Overcharging Managing Agents

nohopengn

Just thought I'd give you a quick update on how our managing agents have been acting.

At the recent AGM for the apt. complex I joined the board of directors. We have used xxxx for the last 10 years.

At the last board meeting (there are only 4 held every 12 months) - one of the directors (who was also acting a company secretary) informed all other directors that he felt our managing agents have been overcharging the complex. This director then produced some documentation which highlighted the overcharging. For example: the price to replace a door costs roughly €900. Our managing agents charged €2400 to replace the same door. Another example is where we have a janitor who does odd jobs around the complex. Works that the janitor carry out have been charged to the company. Even though we pay the janitor? It has also been proven that the managing agents wrote cheques on behalf of the company that exceed their authorised limit. It has also been alleged that xxxx have 'dipped in and out' of the sinking fund.

Having gone through the recent budgets it is blatantly obvious that these guys are fleecing the company.

The Director who informed of the over-charging estimates that xxxx manage over 100 complexes and they overcharge all developments. In our development he estimated that the overcharging amounts to in excess of €50K per year - over 10 yrs that amounts to over €500K.

The sting in the tail to all of this is as follows: Apparently xxxx got the board members to sign-up to a 3 yr contract. So, even though we are aware of the overcharging we have to wait until the contract expires before having them replaced. This is the advice of the Director who disclosed the overcharging. This Director was also the Company secretary when the contract was signed and this Director was also the one who recommended that the company signup to a 3 year term with xxxx.

I am glad to see that xxxx's charging is being exposed, however I do not feel the company should have to wait until the 3 year term is finished before breaking the contract with xxxx. Any thoughts, insights or suggestions welcome.

Kipperhell

The management charges may be expensive but not as clear cut as simply overcharging. They can quite legally hire their own company/subsidiary and charge what they like to the get the work done. Like wise with the janitor duties being additional expense charges if not covered by the agreement.

I don't like management companies for this very reason but it is likely not illegal or a breach of contract. You would want to be very careful about stating this as overcharging.

Paulw

Surely it should be up to the directors of the management company to agree any payment before a service is hired?? Why are you allowing the management agent to do what you claim?

You should simply require that ALL cheques signed are signed for by directors. You should agree that ANY work required should be quoted and agreed by directors before any work is done.

That's how we do it in our development, so the directors always know what the charges are, and where the money is going.

From what you are saying, I blame the directors. If I was a management company shareholder, and thought my management fees were being incorrectly used, I'd take action against the management company directors, not the management agent.

How Strange

They're not the only MA's to do this but I've seen evidence of what can happen when the MA takes over control of the cheque book and is allowed to sign cheques.

First thing the directors need to do is change the authorised signatures on cheques so only the directors can sign cheques and the MA has to come to them. Then they have to see contractor invoices not MA invoices for the services.

Also, MA's should charge a fixed amount per unit, say €18 or whatever is agreed with the MC. There should be no additional costs added onto service invoices.

Bottom line here is the directors are at fault for allowing this to happen. While the MA may be fleecing the MC the directors are the people charged with running the company so any mistakes, overcharging or unorthodox activity is solely their responsibility.

How Strange

Paulw wrote: »

Surely it should be up to the directors of the management company to agree any payment before a service is hired?? Why are you allowing the management agent to do what you claim?

You should simply require that ALL cheques signed are signed for by directors. You should agree that ANY work required should be quoted and agreed by directors before any work is done.

That's how we do it in our development, so the directors always know what the charges are, and where the money is going.

From what you are saying, I blame the directors. If I was a management company shareholder, and thought my management fees were being incorrectly used, I'd take action against the management company directors, not the management agent.

You have two different examples of MC's here.

PaulW's is a well run MC and the OP's is badly run. Unfortunately most MC's are badly run because the directors also have full time jobs and other committments so they're only too happy to leave all the day to day stuff in the development to the MA.

Paulw

How Strange wrote: »

You have two different examples of MC's here.

PaulW's is a well run MC and the OP's is badly run. Unfortunately most MC's are badly run because the directors also have full time jobs and other committments so they're only too happy to leave all the day to day stuff in the development to the MA.

In our development, we all have full time jobs too, but the MA will come to us to get cheques signed. Aside from that, and work that needs to be done is communicated (with quotes) by email, followed up with phone calls and (if needed) a meeting.

