Report on Multi-Unit Developments :(

Sar!

Not sure if this has been brought up anywhere else on boards today but...

Has everyone seen the new Property Management Legislation mentioned in today's papers? The Times has two articles on about it on page 9 and the actual report can be found on the front page of the Law Reform Commision of Ireland website (www.lawreform.ie)

Having lived in an apartment for the past 4 years, I think its hugely disappointing to see that the long awaited legislation looks as if it will mainly benefit people buying new apartments in the future as opposed to helping those who are already living with the nightmare!

I think what seems to be more worrying is that it may help to introduce a serious discrimination between new and old apartment owners thus ultimately making it difficult to sell on your property.

Surely this has to be a mistake?!

markpb

The report does touch on existing developments but it's a huge legal minefield so I'm not surprised it got as little coverage as it did. It's very hard to change the way existing companies are run especially where existing contracts between the developer and the owners would be affected. Also, existing management companies are just regular companies so I think it would be legally very difficult to write a law which would not affect trading companies. There is one mention in the summary (I'm still reading the whole thing) that says existing companies should be able to change to the new structure but I'm not sure how this would work, especially where owners aren't in control of the management company.

It might be too late and it might not be perfect but it's a huge step forward. I'm still shocked at some of the things in there made it into the final cut. On a personal level, one of the major items in it (vesting prior to sale & removal of golden votes) was suggested by a lobby group I'm a member of (www.apartmentowners.ie) and we're delighted that it made it, especially considering we've only been around for four months

Sar!

I absolutely agree its a big step forward for the future especially over the vesting by developers but what about the 500,000 apartment owners in Ireland who are currently living in apartments?

Surely this legislation will create a serious problem whereby in future years potential first time buyers will be turned off buying any apartments that didnt manage to fall under the new legislation?

I really think it seems completely ridiculous that the owners who have complained about these issues for so long are the ones who dont really benefit from new legislation!

Victor

markpb wrote: »

Also, existing management companies are just regular companies so I think it would be legally very difficult to write a law which would not affect trading companies. There is one mention in the summary (I'm still reading the whole thing) that says existing companies should be able to change to the new structure but I'm not sure how this would work, especially where owners aren't in control of the management company.

Potentially you have
(a) Companies where every party want it to be a designated property management company.
(b) Companies where some party(s) want it to be a designated property management company.
(c) Companies where no party want it to be a designated property management company.

"A" companies get made designated property management companies automaticly, "B" companies are adjudicated on and added to a ministerial order and "C" companies are left alone.

Treehouse72

Priceless. They come up with this crap just as the biggest building boom in the history of humanity ends. I mean, do the myriad scandals and disgraces that accompanied this wretched housing boom never end?

It would be comical if it weren't borderline criminal.

The_Conductor

It is rather disappointing to be honest.
At very least, if implemented, it will put a framework into place- though as its not retrospective, as pointed out above, its of marginal interest at best to most.

My own particular bugbear is those developments which were largely offloaded on property speculators or absentee landlords, with a very small number of owner-occupiers. In general the owner-occupiers tend to be very interested in the running of the management companies- while the other category of owner don't really care a damn about anything- other than keeping the fees as low as possible. It really isn't fair- though I guess its that way, with people freeloading on the efforts of others, in all walks of life.

If there are indeed a half million pre-existing owners out there- I think the time is ripe to try to agitate on the matter.......

Sar!

I think you are absolutely right - now is definitely the time for all concerned to make a serious move on this issue.

