Bill to regulate Management Companies for apartment blocks. Overall good bill?

I'm surprised no-one has jumped on this one yet!

The big points are:
- vesting on incorporation (the developer can't hang onto new, in-progress or completed developments)
- the developer must pay the service charge for un-sold units
- no golden shares, majority votes or other unfair voting covenants
- the owners must approve the budget each year
- house rules are part of the contract
- the district & circuit courts have jurisdiction so it's cheaper to collect unpaid service charges and solve disputes.
- the court can direct mediation
- CRO can restore a struck-off company within 6 years instead of 1

Overall it's a good bill but there's still some work to do, especially around completion. It should help a lot of existing developments too.
 
Hi Mark

It is a bit odd alright.

There are many questions and complaints on Askaboutmoney about managment companies.

Now people have a chance to influence legislation to solve these problems, and no one apart from you discusses it.

Brendan
 
Does the legislation provide for existing developments?
Our builder still owns more than half the apartments and is still the director of the management company. He is not paying service charges for the apartments he owns (and they are all rented out!). Is he now obliged to pay those charges and if so from when? e.g is back dated or is from today onwards or something?
 
I'd be very interested to know the answer to this as well as I have just agreed a payment plan for the coming year. Almost half the units in our development remain unfinished / unsold and I don't believe the developer (also the managing agent) is paying for every single unit! I must scrutinize that budget again!
 
As far as I can tell, he'll be obliged to pay service charges on all completed, unsold units from the date the legislation takes effect. Then, within six months of that date, he'll have to transfer the common areas to the management company. Unfortunately, with the current drafting, if he still has more than half the units, he'll still retain control of the company.
 
It only entered the Dail last week so at best, it will become law in the Autumn.
 
There's a link to it on our website: [broken link removed]

[broken link removed]
 

Does approving the budget suggest the owners will be able collectively to prevent being overcharged for their yearly charges bc thats one of the biggest things stopping me buying an apartment/anywhere with management charges? It would be good if there was a percentage above with charges culdnt increase for example from year to year... Apologies if this is covered in the Bill its late and I didnt read it...yet

thanks

Q
 
queenlex said:
Does approving the budget suggest the owners will be able collectively to prevent being overcharged for their yearly charges
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The current draft says that the budget must be discussed at an AGM and voted on. If at least 75% of the owners vote against the budget, the existing budget remains in effect.

It would be good if there was a percentage above with charges culdnt increase for example from year to year
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It's not really realistic to put limits on the increases. If major repair works needs to be done and the sinking fund doesn't have enough to cover it, the service charge must increase. Preventing it in law would just mean the work wouldn't be done.
 
This appears to be a good bill in that it seeks to address the most common problems with managed estates. Dermot Ahern is to be commended for getting legislation drafted in a difficult and complex area.

The Bill does not address the inequality whereby those who live in managed estates contribute (through taxes, water charges and waste charges) towards the costs of upkeep for those who live in estates which have been taken in charge by local authorities.

This is doubly unfair where service charges are having a big negative impact on the value of properties in privately managed estates (i.e. management company estates). This inequality needs to be addressed.
 
I have a huge issue with the mandatory minimum contribution to the sinking fund of €200 per unit. It's going to bump up our fees hugely and our sinking fund is already healthy.
 
shesells said:
I have a huge issue with the mandatory minimum contribution to the sinking fund of €200 per unit. It's going to bump up our fees hugely and our sinking fund is already healthy.
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You are probably almost unique by having a healthy sinking fund !
Why would any apartment owner want to put money away now for a replacement roof in 20 years time? The perspective of many apartment owners is still that apartments are owned for a few years. IMHO MUD should have made it mandatory for the developer to retain an appropriate professional to produce a schedule of replacement works and projected costs. This could provide a schedule of sinking fund contributions appropriately spread over the life of the assets. Part of this is covered in Schedule 3 but it is incomplete.

The act is welcome but it is patching a very flawed system.
The definition of common areas in the act does not refer to balconies or windows, two areas where there seems to be great confusion. A much clearer definition of common areas would contribute greatly to providing clarity around what block insurance should cover. If block insurance was not such a dark art, more insurance companies might compete for the business.

The assumption that the problem with multi unit developments is passing the care of the development from a nasty developer to a waiting collection of owners with the skills and available time to be directors is flawed. There is not a queue of people who want to give freely of their time to act as a director of a management company. The act should make some provision for the compensation of directors to encourage the appropriate skilled people to volunteer. It could be something like a provision that up to 33% of a directors management fees on a single unit could be waived in recognition of their contribution to the management company.