How Strange wrote: »

Bottom line here is the directors are at fault for allowing this to happen. While the MA may be fleecing the MC the directors are the people charged with running the company so any mistakes, overcharging or unorthodox activity is solely their responsibility.

Yes, it's very much the directors that are at fault, and if legal action was taken by shareholders of the management company, then it is the directors who could find themselves in a lot of trouble. The directors have the legal liability to the shareholders to ensure that the management fees are properly used.

nohopengn

Paulw wrote: »

From what you are saying, I blame the directors. If I was a management company shareholder, and thought my management fees were being incorrectly used, I'd take action against the management company directors, not the management agent.

I agree with what yourself and Howstrange are saying.
As soon as I was informed I checked with 2 solicitors and the ODCE the very next day. In all cases I was recommended to seek legal advice.
This is where things get interesting.
At the next meeting, I explained to all directors that I had contacted the ODCE and 2 solicitors to get advice. I explained that I was concerned as a director, a case of negligence may be brought against me for not removing the MA. The response was muted. The Director who highlighted the issue in the first place(let's call him M), was very hesitant with regard to removing the incumbent MA. He said they are too big and it was not our job to 'bring down the MA'.

When I suggested that an independant audit be undertaken, another of the board expressed concern that the audit would reveal nothing and cost at least €10-15K.

At the last meeting we did change the bank mandate and now two board members must sign the cheques.

Finally, Director M at the last AGM told all members that tenders had been issued with regard to changing the MA. It turns out, that no tenders were ever submitted. So this Director M delibrately misled all members by telling them tenders were sought. He also has assumed the role of secretary even though he was not reappointed. This guy M has told all directors that his full-time job is managing apartments and he uses 'bullyboy tactics' in the boardroom .

I've considered calling an EGM and laying all cards on the table for the members. The thing is I may only get one chance and I want my case to be watertight.

Again, feedback welcome.

thanks

Paulw

nohopengn wrote: »

When I suggested that an independant audit be undertaken, another of the board expressed concern that the audit would reveal nothing and cost at least €10-15K.

Your accounts must be independantly audited each year (by law). This should only cost around €1-2k.

You could always resign as a director, and then take legal action against the sitting directors.

You (personally) are in a very difficult position and are legally liable for the current issues.

Best of luck.

nohopengn

Paulw wrote: »

Your accounts must be independantly audited each year (by law). This should only cost around €1-2k.

You could always resign as a director, and then take legal action against the sitting directors.

You (personally) are in a very difficult position and are legally liable for the current issues.

Best of luck.

Thanks PaulW

nohopengn

Paulw wrote: »

You could always resign as a director, and then take legal action against the sitting directors.

You (personally) are in a very difficult position and are legally liable for the current issues.

Best of luck.

quick update.

Since attending the last board meeting a number of issues have arisen.
1. The MA have misinformed the board on a number of issues - I was able to get the MA to confirm this.
2. I have identified services that we are not getting, but are being charged for.
3. M - the board member with his own agenda, is now refusing to respond to any direct email/phone requests made by me.

I checked with the ODCE and they said they will not get involved with internal board disputes. does anyone know if there are guidelines/rules anywhere that state how board members should behave?

markpb

nohopengn wrote: »

At the next meeting, I explained to all directors that I had contacted the ODCE and 2 solicitors to get advice. I explained that I was concerned as a director, a case of negligence may be brought against me for not removing the MA. The response was muted. The Director who highlighted the issue in the first place(let's call him M), was very hesitant with regard to removing the incumbent MA. He said they are too big and it was not our job to 'bring down the MA'.

This guy M has told all directors that his full-time job is managing apartments and he uses 'bullyboy tactics' in the boardroom.

There's something funny going on there. Is Director M an owner of an apartment or are they related somehow to your agent? Their reluctance to do anything after highlighting potential problems is very suspicious.

Ciara22

Quick query - Is it right that you have named the Management Company in your original post?

Or are you no longer with the company you have named?

pinkypinky

He's named the management agent not the management company.

consumer1000

nohopengn wrote: »

quick update.

