeowner/ member of the OMC at annual meeting under S17 18 and 19 of the MUD Act. The Receiver  is not a member of the OMC . As for the Developer ?? 

9 If the term of your lease is as above that

* developer collected the service charge thru the OMC for your estate
and developer liable for maintenance until common areas transferred to the OMC then beg the questions
of
1 paying any service charges for maintenance until those common areas are transferred to OMC?

and

2 Are the houses and land 'well charged' by the debenture on foot of which receiver appointed?.

-
*
*


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## Tea and Toast (3 Feb 2015)

Hi MTP, thanks for your input.  Could you tidy it up as it's difficult to read understand.  

On my side to clarify; receivers were appointed to the developer's company.  So the Receiver effectively is the developer - added to which, due to the majority shareholding (members' votes of 1 per sold/unsold house) they controlled the OMC.  However they have been good in this regard and the OMC was able to properly function.  

To maintain the appearance etc of the unsold houses, the Receivers agreed to pay their dues for each house.

The incorrect apportionment was a simple case of (using illustrative figures); Bill = 10,000 but amounts paid of  date01/01/10  eur1,000 and date01/01/11 eur1,000 paid. leaving total payable as eur8,000.    However for the MUD Cert, the OMC calculated it as 10,000 less 1,000 less a further 1,000 less the latter eur1,000 again and looked for eur7,000.  Hope this clarifies.


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## Leo (3 Feb 2015)

Mtp, I've edited your post to remove the two full quotes of the OP. If you wish to address specific points, please edit the quote to isolate the points you're referring to.


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## mtp (5 Feb 2015)

Sorry about that ut best . It just U said receiver contending that member being undercharged .

My post is what I discovered when I checked lease (how s charge calculated ) against OMC accounts (expenditure of any given year).

Chapter 6 of the ODCE Guide Book for Owner Man Co deal with account of omc  6.13nd 14. where under lease s charge payable to lessor. 


your reply suggest that current dispute with receiver applies to house being sold and has nothing to do with service charge arrears of existing members.   





Tea and Toast said:


> Hi MTP, thanks for your input.  Could you tidy it up as it's difficult to read understand.
> 
> On my side to clarify; receivers were appointed to the developer's company.  So the Receiver effectively is the developer - added to which, due to the majority shareholding (members' votes of 1 per sold/unsold house) they controlled the OMC.  However they have been good in this regard and the OMC was able to properly function.
> 
> ...


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## mtp (9 Feb 2015)

I am just coming back to u on issue of the management company paying to maintain lands - PRIOR to the transfer of the common areas to the OMC by the register owner - the developer.


Your lease will tell u the position - in ours the common form - Both The developer and the OMC covenanted with me and all other owner that the developer liable for all these maintenance until the common areas are transferred to the OMC. 


The OMC is breaching the covenant in the lease - if it is the same as ours - to member by charging service charges to maintain lands PRIRO to the land being transferred to the OMC. This of course will require the co operation of the Receiver or more precisely his employer THE BANK. The question alos is were land well charged.

I suspect  that the OMC has taken on the developer costs to maintain lands - the debt that arouse to landscapers when the developer was in control of the OMC /- not in receivership. But under our lease  these were and are developers debt . What the OMC is doing - if same lease and d taken on debts for landscaping incurred by developer  is breaching  lease by taking on and charging member for debts not belonging to the com or members.  SSeems


U  say  we need a good prop man co - the prop man co is the OWNER OF THE HOME - u and your neighbours. All homeowners - part of your contract when u purchased to be member of and OMC with responsibility for the maintenance of the common areas . Condition of the PP.


This is all in the control of MEMBER - homeowners in your estate - what the service charge is and what it will be used for. The venue - at the annual meeting  under S17, 18  and 19  of  the  MUD  Act. . No one else can do it.  -Your  choice.


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