# Management company charging interest



## computerman

Our board has changed management companies. The new management company has sent out invoices stating that the "old" way of paying by 2 by annual installments will incur a 50 euro charge. In addition interest will be charged on outstanding amounts.  In staad they require the annual charge to be paid up front within 30 days from the invoice date.

Can someone advise if this is allowed? Should  the management co by offering credit terms or charges be regulated?

Any advice appreciated.


----------



## shesells

I think you are referring to changing to a different management *agent*. The agent is retained by the Management *company* of which all owners are members, to administer the day to day running of your development.

Regarding interest, it is not generally collectable on management fees. Check your lease to be sure but I know that our Management Company has had to take legal action against a handful of owners for non payment of fees over a prolonged period and a court will never award interest to the Management Company.

What is the general financial state of your development? It could be that there is a shortage of funds needed to pay the essential services such as insurance and refuse and they are trying to get in as much money as possible as fast as possible. Or it could be that your new management agent is trying to minimise the work they need to do to collect fees.


----------



## computerman

One apartment out of 22 has a husband and wife.  Both co opted themselves as directors.  they then dismissed the old managing agents and appointed new ones.  The new agents subsequently increased the managing charges.  

In the past the charges were paid in 2 installments - no problem there.
The new agents now want the full amount paid within thirty days of the invoice being issued. You can pay by 2 installments, but there will be an admin fee of 50 euro.

In relation to outstanding amounts, they now intend charging interest.

There is money in the kitty, so its not as if the company cant pay its way.

Im wondering on the legality of the interest charges and the admin fee.


----------



## jpd

you would have to read the small print in the contract.  Why not get yourself appointed to board?


----------



## shesells

For a start if the husband and wife only own one apartment they are not entitled to both be directors as they only share one membership of the management company. Directors can also only be appointed by an AGM,

The fees aren't set by the agents, they are related to the budget for the development and that budget has to be approved by the directors. As a member of the management company you are entitled to see this budget and it should be approved by an AGM.

Check your lease to see what it says about charging interest on fees. I know it is not legally enforceable in the majority of cases. Regarding the admin fee, the agent charges the management company for its services, you should not have to pay twice!


----------



## shesells

jpd said:


> you would have to read the small print in the contract.



 Where would the contract (lease agreement) allow for the behaviour of different management agents? Our lease says we agree to pay management fees. Our MC pays a MA to collect the fees as part of their administration of the development, there is no way an owner should have to pay again!


----------



## 10amwalker

There is a clause in our leases that allows 15 % interest p.a. be added to outstanding service charges each year. The Board have found this a particularly good device in assisting the service charges be collected. 

However I would not be in favour of any charge for paying in two installments. 

Our management company allows monthly standing orders.  I am aware that some managing agents do not allow standing orders however it is up to the Board of the management company to insist that flexible payment methods by their members are allowed and facilitated.
Surely it is better to be receiving money into the company on a regular basis- it does help with cash flow.

Shesells- if there is an interest clause in your lease surely that is enforceable ?

I agree with jpd suggestion: join the Board.. a management company can usually have 7-9 directors. The husband and wife team would I imagine be delighted with some help..


----------



## shesells

If there is an interest clause it should be enforceable, there isn't in the majority of leases I have heard of. However, a judge may decide that the interest rate is excessive and may reduce the enforceable amount.


----------



## Sconhome

At our recent AGM the board of directors and shareholders of the management company voted to accept a proposal to charge interest on past due accounts and to levy a charge on standing order payments where the management fee is spread over a year.

This is perfectly legal as it is voted democratically into the company agenda. With the amount of arrears building up in unpaid management fees, a penalising levy would have been introduced on those who do pay the fees in order to make up the shortfall in accounts.

Also voted in was the decision to elect debt collection on these accounts.


----------



## purpeller

In difficult times, it's going to be even harder to get people to pay their service charges.  Agents and companies have to be more flexible, not less!

My development offers quarterly, twice a year or all at once, with a small discount if you can pay it all in the first quarter.  My lease does allow for charging interest, at the decision of the board of directors.


----------



## Magpie

computerman said:


> One apartment out of 22 has a husband and wife.  Both co opted themselves as directors.  they then dismissed the old managing agents and appointed new ones.  The new agents subsequently increased the managing charges.



The members must have voted them in, thats the only way it happens. How many didn't bother to turn up? Did anyone else volunteer to be directors? Its not an easy job, its time consuming and you do it for free.


----------



## computerman

I have just found out that husband and wife are both signatories on the cheque book......................


----------



## Magpie

They would be if they are both directors. The questions are...who nominated them, who voted for them, and were there any other candidates for the position?


----------



## mathepac

To OP I suggest you and other property owners in the development get together, consult your Memo and Articles of Association (and a lawyer if necessary) and call an EGM of the management company. The developments sound strange at best, sinister at worst.

Are you positive that they only own a single property in the development? Are there any connections (family, commercial) between the new management company directors and the new managing agents?


----------



## shesells

To me there's a company law issue, you need to have two directors at least (I stand open to correction on this) but if they only own one unit then that's only one membership of the management company (unless you are in a development with "golden" members) so they should not both be directors. Check www.cro.ie to see what paperwork is filed for the company, it might help shed some light on the issue.