In the Home supplement of the Sunday Times issued Sunday just gone there was an article on "How residents can sack their management board" and it stated that:

"There are an estimated half a million Irish people living in apartment schemes and paying annual management fees"

In other words all these people are experiencing the same awful issues with Management companies/Agents and Builders and yet our Government now seem all set to just go ahead and forget about us all...its unbelievable.

bobbysands81

markpb wrote: »

It might be too late and it might not be perfect but it's a huge step forward. I'm still shocked at some of the things in there made it into the final cut. On a personal level, one of the major items in it (vesting prior to sale & removal of golden votes) was suggested by a lobby group I'm a member of (www.apartmentowners.ie) and we're delighted that it made it, especially considering we've only been around for four months

Believe me mate - the removal of golden votes has been on the agenda for years.

bobbysands81

Treehouse72 wrote: »

Priceless. They come up with this crap just as the biggest building boom in the history of humanity ends. I mean, do the myriad scandals and disgraces that accompanied this wretched housing boom never end?

It would be comical if it weren't borderline criminal.

This Bill is years in the making, not an overnight thing. Legislation is not easy to write. None of what's in the Bill is finalised so lobby the Minister for Justice if you would like to see changes.

bobbysands81

smccarrick wrote: »

It is rather disappointing to be honest.
At very least, if implemented, it will put a framework into place- though as its not retrospective, as pointed out above, its of marginal interest at best to most.

My own particular bugbear is those developments which were largely offloaded on property speculators or absentee landlords, with a very small number of owner-occupiers. In general the owner-occupiers tend to be very interested in the running of the management companies- while the other category of owner don't really care a damn about anything- other than keeping the fees as low as possible. It really isn't fair- though I guess its that way, with people freeloading on the efforts of others, in all walks of life.

If there are indeed a half million pre-existing owners out there- I think the time is ripe to try to agitate on the matter.......

Some shareholders in all companies are always more active than others - there's nothing that can be done about that.

bobbysands81

Surprised nobody has yet picked up on the NCA Multi-Unit Development Stakeholders Forum which has also reported according to the NCA website. It includes a Voluntary Code of Practice signed up to by the Irish Home Builders Association and a report on the actual work of the Forum as well as Educational information and templates for things that should be in agreements that unit owners have with their Management Co.

http://www.consumerconnect.ie/eng/Hot_Topics/Campaigns/Property_Forum/

Sar!

Again sadly its great for new developments built after Sept 08 but not mandatory for any developer to follow for old developments. Please see note in the NCA Code of Practice doc that states:

"The Code shall be applicable to all new multi-unit developments by IHBA members where Management Company arrangements are put in place after 1st September 2008. Reflecting the best practice aspect of this Code, IHBA members may apply the same principles in respect of the operation of Management Companies established prior to this date."

Treehouse72

bobbysands81 wrote: »

This Bill is years in the making, not an overnight thing. Legislation is not easy to write.

Ah, I see.

astrofool

It may become in the interest of older developments to comply in the interest of raising their average selling price (especially in the case where the builder is trying to sell the units).

Sar!

Sadly while that may be the case in very recently built developments (i.e. in the past year) it isnt the case in older developments that have been completed for some number of years and all units have been long since sold (if not twice over in some developments!).

The developers seem to remain on these older sites for a number of hidden agendas - i.e. trying to build on nearby property linking them with the current development/trying to build on the developments common area further down the line if there is enough space/forcing owners to use a specific tv and broadband provider/forcing residents to work with a specific managing agent/allowing retail units onto residential sites etc... etc...

Bottom line is that with this new legislation there is absolutely no incentive at all for developers to resign from the Mgt co. and move onto something else which is really all that most people were hoping for. If anything I think it will drive the price of the older apartments down due to being unable to sell.

bobbysands81

Sar! wrote: »

Again sadly its great for new developments built after Sept 08 but not mandatory for any developer to follow for old developments. Please see note in the NCA Code of Practice doc that states:

"The Code shall be applicable to all new multi-unit developments by IHBA members where Management Company arrangements are put in place after 1st September 2008. Reflecting the best practice aspect of this Code, IHBA members may apply the same principles in respect of the operation of Management Companies established prior to this date."

Yeah it's disappointing alright but really not much can be done. It is a voluntary Code of Practice so it is almost impossible to apply retrospectively. The IHBA should be commended for signing up to such a Code of Practice.

