leaseholder and PRTB

Mailman

What's this stuff at the bottom of this report about an apartment leaseholder being able to refer disputes to the PRTB?
http://www.independent.ie/national-news/social-housing-clawback-ends-1708458.html
That seems like a crazy decision. The property isn't rented and PRTB should have no business investigating anything to do with non-payment of service charges.
As leaseholders are members of the managment company the PRTB would be investigating a complaint by a leaseholder against a group he belongs to himself/herself.

dats_right

I heard some discussions on this a couple of weeks ago and I'd never previously considered the matter, but per section 3 (1) of the Residential Tenancies Act 2004:

Subject to subsection (2), this Act applies to every dwelling, the subject of a tenancy (including a tenancy created before the passing of this Act).

So let's get back to basics, what exactly is the realtionship between the owner of an apartment and their management company regarding landlord and tenant issues? It is usual that the owner/lessee of the apartment gets from the developer/lessor a long lease of say 999 years subject to a nominal rent of maybe €5 per anum (which will never be demanded) and the various covenants and conditions therein contained (eg pay management fees, etc), the management company is also usually a party to the lease. Upon completion of the development the developer will transfer his interest in the common area along with his reversionary interest in the apartment leases to the management company.

Applying section 3 to the above, we see that;
1. The apartment is a 'dwelling' for the purposes of the act as it satisifes the definiton of a dwelling contained in the Act, viz:

a property let for rent or valuable consideration as a self-contained residential unit and includes any building or part of a building used as a dwelling and any out office, yard, garden or other land appurtenant to it or usually enjoyed with it and, where the context so admits, includes a property available for letting but excludes a structure that is not permanently attached to the ground and a vessel and a vehicle (whether mobile or not);

as there is a rent, albeit it nominal, it thus satisfies the first strand of the test as to whether the provision of the Act apply.

2. Does it classify as a tenancy? Well, clearly the answer is yes as the initial agreement was a lease subject to a nominal rent.

So was Judge Linane's decision in the Circuit Court mad? I would say no, as it her job to apply the legislation as it stands and not as it ought to be or how it should be. This is particulalry so as this problem could so easily have been avoided by better drafting. Because it would have been very simple for the legislature to exclude long lease/management company scenario by including appropriately worded provision to that effect in the legislation, as it did with 9 other types of tenancies which are excluded from the provisions of the Act . But the legislature didn't and as a result it has resulted in this presumably undesired and unintended consequence.

Furthermore, as we all know from the case of Salomom v Salomon the principle of seperate legal personality or entity exists in the case of companies registered under the Companies Acts, meaning that a company has its own legal personality seperate and distinct from that of its members. So the person will obviously be suing the management company quo their position as lessee rather than as a member of the company. The distinction may seem artificial but doesn't alter the fact that there is no difficulty with a member of a company suing that company.

In conclusion I think the decision is the correct one based on the law as it currently stands. I do however agree with the OP is in the overall sentiment that the result of such a decision will have undesired effects and that the PRTB shouldn't have any business with such disputes, but that isn't the Judges fault as it is not their job to remedy the defects of the legislation. It is quite clear that these types of disputes were never envisaged as falling in the remit of the PRTB, not least because although technically speaking there is a relationship of landlord and tenant the de facto position is very much different 'on the ground' as it were in the case of these long apartment type leases. Nonetheless the onus is now firmly on the politicians to close this lacuna in the legislation by bringing forward a suitable legislative amendment to redress the situation as soon as possible.

Mailman

As Secretary of a Management company where two leaseholders are consistently acting the maggot with regard to their management fee this has the potential to cause me considerable hassle.
The one good thing about them being leaseholders was that it was always clear that they were in breach of contract so a Solicitor's letter threatening court proceedings forced them to pay their (comparitively small) service charge.

dermot_sheehan

This judgment was due to the loose drafting of the Residential Tenancies Act which will now have to be amended unless the PRTB wants to be inundated with several thousand registration applications for "tenancies" where no genuine landlord/tenant relationship exists.

The problem now for management companies is that the PRTB will only have jurisdiction if the tenancy is registered, which requires the co-operation of the tenant to sign a form. Most tenancies that are subject to the PRTB have a covenant that the tenant assist with such registration, I imagine most long term tenancies do not have this covenant.

Jo King

gabhain7 wrote: »

This judgment was due to the loose drafting of the Residential Tenancies Act which will now have to be amended unless the PRTB wants to be inundated with several thousand registration applications for "tenancies" where no genuine landlord/tenant relationship exists.