Since attending the last board meeting a number of issues have arisen.
1. The MA have misinformed the board on a number of issues - I was able to get the MA to confirm this.
2. I have identified services that we are not getting, but are being charged for.
3. M - the board member with his own agenda, is now refusing to respond to any direct email/phone requests made by me.

I checked with the ODCE and they said they will not get involved with internal board disputes. does anyone know if there are guidelines/rules anywhere that state how board members should behave?

Dear Nohopengn,

You need to take steps if you haven't already to safeguard your company from MA's and more importantly rogue directors who have access to your company's bank account, chequebook and other company funds. Your MA isn't your biggest concern right now and can be instrumental in helping your clean up your house so to speak.... this director you have bullying the rest of you is your biggest concern right now.

Do not allow one director to bully the rest of the board…. The best way to achieve this is to formalise all board proceedings. Do this with strict motion, second and vote on board level. Bring these protocols into practice at every board meeting! These formal practices are designed to take the verbal bullying out of the boardroom. Anyone can put a motion to the board at a board meeting and get it voted upon. Do not let one director run your company because in the end you are all liable for this one directors actions.

While the interaction should be friendly, no board member should be treated as a trusted friend unless they are actually one of your close trusted friends. Good governance goes a long way in voluntary organisations such as these.

First your board should implement a series of check and balances for all directors and the MA to follow. You should as a board propose and second several resolutions at a single Board meeting, where you pass the following rules for all board members to follow. Make sure you take detailed minutes this meeting and all directors get copies.

Your bully will either get more unruly or be tempered quick enough. Either way there is no reason to keep things the status quo without formal practices put in place.


Propose and pass the following. Do not compromise on these.

1. Only Directors can sign cheques. All Directors should have the ability to sign the checks barring a Treasurer or Assistant Treasurer to be a check and balance.

2. No Cheques are EVER written outside a Board meeting or outside of the entire board's knowledge and approval. This is CRUCIAL!

3. At least two directors must sign each cheque. And these should be signed at Board meetings in the presence of the rest of the board.

4. All invoices for payment are presented by the MA to the board 7 days in advance of cheques being written. This will give the board time to review all payments prior to signing the cheques and won't waste your time at the board meeting sifting through and questioning payment.

5. Your board should meet once a month, at the very least to sign these cheques and approve invoices.

6. All Direct Debit Mandates should be cancelled until you can assure the checks and balances are in place. All current Direct Debit Mandates / Standing orders should be known and listed for all directors.

7. Pass a series of motions at a Board Meeting that No Contracts or Service Level Agreements are to be signed outside of board meetings. No single director should sign any contract... Always require at least 3 Director's Signatures for each and every Contract or Service Level Agreement with a third party. It should be your company's policy to not honour any agreement that isn't approved by the entire board by a majority vote. Any single director engaging contractors outside the board's approval should be removed as a director immediately.

8. Take Minutes and Record all proposals, motions, seconds and votes on these issues.

9. Follow protocols when passing these motions. Be official. As most boards are operating more on verbal exchanges and not formally voting on changes, this may seem awkward at first.... but as a board who are to protect the company, and have the company's best interests in mind, you should implement some type of formal process of getting motions presented to the board and voted upon. These should always be recorded and minutes should be distributed and approved at the next meeting, and minuted again at that meeting as being approved.

10. Any director who does not see these checks & balances as a priority and the very minimal level of protection for directors and their personal liability should be removed. Directors liability insurance should not be a reason for tossing aside checks and balances.

11. Your Managing Agent can be dismissed if misconduct is proven. A contract does not allow for theft, misappropriation of funds, unethical or potentially illegal behaviour. It also does not allow an MA to walk all over you. If the Agent is in breach of their contract, it is null and void. Consult a solicitor on the contract and its veracity before proceeding and document your case clearly.

12. Elect a Treasurer from the Board. Give the Treasurer the Chequebook, but do not put him / her on the bank's mandate to sign cheques. This person should be a check and balance. No cheques should be written without his / her approval. Again, write no cheques outside the permission of the board.

Make sure the bank ONLY issues new chequebooks to the Treasurer - NOT any other director who can sign them outside board approval. This goes for the MA as well.


13. Submit all request to the bank in writing and GET WRITTEN CONFIRMATION from your bank that they will comply with your requests. Banks are so incompetent and lax when it comes to Management Companies, they tend do whatever they like and don't necessarily safeguard your funds or take a proactive approach to good corporate governance when management companies are concerned.