Unfortunately not all builders are members of the IHBA and these are the ones most likely to be cowboys.

bobbysands81

Sar! wrote: »

Bottom line is that with this new legislation there is absolutely no incentive at all for developers to resign from the Mgt co. and move onto something else which is really all that most people were hoping for. If anything I think it will drive the price of the older apartments down due to being unable to sell.

Will developers not have to pay for all costs associated with the development until such a time as they hand over the running of the management co to the owners thus meaning that they'll want to sort things out as quickly as possible so that they minimise their costs?

Sar!

It would be great if it worked that way but sadly thats not the case in that all the owners are charged extortionate "service fees" which pay for any costs that may arise on the development.

markpb

Sar! wrote: »

Bottom line is that with this new legislation there is absolutely no incentive at all for developers to resign from the Mgt co. and move onto something else which is really all that most people were hoping for.

I'm not sure whether you're taking about old or new apartments. For new apartments, it allows owners to be elected on an equal basis to the board of directors as soon as they move in. The developer no longer has any power or control over the company or the property once he starts selling.

For old apartments, I'd love to see a change in the law too, especially for people like this who are left is legal limbo. I honestly can't think of anything though. The law has fallen so far behind and some of the developers have been particularly clever at making sure they retain total control.

Sar!

Im talking about old apartments whereby most if not all Mgt. Co's in these developments have developers sitting on their Board of Directors. (the example you mentioned is extremely similar to my own and many others...)

I think about the only solution left is for everyone affected to start raising this as a massive political issue and then maybe even bring it to the EU if needs be. After all, we wouldnt be in this mess if it werent for the Goverment allowing developers to run riot for so many years.

Funny how now when there is a property crash they start bringing in new laws to help encourage people to buy again.

bobbysands81

Sar! wrote: »

It would be great if it worked that way but sadly thats not the case in that all the owners are charged extortionate "service fees" which pay for any costs that may arise on the development.

If the Management Company (when it is still in the ownership of the Directors) are charging residents for things which the developers should be paying for then that is fraud!

Sar!

Well its a little difficult to tell exactly what our service charges are being spent on when no one receives a breakdown of accounts even though they have been requested by numerous residents till they are blue in the face!

Even if we managed to get the accounts sent out we all know they would be sent on by The Managing Agent who are employed by the Management companys Board of Directors (A.K.A The Developer) who no doubt could tell the residents its being spent legitimately even when its not!

(This year we got told the service fee was being increased and when residents asked why they each got four different explanations ranging from increases in ESB, GAS, Mgt Agent fees and the best answer yet....light bulbs!)

Its a total scam!

The_Conductor

You are legally entitled to a the accounts of the Management Company detailing all income and expenditure. It has to be supplied to you within 21 days of the Annual General Meeting (to which you also have to receive at least 21 days notice). Failure to provide sufficient notice for the AGM or the Annual Accounts mean the AGM is an improperly constituted meeting, and any decisions agreed at the meeting are open to legal challenge.

Sar!

Can you please point me to anywhere that legislation may be written?

Our AGM was held in September last year and the latest update I have received from our Mgt. Agent (today) is that the Board have told him the residents are only meant to receive the account breakdown three weeks before this years AGM (again in Sept) which basically means we have paid for most of the years services before we can see where they are being spent! (.. even if we do in fact recieve them, as last year we didnt!)

The_Conductor

Sar! wrote: »

Can you please point me to anywhere that legislation may be written?

Our AGM was held in September last year and the latest update I have received from our Mgt. Agent (today) is that the Board have told him the residents are only meant to receive the account breakdown three weeks before this years AGM (again in Sept) which basically means we have paid for most of the years services before we can see where they are being spent! (.. even if we do in fact recieve them, as last year we didnt!)

