Mgt co want to increase insurance charge for apartment block because of open fire

[gebbel]

I have recently come into conflict with the management company in my estate about the insurance cost for the block, which contains 4 ground floor apartments (one of them being my own) and 4 duplexes. There is another separated block beside us, containing the same number of units. Up until now, the apartments and duplexes in both blocks have been equal in terms of the relative charges applied.

A couple of months ago I was approached by a member of the management company who challenged me about my open fire, saying that the insurance company were unaware of it. I showed him the developer's listing from 2006, which clearly states that an open fire was provided.

Today I received the following email from a member of the mgmt company;

The cost to insure your block is more expensive than the other block due to the open fire. The cheapest quote we could get is €2285. The cost to insure the other block is €1100.

If your block paid separately the cost per unit would be €285, whereas if the 2 blocks paid together and divided the cost equally, the charge to each unit would be €211.50.

Previously the difference in insuring the blocks was not as much as that, but the open fire issue has only been disclosed recently and has pushed the cost up.

Obviously, the issue now is how the insurance will be paid by each block. It is cheaper for your block by grouping the blocks together and dividing the cost but due to the higher insurance of your block the members of the other block may object.

The practice has been to split the cost evenly and I think that any changes to that practice should be raised at a meeting and put to a vote.

So €1185 more to insure my block as I have an open fire? My unit is an end unit, I haven't been in other units to see how they designed.

To be honest a couple of us in my block have become a little suspicious of the managment company and I'm unsure how to proceed with all this.

 

[jdwex]

I would have thought apportionment would be set out in lease docs - they can't unilaterally change "the practice"

 

[lantus]

How the service fee is divided up will be described in the contract lease document which you signed when every member purchased the house. It 'may' be that each block is identified uniquely however it is unlikley. If the development coms under a single management company it is more likley that it refers to the apartments and common buildings as a single entity (regardless of the actual number of elements they are comprised of) and not block one or two.

The lease will say something like: -

1/ divided equally between each unit.
2/ aportioned by ratio of bedrooms

for example. Some documents however dont contain this level of detail which can lead to ambiguity and situations where this could be possible.

The directors of the company are required to apportion bills by the lease documents and no other way. You cannot vote to do it a different way just because it may 'seem' better one way or another.

The directors 'should' have these documents to hand and you can request to see it or confirmation that it does not contradict the contract. You should probably get a copy of your own contract or ask if one of the others in your block has it.

The idea that you have concealed an open fire is rediculous. As you say it was built that way and is not your responsibility.

You can bet your bottom dollar that if the block without open fires developed a sudden and expensive fault then it would suddenly be better to split the cost again. This is why we have lease contracts, to protect against people exercising preferential advantage when it suits. (I wonder where the directors live???)

 

[ontour]

First step is to check your lease to see how the service charge is applied and how it can be changed.
I think that the communication from the management company is reasonable. They are alerting you to something that they believe may have a financial impact on you in the future. The details of whether a vote at a meeting can make that change depends on the lease and possibly MUD. It may be a case of requiring a unanimous decision. If that is the case it would be surprising if at least one person did not agree with paying more.

Part of the solution is engaging with the management company as you are a member rather than a client of the MC. Working with them might get more people involved to research alternate insurance providers or other actions that could mitigate the increase in costs. Being involved could also alleviate your suspicions.

 

[Vanessa]

Ontours advice is correct. Check your lease to establish how the management charge is calculated. If you haven't got a copy it is with your solicitor/bank and request a copy.
I would say that to change a lease it would require the holding of an E.G.M.
The management company would have to submit a motion, giving all owners the required period of notice and then holding a vote on their proposal at the E.G.M
They may need to get 75% of the attendance and proxy in favour. These conditions should be in the lease documents

 

[lantus]

Ontours advice is correct. Check your lease to establish how the management charge is calculated. If you haven't got a copy it is with your solicitor/bank and request a copy.
I would say that to change a lease it would require the holding of an E.G.M.
The management company would have to submit a motion, giving all owners the required period of notice and then holding a vote on their proposal at the E.G.M
They may need to get 75% of the attendance and proxy in favour. These conditions should be in the lease documents

You cannot 'change' the lease through any OMC meeting. IF the lease specifies no specific manner in which the fee should be apportioned then that could be voted on but that is not a change in the lease, just approving the manner in which the lease is interepreted.

There is a provision in the MUD act to get arbitration through the courts which could result in a legal lease change but this is an altogether different and more onerous process.