----------



## Magpie

You do need 2 directors, which is why they could have both ended up being them if no-one else was willing to do it.


----------



## shesells

Magpie said:


> You do need 2 directors, which is why they could have both ended up being them if no-one else was willing to do it.



Yes but the directors need separate memberships of the company. If they only own one unit then they are only entitled to one directorship.


----------



## Magpie

My point is that while they may be entitled to only one directorship, the members of the company may have been relaxed on that fact if no-one else was willing to step up. The members must have voted them in, meaning that they don't care whether they are entitled to one ownership or 2.  Seems like the need to have 2 directors would have over-ridden any concern on memberships.

My experience of these things is that while members like to complain after the fact, not many are actually willing to do anything to run the company. I am guessing here that the husband and wife team were the only people willing to actually get their hands dirty.
OP for example, was he even at the AGM? Did he not vote for the directors? Or volunteer to take one of them himself?


----------



## shesells

It's not up to the members to decide to relax the law. Breach of company law is a criminal offence. There's a lot more to being a director than a lot of people think, the responsibilities are huge for no pay and a whole load of grief. Having said that, I've been a director since we took over the development 5 years ago.


----------



## mathepac

Magpie said:


> ....  Seems like the need to have 2 directors would have over-ridden any concern on memberships...


Incorrect - eligibility to attend AGM / EGM, to vote, participate in the business of the management company or to be available for appointment or co-option as a director are all dictated by the registered Memo & Articles.


----------



## Magpie

I understand all of that, being the director of a management company. What I'm saying is if there were no-one else available to take a directorship, the other option is not having a mgmt co. Which is not possible. And as you imply, a great number of people involved in these things do not understand company law or their responsibilities as directors.

I'm not saying it is a good idea, what I'm saying is it is entirely the fault of the othe members of the company, including the OP. Its very easy to complain about these directors and what they are doing, not so easy to actually have taken some responsibilty for themselves.


----------



## computerman

In relation to this development, there are 20 units, all houses - no apartments. 
Two houses were sold last year, as it happens they belonged to 2 directors (not related -just neighbours).  The old management co approached me and asked if i would consent to being a director. I agreed conditionally.  (If another director came along I would resign).

I subsequently completed the relevant forms.

"hubby" moved in to the sold unit and became second director. Next thing I get a call from the old management agent, telling me that hubby removed me from the directors (no notification) and put his wife in in place.

They subsequently changed management agents on the basis that the old agent was too expensive. A new invoice arrives from the New management agent increasing the charge by 50 euro, and insisting that the charge be pain in full within 30 days or interest would be charged. 
In addition the letter stated that if we wanted to pay by installments (as we always did) there would be an additional charge of 50 euro.

Hence my original query.


----------



## purpeller

Something sounds dodgy there.  Depending on the memos and articles, directors can be appointed by the board of directors without an A/EGM but it would be standard for all directors to attend AGMs and for the longest serving to resign.  However, in practice, it can happen that they are immediately re-appointed because there is no one else willing to do it.  

I suggest gathering up your other neighbours and calling an EGM to discuss all of it formally asap.


----------



## shesells

purpeller said:


> Something sounds dodgy there.  Depending on the memos and articles, directors can be appointed by the board of directors without an A/EGM but it would be standard for all directors to attend AGMs and for the longest serving to resign.  However, in practice, it can happen that they are immediately re-appointed because there is no one else willing to do it.
> 
> I suggest gathering up your other neighbours and calling an EGM to discuss all of it formally asap.



Precisely. It's your management company, and it's in the best interests of all owners that the law is being complied with and everything is above board. Does not look like it is in your development. As it's the MC that will be in trouble if something is as dodgy as it's sounding to us, it's important to get it sorted asap as it's next to impossible for anyone to sell when there are issues like this.


----------



## computerman

Interesting development,

I just received a summons thismorning, for last years fees, and this years fees in full which were due on the 10th of April last.  Id say, the post is being watched!!

Any one have an idea where I could get a copy of the lease?

also, the summons has a date set for next month, however, I thought such summons had to be stamped by the registrar' office before being sent out.  Am I correct in this?


----------



## shesells

The lease was the contract you signed at purchase. You should have been given a signed copy by your solicitor?


----------



## computerman

I bought the property 20 years ago, and the original solicitor is long gone.  Any way it transpires that the bank have a copy even though the mortgage is paid off.

I spoke to the old M Agent this morning - a mind of information!!!  Transpires that last agm did not have a sufficent members attending to have a agm.

Their were 3 tenants in attendance, so Im looking for proxies notes.


----------



## pbcup

Correct me if I'm wrong here, but imho there is no reason why a husband and wife sharing an apartment may not both be directors of a management company.

They will only have one member's vote between them but I am not aware of any law prohibiting this.  The only way I can think of that they may somehow be breaching the law is if the memorandum and articles of association of the particular company restrict the directors to members of the company and further stipulate that only one director per membership is allowed.  I've never seen such M&A for a apartment block's management company.


----------

