Management company fine

P

peelaaa

Guest
I live in a small development of 3 houses.
The land in front of all the houses upto the main road is shared between the 3 properties however a management company has to be setup to look after the area.
The original management company was setup by the solicitor who was originally involved in the development of the site with builders.

A while back we found out that they had decided not to keep being the management company. We received letters from them stating we(as in all 3 owners) had to take on the management or get another company to do it.
However we only received the letters a couple of weeks before we had to send in our management company info.

As we didn't have enough time, we had to pay a fine (as we were late sending in documents)and also solicitor and accountant fees.
Also we have been told now that we have to pay another fee for this year.
I have tried to explain this as best as possible but as I am not in the finance/legal area I may not be very clear.
We feel we have been forced into this and also that the fines are unfair as we were not aware of this until at the last moment.
How can the original managment company walk away from this leaving us to clear it up?

Any help would be appreciated, thanks
 
peelaaa said:
I live in a small development of 3 houses.
The land in front of all the houses upto the main road is shared between the 3 properties however a management company has to be setup to look after the area.
The original management company was setup by the solicitor who was originally involved in the development of the site with builders.
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I think that you are confusing the Management Company (which owns the common areas, and whose members are the individual proprty owners) with a Management Agency. A Management Agency can be appointed by a Management Company to carry out the functions of the Management Company. A Management Company could also decide to switch Management Agents, or not to have one at all.

peelaaa said:
As we didn't have enough time, we had to pay a fine (as we were late sending in documents)and also solicitor and accountant fees.
Also we have been told now that we have to pay another fee for this year.
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Who is being fined and who has to pay these fees: the Management Company or the individual owners?
Who is doing the fining and demanding these fees?
 
The owner of the common area was the original solicitor involved in the build of the properties. So they were the management company. When they decided to stop being the management company we were told by them that we had to take it on and be the management company or get someone else to manage it for us. All 3 properties were fined for late input of documents to companies house? The fine was for being late. But we have also been paying solicitor fees and accountants fees for doing this. We were fined approx 1000 euros.
 
peelaaa said:
The owner of the common area was the original solicitor involved in the build of the properties. So they were the management company.
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Either the original owner was a solicitor OR a management company. Both cannot be true. A company is not a person.
peelaaa said:
When they decided to stop being the management company we were told by them that we had to take it on and be the management company or get someone else to manage it for us.
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A Management Company cannot "stop being", maybe you are referring to a Management Agent, which could stop undertaking work on behalf of the Management Company. The 3 house owners are probably the members (shareholders) of the Management Company. It's quite possible that they are also the directors of the Management Company, and therefore responsible for filing documents annually with the Companies Registration Office.
peelaaa said:
All 3 properties were fined for late input of documents to companies house? The fine was for being late. But we have also been paying solicitor fees and accountants fees for doing this. We were fined approx 1000 euros.
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There's no such thing as Companies House in Ireland, but there is in the UK. The Irish equivalent is the Companies Registraiton Office. Are you in the UK?

You need to do more research, find out the name of your:
Management Company
Management Agent.
Find out who the directors of the Management Company are.
At the moment the information that you're giving is too confused to be useful.
 
OK, it sounds like the solicitor involved was acting as "Management Agent " and was running the management company ( a legal entity set up to own and maintain your common areas).

This solicitor decided he/she no longer wanted to act as the "Management Agent" and resigned. The management company still exists as it owns the land and needs to be run just like any other company ( i.e. file its returns on time with Companies Registration Office, maintain accounts etc).

You have three choices.

1. Appoint a new management agent to step into the shoes of the solicitor who no longer wants the job. These agents are professionals and will ensure that all the obligations of the management company are met and that the common areas are mainatained.

2. Act as management agent yourselves. You will need to stay on top of all legal and accounting obligations but seeing as there are only three houses this may be easier than you would think.

3. Speak to a solicitor in relation to the ownership of the common areas and see whether these can be split between the three houses or transferred to the County Council for maintenance. If this is possible the managemebnt company can be wound up completely and you could look after the area outside your house as you see fit. No fees, no fines.

This is an unusual situation, having a management company in place for just three houses. It was be that your best course of action is to obtain legal professional advice as to how to proceed.

Good luck
 
SNB said:
OK, it sounds like the solicitor involved was acting as "Management Agent " and was running the management company ( a legal entity set up to own and maintain your common areas).

This solicitor decided he/she no longer wanted to act as the "Management Agent" and resigned. The management company still exists as it owns the land and needs to be run just like any other company ( i.e. file its returns on time with Companies Registration Office, maintain accounts etc).

You have three choices.

1. Appoint a new management agent to step into the shoes of the solicitor who no longer wants the job. These agents are professionals and will ensure that all the obligations of the management company are met and that the common areas are mainatained.

2. Act as management agent yourselves. You will need to stay on top of all legal and accounting obligations but seeing as there are only three houses this may be easier than you would think.

3. Speak to a solicitor in relation to the ownership of the common areas and see whether these can be split between the three houses or transferred to the County Council for maintenance. If this is possible the managemebnt company can be wound up completely and you could look after the area outside your house as you see fit. No fees, no fines.

This is an unusual situation, having a management company in place for just three houses. It was be that your best course of action is to obtain legal professional advice as to how to proceed.