14. If your company's address is that of a director, namely the person you are calling 'M' Change it immediately to be that of your agent or to someone like your company solicitor. Do not allow the entire correspondence of your company to be limited to being delivered to a potentially rogue director's home address.

15. Get a company solicitor if you don't already have one. It will NOT be wasted money as some of your other directors may state. Do NOT let a director legally represent the company. Get an independent solicitor that you trust personally. Make sure the solicitor is answerable to the entire board, not simply a single director. A solicitor can help take a severe burden off of the board and if you have to terminate a contract with your MA due to suspect practices they will be there to aid you. Also, they can be a good transitional address until you find a new agent.


16. If you are considering moving from one agent to another. Get your ducks all in a row.
A. Get all invoices for the last year or even two years.
B. Get a complete and updated list of all member's contacts.
C. Get a complete maintenance fee statement history of all apartments in the block. This will help with debt collection in the future.
D. As part of the list of statements, a complete list of debtors.
E. Get copies of all contracts and Service Level agreements for any contractors in your complex. Get a list of phone number, contacts and billing address for each.
F. Get a copy of the company's insurance policy and all the details related to it.
G. Get a complete list of lodgments for the last year or two as well.
H. Continue to get copies of all invoices and lodgments every single month from now until you change agents.
I. Get any and all developer information that may reside with your MA. (Schematics of your complex, history, snag lists, maps of the complex, layouts, copies of the countersigned leases… basically everything you can get your hands on.

All of the above is your company's property. A Managing Agent cannot refuse to provide it to you, as your company owns all of this information.

If the MA refuses to provide this information or most likely says they will provide it but fail to do so after several requests, give them an ultimatum in writing. Again, all of this information is your company's property and refusing to provide it to you as an elected Director of the company can be seen as a breach of any contract, as negligent and potentially illegal.

J. CONTACT APARTMENTOWNERS.IE AND OTHER GROUPS OF PEOPLE IN THE INDUSTRY WHO CAN HELP GUIDE YOU.


I'm sorry this may be a lot to take in and you probably did not sign up for this type of work.... but most of these are very easy to implement and should be the very least your board does in making sure your Board is acting in the best interests of your company.

There will be directors who oppose you on these things for no good reason. I cannot stress how important it is for your company and board to get some sort of control of your own company... either from your MA or from a rogue director. Check & Balances achieve that.

And yes.... any director who doesn't follow your checks and balances can be and should be removed from your board immediately. This can be done at ANY TIME. NO AGM is required; a simple majority vote from the board of directors will achieve this. The same goes for your company secretary. You vote on it, and then file the appropriate papers with the CRO. That's it. There is no comeback for a director who has been voted off the board by a majority of directors for not following the checks & balances formally put in place to protect the company. Contact your bank immediately and in writing upon removing this rogue director and instruct the bank to not process any cheque signed by this now former director. Essentially change your bank mandate in writing.


Good luck.


Consumer1000

RATM

How Strange wrote: »

Bottom line here is the directors are at fault for allowing this to happen. While the MA may be fleecing the MC the directors are the people charged with running the company so any mistakes, overcharging or unorthodox activity is solely their responsibility.

Hear, hear! They're not called Directors for nothing :pac:

higgins2010

Hi We have call a meeting with the board of management tonight. we want to take over the running of the estate our selfs as there is only 10 houses in it and €400 a year is just too much for us to pay. Can you Help? what steps do we as share holders take to do this

markpb

higgins2010 wrote: »

Hi We have call a meeting with the board of management tonight. we want to take over the running of the estate our selfs as there is only 10 houses in it and €400 a year is just too much for us to pay. Can you Help? what steps do we as share holders take to do this

The only people who can do this are the directors of the management company. Initially, this is the developer and/or someone they appoint but after a few years, they are supposed to resign and let owners vote other owners onto the board. Once this has happened, the directors can terminate a contract with the agent and appoint a new one or opt to run the company without one.

Find out who your directors are and speak with them. They can opt to make this decision themselves or they might prefer if it's presented as a motion at an AGM or EGM and have all the owners vote on it.

higgins2010

Thanks for the info