I'll see if I can dig out the actual legislation. Its company law- nothing whatsoever to do with Management Companies per se- but to do with the running of companies in general. It is discussed in detail in the NCA documents though (which is where I was reading it from). link to document here
See Sections 9-14 on the obligations, roles, responsibilities and administration of Management Companies, particularly in relation to Company Law (pages 39 onwards). Section 12 (page 48) relates to AGMs and in section 12.6 it states "under company law, members must be given sufficient notice of when the AGM will be held (at least 21 days). Members should also receive information in relation to both the company's activities and its finances."

Section 13 deals with Management Company and their obligations in keeping financial records and reporting of same.

I will see if I can find the underlying legislation on which the document is based- but it could take a while, I'm up to my eyes in EU legislation for a totally seperate project at the moment.

Shane

Ps- you can make a complaint about lack of accounts being made available to the Office of the Director of Corporate Enforcement. They have a simple complaints form which is really handy at: http://www.odce.ie/en/forms_complaints.aspx

bobbysands81

Sar! wrote: »

Can you please point me to anywhere that legislation may be written?

Our AGM was held in September last year and the latest update I have received from our Mgt. Agent (today) is that the Board have told him the residents are only meant to receive the account breakdown three weeks before this years AGM (again in Sept) which basically means we have paid for most of the years services before we can see where they are being spent! (.. even if we do in fact recieve them, as last year we didnt!)

smccarrick is 100% correct mate - I'll dig out the info for you - it's from the Companies Acts, 1997, I think. Contact the ODCE to make a complaint about it.

If a director of the Management Co is not working within the best interests then he/she is breaking the law (see below).

Check the Companies Registration Office to see when the last time they filed their Annual Returns that they are legally required to.

Also, check your lease and other documents, these should specify exactly what unit owners should be paying for.

www.cro.ie

Taken directly from the ODCE website:

http://www.odce.ie/en/company_companies_responsibilities.aspx

The following sections set out the primary responsibilities of companies, company directors and/or secretaries under the Companies Acts, under secondary legislation and related case law. Further information on the roles of companies, company directors and/or secretaries can be found in the ODCE Information Books which are available for download at the end of this page.

Companies’ Responsibilities
Companies’ principal duties are as follows:

To maintain proper books of account;
To prepare annual accounts;
To have an annual audit performed (subject to exceptions);
To maintain certain registers and documents;
To file certain documents with the Registrar of Companies;
To hold general meetings of the company.
Company Directors’ Responsibilities
Company directors' responsibilities are wide and diverse. Their duties arise primarily from two sources: statute (Acts of the Oireachtas and other legislation e.g. EU Regulations) and common law.

Directors’ common law duties can be summarised into three principles:

Directors must exercise their powers in good faith and in the interests of the company as a whole.
Directors are not allowed to make an undisclosed profit from their position as directors and must account for any profit which they secretly derive from their position as a director.
Directors are obliged to carry out their functions with due care, skill and diligence.
Directors’ statutory duties are as follows:

Duties as a company officer under the Companies Acts;
Duty to maintain proper books of account;
Duty to prepare annual accounts;
Duty to have an annual audit performed;
Duty to maintain certain registers and other documents;
Duty to file certain documents with the registrar of companies;
Duty of disclosure of certain personal information;
Duty to convene general meetings of the company;
Duties regarding transactions with the company;
Duties of directors of companies in liquidation and directors of insolvent companies
Company Secretaries’ Responsibilities
A company secretary’s main functions are to oversee the company’s day to day administration and to ensure specifically that the company complies with the law and observes its own regulations.

Their duties may be summarised as follows:

Statutory Duties under the Companies Acts (usually in conjunction with a director);
Duty of disclosure of certain personal information;
Duty to exercise due care, skill and diligence
Administrative duties
Related Links:

Decision Notice D/2002/1 - The Principal Duties and Powers of Company Directors
Decision Notice D/2002/1 - The Principal Duties and Powers of Company Secretaries
Decision Notice D/2002/1 - The Principal Duties and Powers of Companies
Decision Notices issued by the ODCE