member proposes solution to his debt in return for services

Background;

member (to be called Tom) in service charge arrears x 3 years

Building is 8 years old
balcony repair needed to unit above Tom's property due to leaking down into his unit below. Balcony is quite a large space with a membrane covered with decking.

Recent members meeting approved floor replacement to 3 identified balconies to include unit above Tom. The units identified were bascially those ones that have been leaking.

Quotes obtained from roofers to repair balconies x 3. NOt easy to find one. No register as yet however understand one is to come out in March.

One quote obtained by Tom which is coming in at over 5 grand, which is over a grand more than what company has budgeted, approved by AGM. However the price is for 2 balconies not one. Tom advised that the roofer recommends that both baclonies should be done at the same time as they are beside eachother. the second balcony has not as far as the directors are aware been giving any problems.

However another roofer advised the company both balconies do not ahve to be repaired at the same time because there is a dividing wall. Company had not budgeted next to Toms.

Anyhow hope you can follow this;
Tom is proposing that he pay the 5 grand directly to the roofer and in return his arrears is cancelled plus for the next 4 years he does not pay for the service charge. This amounts to the 5 grand.

Has anyone any advice on this proposal. Some directors are not convinced it is the way to proceed. Any comments or suggestions would be welcome

Alarm bells ringing here...how would Tom have the money to pay the repair but not the arrears? Can you insure a repair contracted by someone other than the owner ie the management company? And who's to say how much management fees will be for the next four years?

I would run a mile and continue to pursue Tom for arrears and only repair balconies identified by an engineer (not a roofer).

I'd be very doubtful that Tom is doing this out of disinterested goodness of heart or that he has the best interest of the company set above his own. I'd second shesells on this.

Thanks for comments.

Completely agree with you both.

However it is slightly complicated as Tom is
A director and putying thid forward as a directors loan.

Bree Narran said:

Thanks for comments.

Completely agree with you both.

However it is slightly complicated as Tom is
A director and putying thid forward as a directors loan.

Click to expand...

If Tom is a director he probably should be fired as a director for being in arrears.
Don't director's of things have to above reproach. ?

Agree with all above posts. This sounds 'wrong' and as shesells says if they can afford 5k it should be paid to the company and then the company should do the work through the company books.

I can't find anything regarding directors being in debt in the ODCE manual or our articles but there may something in company law? Either way it doesn't promote a good company where a director is in so much debt.

They should pay this off with the 5k they have just told you they have!

I'm sure that a director being in debt could be grounds for the other directors to remove them assuming they have a majority? I would imagine that this be done at a director meeting where formal notification was given and minutes taken.

If being in arrears disqualifies you from voting at an AGM, which is typically the case, how can it not disqualify you from being a director?

director debt and losn

That does sound correct however there is nothing in
Company law or in our memos and articles to support it.

Directors are considering it for discussion at agm and possibly voting on it.

Is there no insurance cover on the affected units?

In terms of Tom, any activity carried out on the buildings should be dealt with by Managing Agent and/or Management Company directly. If he has the quote then he should pass it on, each quote should evaluated by the committee/company and voted on.
If it is a go for Toms quote he should pay the €5k to the company and the company should pay the contractor with a written contract signed by the directors and contractor in place.

What you do in terms of clearing Toms arrears and future payments should be based on his annual payment - he should not benefit for sourcing a quote for a repair.

If Tom is three years behind in management fees he most definitely should not be a director. I would be looking to call an EGM to have him removed if he won't step down voluntarily. Only compliant members of the company can vote or stand for election at our AGMs as confirmed to us by our agent. To me it seems that the other directors are being borderline negligent in permitting him to stay as a director as he cannot be seen to be acting in the best interest of the company if he is not up to date with his fees.

The thing is there is nothing in the legislation or in the articles to prevent member from
standing if in debt. However we do have to look at the fairness of this and I agree re; voting. Will bring it back to board and vote on.

Re; Insurance - poor workmanship - not covered im afraid.