Multiple Management Companies

[jonronan]

I have an apartment in Galway. In our estate a number of different builders built a number of Blocks of apartments and it seems as if each block as its own management company (common area ownership). There is also a main management company (landscaping/Public & ER Liability Insurance/Management Agent Fees).
The invoices were €400 for our Block (Block I) and €370 for the main Management Company.
In the budget for Block I, it shows Block Insurance €1,450, Repairs €500, Sinking Fund €2,000, Accountancy €650 and Management Agents Fees €800 less a surplus from last year of €600 = €4,800 divided by 12 or €400 each.

The main management company budget contains other Management Agent fees of €9,600.

I understand that seperate Block management companies were created so that the Common Areas within each block would be transferred into the company. At the time one general management company was not created.
I do not know why all the common areas cannot now be transferred into the main management company either.

I have been trying to get answers from the Management Agent as to why the €400 had to be issued through the Block I Company. In my view having a seperate trading management company only benefits the Accountants and Management Agents as they get to charge twice for no real additional benefits.

I have highlighted to the Agent that the company is audit exempt and that it would be more beneficial to administer any Insurance by way of a Residence Committe or by way of invoice from the main management company (thereby avoiding seperate Accounts & Agents fees). His fees are €9,600 + €800 x No. of Blocks 7 which I believe is excessive and not necessary.

I do not know if we own the Block I mngt co and I believe the developers still own the shares, so I am worried about paying into a sinking fund or paying for any repairs, where the householders are not the owners of the company.

Is it normal for this kind of structure to exist (two separate mngt co's - One for the common areas of each Block and one for the General Management of the Estate) and has anyone any advice on whether the fees can be renegotiated (how to go about doing this).

Much appreciated.

 

[jonronan]

Our management company is limited by shares and fulfills the criteria necessary to be audit exempt. Link below where you can see the criteria:

[broken link removed]

 

[jonronan]

I would suggest agreeing a fee with your auditors at the AGM.

If an appropriate fee cannot be agreed upon you can always find another.

If the fees are never queried then auditors can lose the plot with the level of fees they charge. By and large, preparing the annual accounts + audit - there is not much work involved, especially for a small management company as you have mentioned. What does take time is the Company Secretarial filings. Having to file the B1 & Corp Tax Returns, along with ensuring all the shareholder/director information is correct is time consuming. Any more than €1,000 VAT Inclusive for accounts/audit & Company Secretarial (for a small company with a limited number of transactions) would be excessive and should be negotiated.

 

[MOB]

A few points, some of which are inevitably repeating what can be found elsewhere on AAM:

1. The Agent is hired by the Management Company, as are the accountants\auditors. If you are not happy with the charges, you need to speak with your fellow members and you all need to agree to retain a new agent and\or run your Management Company without paid agents.

2. A Management Company which has more than 50 members cannot be audit exempt - so amalgamating into a single large Management Company would mean the loss of audit exemption unless the various blocks do not between them tot up to 50 units or more.

3. A Management Company is a necessary legal device to ensure that all apartment owners pay their way on common expenses such as insurance. You can't really do without one.

4. Multiple Management Companies are not common, but certainly it can happen, and usually for good reason.

 

[AKA]

A few points, some of which are inevitably repeating what can be found elsewhere on AAM:

1. The Agent is hired by the Management Company, as are the accountants\auditors. If you are not happy with the charges, you need to speak with your fellow members and you all need to agree to retain a new agent and\or run your Management Company without paid agents.

It can be difficult to change agent if the management company is in debt, or if there are developer directors who have retained a % of the apartments on purpose or if the apartments aren't sold. Also applicable when there are unfinished phases. But worth investigating.

If people pay their fees yes, it can be done without agents, but if you have to take legal action for nonpaying owners then it can get messy - co-operation is required. Also depends on the size of the unit, a small development can share out the work among willing owners. I couldn't see myself becoming a debt collector and requesting solicitor letters be issued etc. as a volunteer director.

3. A Management Company is a necessary legal device to ensure that all apartment owners pay their way on common expenses such as insurance. You can't really do without one.

In older developments from the 70-80s sometimes a res. association or group of residents takes on this role. If a roof needs to be repaired, in the absence of a sinking fund, the cost of repair or replacement is divided among the current owners. This can be substantial for larger repairs. Better to have an official means, in the form of a management company

4. Multiple Management Companies are not common, but certainly it can happen, and usually for good reason.

I've seen this where there are multiple developers in the same development - 2 developers, 2 management companies, 1 agent.



Only way forward is via legislation - haven't met this group but working together will help:

[broken link removed]