There is a more elaborate report here. http://www.herald.ie/national-news/courts/judges-ruling-gives-residents-of-apartments-new-legal-rights-1708975.html

What is not genuine about the Landlord/ tenant relationship? There is the relationship of landlord
and tenant as defined by Deasy's Act. Even a clause in a lease that the tenant should co-operate with registration is of no use to a landlord. If the tenant does not comply, the only redress the landlord has is to go to the PRTB who will not entertain him beacause the tenancy is not registered!

dermot_sheehan

There is no genuine relationship in the sense that a person buying an apartment under a very long lease with a nominal rent is in reality buying the fee simple. A tenancy is used to ensure that covenants to pay the service charge and provide support to the apartment above are enforceable against the purchaser's successor in title. The Landlord service company is not interested in the nominal rent reserved nor its reversionary interest (which doesn't revert for many hundreds or thousands of years in many cases), but rather ensuring the covenants are enforced.

I'm fairly ensure that the oireachtas did not intend for these relationships to be caught by the residential tenancy act, however given the way it was drafted it is a fair interpretation of the act for it to cover these types of situations

Jo King

If a tenancy is used it is a genuine lanldlord and tenant situation. The purchaser does not buy the fee simple. He gets a long lease and is bound by covenants. The oireachtais may not have intended to cover these type of lanlord and tenant situations ( why did they not say so?) but they did. This decision will be a godsend to many people who have trouble with management companies and with developers who have retained control. It appears that new legislation to regulate apartment management complexes will not apply to existing developments.

dats_right

Jo King wrote: »

This decision will be a godsend to many people who have trouble with management companies and with developers who have retained control. It appears that new legislation to regulate apartment management complexes will not apply to existing developments.

For starters, I don't think you can seriously equate a year long letting agreement with a 10,000 year lease and I would also say that I agree entirely with Gabhain's comments generally. Besides, I doubt whether the Circuit Court decision will be the godsend you think and I will explain why, firstly if the landlord's obligations as provided for under the Act are imposed on management companies,supposedly as landlords, that will undoubtedly lead in many instances to enormous additional financial burdens being placed on the company, which will in turn be passed onto the apartment owners in the form of increased management fees. Secondly, the burden of compliance with the obligations RTA and in particular the financial implications of same will invariably result in management companies ceasing to function and ultimately being removed from the Register of Companies, thereby leaving everybody in limbo and from a conveyancing perspective making your dwelling virtually unsellable.

Your refer to Deasy's Act which I beleive was enacted circa 1860?! There have been many enactments since altering the duties and obligations of landlord and tenant not least the relatively straight forward procedures for buying out the freehold in long term leases, which has the effect of essentially eliminating any notion of landlord and tenant in the true sense in these long leases. This procedure is not usually available to owners of apartments, which is probably the real reason why the RTA 2004 overlooked the situation of management companies as lessors.

Rest assured though the PRTB were never intended to have jurisdiction over long leases used for selling apartments. I would be very surprised if amending legislation isn't introduced shortly.

Victor

gabhain7 wrote: »

There is no genuine relationship in the sense that a person buying an apartment under a very long lease with a nominal rent is in reality buying the fee simple.

Sutely a fee farm lease, not fee simple?

dats_right wrote: »

Your refer to Deasy's Act which I beleive was enacted circa 1860?! There have been many enactments since altering the duties and obligations of landlord and tenant not least the relatively straight forward procedures for buying out the freehold in long term leases, which has the effect of essentially eliminating any notion of landlord and tenant in the true sense in these long leases. This procedure is not usually available to owners of apartments, which is probably the real reason why the RTA 2004 overlooked the situation of management companies as lessors.

Eh, whats the story with ground rent or does it apply in the management company-apartment owner arrangement?

Milk & Honey

I was delighted with the Judge's ruling seen in yesterday's Evening Herald and mentioned in the Irish Independent re: owners of property having new legal rights. As, I am the owner of an apartment and as i have a problem with the builder on the site, i now understand it, following the Judge's ruling this means that since my builder owns the long lease (999 years), I can now take my grievance against the builder to the Residential Tenancies Board instead of having to go through the long and expensive route to the courts. Does this ruling apply to management companies also? Great news, isn't it!!!!

Robbo

Until this is "fixed" aren't we in a situation where the PRTB is able to hear these disputes but almost certainly won't touch them with a bargepole on account of the tenancies not being registered and that they would be swamped with more than their usual share of petty squabbles?

Jo King

The PRTB can only refuse to deal with disputes referred by the landlord if the tenancy is not registered. there is nothing to stop a tenant referring a dispute. Management companies will probably be pressured by the owners to register now anyway. It only costs €300 a block.There is a lot of scaremongering about increase costs for management companies. A bit of oversight might make them more efficient.