The act deals primarily with one part of the lifecycle of a multi-unit development, namely the transition from development to owner managed. It does not deal with the planning, construction, ongoing administration and maintenance in any great detail.

The fact that the service charges can only be reviewed annually may cause problems. If one month after the AGM the fire safety system needs urgent replacing to ensure safety, the management company must try to fund this extraordinary expenditure and wait 11 months to add it to the next year's service charge. An EGM should be able to amend the service charge.

The direction on the sinking fund would appear to indicate that sinking fund contributions should be a fixed amount per unit rather than a weighted amount per unit. Not sure if that is intentional or me reading too much in to the wording!

The act should require that a prospective purchaser is provided with a statement of the sinking fund balance and the projected sinking fund requirement. It is important that there is a clear value placed on sinking funds for purchasers and sellers.

I could not see anything in the act about the sale/ transfer of units and the management fees. Should the seller pay the management fees up to the date of sale and be reimbursed the balance or is it like car tax and it runs for a cycle regardless of when the unit is bought or sold.
Under the House Rules section there is a note with regard to the actions that can be taken for breaches of house rules: "may recover the reasonable costs of remedying such breach" This would appear to make it more difficult to apply monetary penalties to discourage breaches of rules. A retrograde step IMHO. The references to the court system to solve problem would appear to be time consuming and expensive.
The payment of management fees is also lightly covered. It should prescribe that owners can pay quarterly without penalty rather than one annual lump sum. It should also set in place some rules about the application of interest to overdue accounts.

Reference to the role of the management agent, an integral part of most multi unit development, is fairly light. Nothing to protect the less vigilant or less experienced directors from getting fleeced by management agents.

The act tries to put structures in place to process issues rather than avoiding issues. High management fees are one of the most significant gripes of owners, many of these could be avoided by better energy management, waste management etc. For example, why is it not compulsory that all windows have to be accessible for cleaning. Many of these issues link to the planning process which should be changed for future developments. The act could address development where the developer has yet to hand over to the owners.

The act is welcome but I fear that multi unit developments in Ireland are a BP style problem and we are looking optimistically at the MUD Act as if it was the little hat that was going to solve the problem in the gulf of Mexico a few weeks ago. It is right to be positive and optimistic but is this act up to solving the current and future problems of MUDs?
 
You're dead right about almost eveything you said there! I just have to clarify a few things:

ontour said:
MUD should have made it mandatory for the developer to retain an appropriate professional to produce a schedule of replacement works and projected costs.
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We suggested this to the DoJ and they're considering it.

It does not deal with the planning, construction, ongoing administration and maintenance in any great detail.
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The bill was written by the DoJ and they can't or won't encroach on anything that could fall under the jurisdiction of other government departments. Planning, construction and completion are DoEHLG so they won't touch it.


There's no need to legislate for this - it's a private matter between the seller and purchaser (and their solicitors). Most solicitors advise purchasers that any debt must be paid by the seller and any payment in advance should be paid by the purchaser to the seller. There's no need to complicate things or even involve the management company in that.


Totally agree, it's a massive step backwards. On the other hand, jurisdiction for most cases will go to the district and circuit courts so it should be cheaper than the present to bring people to court. The court can also send both parties to mediation to reduce the costs further.

Reference to the role of the management agent, an integral part of most multi unit development, is fairly light. Nothing to protect the less vigilant or less experienced directors from getting fleeced by management agents.
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There is a separate piece of legislation making it's way through the Dail at the moment which regulates managing agents. The quango to enforce that legislation, the NPSRA, already exists.


Like I said earlier, they can't address those issues because they're out of their jurisdiction. On your second point, a large part of the the act does cover developments which have not yet been handed over.
 
markpb said:
On the other hand, jurisdiction for most cases will go to the district and circuit courts so it should be cheaper than the present to bring people to court. The court can also send both parties to mediation to reduce the costs further.
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You are not going to bring people to court for putting some old furniture in a bin bay or having a big party on a Saturday night. Other owners would not stand for funding the cost of employing a solicitor to pursue this and the directors are not really looking to do more work for free.

There are some complex issues between owners and management companies where it is appropriate that they are resolved by courts / mediation however most issues between residents / owners and the management companies relate to silly breaches of house rules. These need to be 'nipped in the bud' to create the culture or standard in the development that it is not acceptable to act in that way. Pursuing court cases and mediation does not really support 'nipping it in the bud'.
 
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