Mgt Company Charge, Defecits, Mis-calcuations and Incompetence?

[ClubMan]

Some possible inaccuracies in that leaflet:

In today’s housing market, homebuyers often have no option but to join a management company.

Of course homebuyers have an option. They don't necessarily have to buy in a development that is privately managed.

• The first years fees are frequently included in the overall mortgage package
• Often it is only when owners receive a bill for management company fees in the second year that they realise their home is subject to a management company

This does not sound correct to me and is certainly not my own experience with private management.

Get your solicitor to confirm that service charge payments on your potential home are up to date

Sound advice but this should be done as a matter of course and normally the seller cannot legally sell the property without discharging any outstanding management fees.

Ensure that all insurances are in place and premia paid by the previous owner;

It is not clear how this relates to the management company/fees issue. If the management fees are paid up then the relevant block and/or public liability insurance should be sorted. Is this actually referring to individual property/unit insurance or something?

The landlord should be responsible for paying the management charge so look carefully at your lease agreement to make sure that this will not be passed on;

Surely the landlord can pass on the management charge if s/he so chooses and the tenant agrees to it as one of the conditions of the lease agreement? Obviously only the householder is entitled to be a member/shareholder of the management company though.

As a tenant, you can vote for the estate to be taken in charge by the Local Authority, by registering on the list of Local Government Electors.

I have never heard of any such voting mechanism. Obviously you can vote for a local representative who might help lobby for your area to be taken in charge but that is a different matter. Also, I would expect that the views of the housholder (management company member/shareholder) rather than the tenant would carry more weight in these matters but I could be wrong.

 

[RainyDay]

Most reasonable persons would find a fair degree of nitpicking in Clubman's post.

The leaflet does not say as an absolute that homebuyers have no option but to join a management company. It says that 'often, homebuyers have no option....'. Purchasers with limited budgets will find themselves squeezed towards apartment/townhouse developments, which inevitably involve management companies. I searched myhome.ie for properties for sale in Dublin at less than €250k and got 33 properties, only 4 of which looked like they wouldn't involve management companies. THe others were all apartments and townhouses. So is it theoretically possible for buyers on restricted budgets to avoid management companies? Yes, if they are prepared to dramatically reduce the number of properties they consider. In reality, this is not a practical approach for the majority of young FTBs.

In relation to the inclusion of the management fees within the overall sale price, I personally haven't come across this happening. I have heard politicians from Labour and (iirc) FG talking about this scenario recently. In many ways, this makes sense. From the purchasers short-term cash-flow point of view, it probably suits to include the in the mortgage rather than trying to fund this directly at time when they are financially strapped. From the developers point of view, it eliminates difficulties in chasing the money and disputes about value/service etc. I'm pretty sure Clubman's personal experience of house purchase was sometime in the 90's. I'm quiet prepared to accept that this approach is happening now. In fairness, any serious dispute of this point should be a bit stronger than 'didn't happen in my day'.

Sound advice but this should be done as a matter of course and normally the seller cannot legally sell the property without discharging any outstanding management fees.
It is not clear how this relates to the management company/fees issue. If the management fees are paid up then the relevant block and/or public liability insurance should be sorted. Is this actually referring to individual property/unit insurance or something?

Indeed, ensuring that the management fees and insurance premia are up to date should happen as a matter of course. However, I'm pretty sure I've seen postings (here and/or boards.ie) of cases when this didn't happen, so it is sensible advice to any purchaser to be proactive on this.

Surely the landlord can pass on the management charge if s/he so chooses and the tenant agrees to it as one of the conditions of the lease agreement? Obviously only the householder is entitled to be a member/shareholder of the management company though.

I've never heard of a case where a tenant pays the management fee directly and becomes a member of the management company. In general, it is not really appropriate for tenants to hold this power, given the relative short-term nature of their involvement. It would be in many tenants interest (for example), not to pay into a 'sinking fund' to cover future maintenance costs, if they reckon they are not going to be in this property in 3-5 years time. A management company dominated by tenants would be dominated by short-term decisions. Also, the landlord can get full tax relief as an legitimate expense for the management fee. The tenant cannot.

I have never heard of any such voting mechanism. Obviously you can vote for a local representative who might help lobby for your area to be taken in charge but that is a different matter. Also, I would expect that the views of the housholder (management company member/shareholder) rather than the tenant would carry more weight in these matters but I could be wrong.

Are you stating that this mechanism doesn't exist because you haven't heard of it? The fact that you (and many others) haven't heard of this mechanism is a great reason for publishing this leaflet, to ensure tenants are aware of their rights.