Good luck
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Yes, I think you understand my problems. The solicitor resigned from acting as the management agent of the common area, does that mean all 3 householders were always the management company as we were not told this when we purchased the property.
We did not receive written notification of the solicitor resigning their position until it was too late and therefore we were fined for not sending in annual accounts?
In your note 3, can the management company be wound up if the ownership of the common area is split between the 3 houses or is it only if we transfer maintenance to the county council. If we do this then can the council build on that land or do we still own it. Also if they are designated as maintaining it, could we maintain it also without their permission, ie. trees, fencing etc.
So, what is the benefit of keeping the management company between the 3 houses compared to handing it over to the county council.
What costs approxiamately should be have to pay annually for having this management company?
Sorry for all the questions, just a bit frustrated with the legal jargon.
 
peelaaa said:
In your note 3, can the management company be wound up if the ownership of the common area is split between the 3 houses or is it only if we transfer maintenance to the county council.
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The council will own it, presumably, as I can't see why a taxpayer-funded council would want to maintain private land that they don't own.
peelaaa said:
So, what is the benefit of keeping the management company between the 3 houses compared to handing it over to the county council.
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As SNB said: "The management company ... needs to be run just like any other company ( i.e. file its returns on time with Companies Registration Office, maintain accounts etc)." Are you capable/interested in running a company? It doesn't seem so, in which case you can hand it over to the council and no longer have to be concerned or legally resonsible for it.
peelaaa said:
What costs approxiamately should be have to pay annually for having this management company?
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Impossible to give a figure without exact details, but roughly:
Common area maintenance costs.
Insurance for common area (in case member of public trips etc).
Director's insurance.
Accountancy fees.
Legal fees.
CRO filing fees.
 
Thanks for replies. If the management of the common area is handed back to the council, do we still own the land or do the council then own it.
 
It looks to me as if the original directors of the management company have resigned and it is then up to you and or the other two owners to become directors of the management company. My understanding is that where builders or solicitors act as directors of a mc they have established to look after common areas of a development they can resign at any time and it is up to the owners to appoint new directors.

It is essential that you or someone you appoint become directors - if your management company is struck off the companies register it will cause you major headaches. You can then look after the common areas and the upkeep yourselves or appoint a management agent to do the same.

Each local council was requested to draw up plans and guidelines for their "taking in charge policy". Check your local councils website for details of their plans. However by your description it sounds like the area outside the houses up to the main road is owned by the three houses. Is it used for parking etc. Is it within a wall or behind gates? The council will only take in charge public areas and I can't see them taking this on to be honest. Do you have a roof in common or other things in common with the other houses? If so you will probably still need a management company.

A couple of years ago my brother looked at a house in a similiar situation (three houses, common front parking area behind a wall, off a main road). I actually suspect it may be the same place! I advised against it because of the management company issue - I thought that the setup might cause difficulties, but he put down a deposit on the show house. He drove past the house a week or two later and could see people in the kitchen cooking dinner. He rang the solicitor who denied anyone had moved in but it was obvious that the builder had people living there while the purchase went through. My brother was annoyed because he had paid a lot extra for the showhouse and didn't want people in there who may cause damage or wear and tear before he completed on the property. That coupled with doubts about the management co. meant that thankfully he pulled out and got his deposit back.

That doesn't help you I know but now that you find yourself in this situation you'll need to read up on management company info. I think there is a book out called "Apartment Living" by Robert someone and it would be probably give you a lot of help.
Also have a look at this [broken link removed]
 
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notoriously difficult area management companies - I think there will be new options instead of companies limited by guarantee once the CLRG (company law review group) get the new Companies bill out. Fingers crossed - because there needs to be some changes in this area
 
Also, members cannot fall below 7 or you lose your limited liability. It sounds like you have a problem with only 3 members.

O'KellySutton in Kildare Town sorted out a similiar problem we had with our management company.
 
@peelaaa, the real difficulty you have is when you purchased your house you became a member of the management company for the development as did the owners of the other properties.

It would appear that the solicitors acting for you did not explain this adequately at the time of purchase. A member of the property management company (or any company for that matter) has specific responsibilities. Your will have signed contracts and other documents at the time of purchase relating to the property itself and the management company. You need to speak with your solicitors urgently about these documents.
 
"It would appear that the solicitors acting for you did not explain this adequately at the time of purchase."

"You will have signed contracts and other documents at the time of purchase relating to the property itself and the management company."


Eh?

mf
 
Is this not a simple question of checking with the CRO if the OP is an actual director of the company ? He does not seem aware that he is a director with obligations. It is a very clear process when you become a director of any company and the original documents will be available online at www.cro.ie.


If he did not know he was becoming a company director then he needs to go back to the legal advice he recieved originally in purchasing the house.

If he is not a director of the company then he has no liability for the CRO fines and depending on the timing of the fines the original directors of the company will be liable. I dont believe you can resign as a director if there are outstanding CRO fines.

It would be a bit shoddy if he actually signed CRO registration forms as part of the purchase but did not receive/understand the implications. Did all three purchasers realise the implications of them becoming directors ? Are they directors ? Were all three purchasers blindsided on this point ?
 
jaybird said:
I can't see how you wouldn't know if you were becoming a company director, unless you are in the habit of signing forms without even the most cursory glance at what they are.
I am a company director of a management company, the forms are very clear as to what they are for.
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I wonder where the request for payment of the fine is coming from - the CRO to the householders directly ( ergo Directors ) or via the former manager/agent ( ergo s/he is the director with the liability)

If they are legitimate directors then there is no way around it and the fines add up daily so some swift action is necessary. If they are not actual directors then there is nothing to fear about the fines - but everything to arrange about the future structure of the company.

I am not a lawyer.
 
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