 

[igora]

Hi,

1. Does anyone know if a shareholder of a management company ( ie. a house owner) can be a "committee member " and have voting rights on the day to day running of the development without actually becoming a director of that company?

2. What happens in a situation where the management company for eg. goes bankrpupt - Is there then an issue for the director personally and could this interfere with / reflect on the individuals private business profile?.

All replies appreciated.

 

[ClubMan]

1. Does anyone know if a shareholder of a management company ( ie. a house owner) can be a "committee member " and have voting rights on the day to day running of the development without actually becoming a director of that company?

I don't think so. I think a shareholder/member who is elected to the board must sign a CRO B10 form and become a director if the management company is a limited company. Definitely the case with my own management company anyway. Obviously non director member/shareholders have a vote at general meetings.

 

[RainyDay]

1. Does anyone know if a shareholder of a management company ( ie. a house owner) can be a "committee member " and have voting rights on the day to day running of the development without actually becoming a director of that company?

Even a director wouldn't have a huge involvement in the day-to-day running in most cases. If the management company takes on a managing agent, the agent will be responsible day-to-day. The real power depends on how the contract between the agent and the company is written.

I would guess that in practical terms, it may well be possible to exert influence without taking on a directorship by being the guy who does all the work. If you are the one who is prepared to write up a spec for the managing agent, get in competitive quotes from a few agents and analyse the responses, you may well be able to influence the direction taken. Similarly, if you provide support to the directors ("I know a great plumber who can sort that out"), you could become the power behind the throne.

2. What happens in a situation where the management company for eg. goes bankrpupt - Is there then an issue for the director personally and could this interfere with / reflect on the individuals private business profile?.

In theory, this could indeed be a reflection on you. In the worst case scenario, if the management company would found to have been trading in a fraudulent manner, you could be barred as a director for a period of time. I've never heard of anyone being barred in this way as a result of the activities of a management company (though I wouldn't have an exhaustive knowledge of this).

 

[Kiddo]

Getting back to the original reason for this thread, I live in the estate that Chief Robert refers to. We have lived here for three years and there was a defecit in the budget for two years which was explained by an overestimate as to the number of units that would be completed. We can only hope that the situation will resolve itself when all units are sold. The last phase goes on sale this autumn.

With regard to the waste charge..I did find it a little incredible that the management agent underestimated it by 100%. That said the 2006 budgeted waste charge works out at €246 per unit. Taking into account that it now costs €8 to buy a bin tag in South Dublin Co. Co. its cheaper than using SDCC, if you put your bin out every two weeks. We have received correspondance from the management agent encouraging all residents to recycle (there are huge bins provided for recycling) in order to reduce this charge. In addition we have a full time janitor who rotates the bins so that communal bins aren't overflowing and he deposits the bins back after the refuse has been collected...even the privately held bins (anyone with a side entrance).

With regards to the landscaping, IMO the estate is well landscaped and maintained. The grass in the common areas is cut on a regular basis and the plants/bushes are well looked after. During the winter the landscape company can be seen "hoovering" up the leaves. The landscape company can be seen regularly around the estate. winter or summer. Hardly

For example, it was quite irritating to be charged for "Lanscaping charges" when you don't see anything happen over the course of a year bar 1 annual walkaround the estate by people with a weedkiller gun and a spray mask!!!

Another house rule thats strictly adhered to is no clothes lines on the balconies and no satellite dishes which IMO really take away from any mixed development.

At the end of the day we were all made aware when purchasing that there would be a management charge involved. When we purchased in 2003 we were told it would be in the region of €300 per annum, at that time SDCC were collecting refuse. For 2006 we have been charged €478 which includes the refuse charge. Its hardly a "rip off"....

Having discussed the issue with a few of our friends who live in surrounding areas but in more traditional estates...the conclusion is that when local authorities "take in charge" estates that usually involves them cutting the grass in public areas on an infrequent basis and local residents (usually the same few) getting together to plant flower beds/paint over graffetii/clean up litter each year...so IMO its a small price to pay for a high level of service.

I have no connection with the management company or agents...but in this case,compared to other horror stories I 've heard..they are doing an ok job.

 

[money man]

Fair play kiddo, i am so sick of people whinging not only about the management company issue . it sounds like the estate is very well looked after which if you travel around is not as common as you would think. if the developer is not finished selling all the units then he is harly going to let the place get run down and affect his ability to sell the units. the charge doesnt sound too high to me. the refuse issue is a difficult one however. you have someone to monitor the use of the bins etc which helps. if refuse collection is part of the service charge then there is no incentive to recycle. but on the positive side rented properties are guaranteed to have bins ( which most landlords dont bother doing) . if residents look after the estates what happens if some people rent out their houses and dont really care what the place looks like and doent fo their bit. also if your neighbour doesnt pay their service charge do you want to be on the board of directors that instructs legal proceedings against them? well done for speaking up though and not just going along with some of the rubbish (excuse pun) that is peddled out!

 

[ClubMan]

At the end of the day we were all made aware when purchasing that there would be a management charge involved. When we purchased in 2003 we were told it would be in the region of €300 per annum, at that time SDCC were collecting refuse. For 2006 we have been charged €478 which includes the refuse charge. Its hardly a "rip off"....

Exactly. If management companies and the associated fees come as a surprise to some buyers then they should be getting onto their solicitor asking why they were not apprised of these details as part of the conveyancing process. Where they are aware of the situation (the vast majority of situations I would expect) then claiming that they are being ripped off is plain silly. The main area of legitimate complaint here is when the developer won't hand over control of the management company to the residents or a previous management company has gone bust or been struck off. At the buying stage these should be identified as risk factors and the buyer needs to weigh them up and make a calculated decision as to what to do. Just plunging blindly in and hoping for the best is not a good idea. The number of people who are members of a management company but still can't distinguish the company from the day to day management agent is astounding. If people are not happy with the way that their development is managed then they are always free to become active in their management company and exert more direct control over matters (e.g. run for election to the board of directors or get involved in any ad-hoc committees that are established).

 

[Sunny]

I have no doubt there are some good reputable management companies around but at the same time, I have no doubt that there are total cowboys operating as well. With the amount of money involved, I can't understand why these companies can't be regulated or monitored just like the banks, solicitors, builders etc etc....From reading various posts and articles on this topic, the one thing that I find standing out is the fustration that people feel because they feel like they have no power or anyone to turn to if they have issues with the company. How difficult would it be to ensure that all management companies have to register with a body just like the landlords now have to and give this body the power to deal with complaints etc...

 

[ClubMan]

I can't understand why these companies can't be regulated or monitored

They are monitored (or should be) by their shareholders/members (i.e. usually the householders) and are regulated by the normal CRO rules that apply to limited companies. If some people want even more regulation then they can presumably expect to pay higher management fees as a result of the higher overheads. However it seems to me that some people just want somebody else (e.g. a state agency) to take care of things for them. If that's the case then they should buy somewhere other than a privately managed development.

 

[pinkie123]

I don't understand why people are against paying for the upkeep of their area. I live in a new estate in dublin 24, up and coming area. At the moment the place is being kept very well, nice plants, trees etc. The mgt fees aren't too bad, mainly because I live in a duplex and not an apt. block. I fear that if the mgt company is gotten rid of, and its up to the council to manage the estate, that it will not be kept to the standard as of now. And go down the same route as other estates in dublin 24. Is this not a valid point?

 

[ClubMan]

If you don't want you area to be taken in charge and the management company dispensed with then you should become active in the management company and in explaining what you see as the benefits of having one to your fellow householders.

 

[annR]

I have no problem paying management fees for the upkeep of the area and my estate is nicely looked after. However the fee is very high and adds up to a huge amount annually. To be honest I actually can't afford to pay that much for upkeep of the estate. Even though they send a breakdown of what the costs are, there's no real transparency i.e I don't know for sure that it really costs that much to have someone mow the grass etc!

Clubman, what steps do you think I could take to monitor the management company? I'm just a normal house holder who is not especially interested in being part of the residents committee. Does this mean that it's ok for me to be ripped off?

I say ripped off because it has recently come to light (pun intended) that our management company has been charging fees for lighting the estate while all the time, Fingal CC has actually been providing it. They've said they were doing this pending confirmation from Fingal CC as to who was looking after this. Fingal say no one approached them. Mgmt company just kept charging even though they were not getting billed for the lighting. Now they have a PR company answering any queries. I think this is nothing short of fraud.

How are ordinary householders supposed to keep up with all of this if the mgmt company of which they are a member is not even taking phone calls? it's impossible not to feel that this is just some 3rd party making lots of money off people who have nothing to go on except bills and the odd budget breakdown.

 

[Guest107]

Now they have a PR company answering any queries. I think this is nothing short of fraud.

yes it looks like fraud, you are entitled to an answer from the management company which asks the management agent not a PR bunny of some sort .