Management Company, Household charge and future property tax!

muttley-dps

Hi folks,

Currently in the middle of buying my 1st home. We're as far as pre-contract enquiries.

Now my solicitor is telling me that the estate in which am buying is under management company ownership for common areas, roads and drains. Where reading drains I imagine sewers are included but need to verify this. The solicitor tells me that even though the management company is named that's as far as it goes - in practicality it does not exist. One of the original builders of the estate is named as director of this management company.

The county council will not take ownership of the estate either so as regards maintenance then looks like there's going to be a large gap - so in the middle of a stormy night if drains or sewers were to backup then there is no-one to contact. Solicitor indicates it is then the responsibility of the original builders to fix. Given recent happenings with Priory hall in Dublin then I wouldn't be over-hopeful builders would sort issues to quickly. Estate is 6 years old and occupancy is 90%.

The other issue here then if we do proceed is household charge and future taxes. If state (county council) is to wash hands of any obligation to residents in estates/apartment complexes all over the country, then how can they expect people to pay property taxes when basic services aren't underpinned by the state?

Just wondering what thoughts are there out there regarding i) estate maintenance and ii) state washing their hands of responsibility while still having hand out for their pound of flesh!

Thanks in advance.

Firedance

I live in an estate controlled by a Management Company. Obviously lots of people will have lots of varying experiences and opinions - this is just mine. If I was purchasing again I would avoid management companies and I would avoid a newly built estate. I say this because it took us several years to force the builder off as a director of the management co, then it took several more to get rid of the property maintaince company the builder had elected to run the estate. It was a lot of hassle and stress.

With regard to new estates have you enquired about Pyrites? You need to be certain there are none in the estate your looking to buy in. When there are arguments going on between the house oweners and the County council about who's responsible for what its not a good situation to be in, even if its only for a period of time (the council may take over the estate/roads etc eventually but you would need to have your solictor confirm that)

I'm sure there are others out there that may have had a more positive experience and who can offer different opinions.

Whatever happens good luck with your first house purchase, its an exciting time :-)

bmaxi

I agree with Firedance. If you can, avoid a house in an estate that has a Management Company, it's more than the hassle is worth. There will be some estates where the residents have successfully taken charge of the Management company but in my experiernce, these are few and far between and need a concerted effort on the part of the people involved. In my case, after a residents meeting at which there was much hot air flowing, seventeen people turned up at the AGM and there were four couples included in that. This is the kind of apathy that has us under the thumb of corrupt politicians.
Expect nothing from County councils, these after all are the reason we have management companies and despite a former Minister for Environment ruling that Management Companies were never envisaged for traditional housing estates, little has been done to change the situation.
The household charge is just that, a tax on owning your home. Although the Government has said it will go toward Local Authority fund,s it is just replacing funding which has been cut from Central Government, IMO they have deliberately avoided calling it a service charge because then people could demand services. Basically it means that the price of your house has increased by 100 euro and will continue to increase annually by whatever figure the Government decides, in effect, you will never own your house outright.

dub in meath

to be honest there just a money making scam for the builder after the site is finished or his mates that run there own property management company in our estate the people in the estate set up there own company to run the area and we pay 50 euro a year and covers everything.the estate has 200 houses in it and the guys that do the grass go around with weed killer and pick up rubbish as well i have friends that are paying up to 1200 euro a year for the same service.

someuser905

sounds like a shít estate, ask for a huge discount. or walk away

athtrasna

dub in meath wrote: »

to be honest there just a money making scam for the builder after the site is finished or his mates that run there own property management company in our estate the people in the estate set up there own company to run the area and we pay 50 euro a year and covers everything.the estate has 200 houses in it and the guys that do the grass go around with weed killer and pick up rubbish as well i have friends that are paying up to 1200 euro a year for the same service.

To be honest you don't have a clue! I live in a managed development and know where every cent of my fees go and our former developer hadn't had a single cent in seven years since owners took over (13 months after the development was built). Sweeping generalisations help nobody, buying in a managed development brings rights and responsibilities.

babaduck

dub in meath wrote: »

to be honest there just a money making scam for the builder after the site is finished or his mates that run there own property management company in our estate the people in the estate set up there own company to run the area and we pay 50 euro a year and covers everything.the estate has 200 houses in it and the guys that do the grass go around with weed killer and pick up rubbish as well i have friends that are paying up to 1200 euro a year for the same service.

With the greatest of respect that is utter crap. The local authority determines which development will require a management company or will be taken in charge when planning permission is applied for. The rule of thumb is that private developments have a clause that it must be privately managed & never taken in charge so that the local authority save a shedload of money. Trust me, no developer ever wanted to establish & maintain a management company as they were a pain in the hoop. No resident wants to pay fees for services that were traditionally free when they were growing up, and trying to get 100% payment compliance is almost impossible. I worked for a builder for 7 years and only one development fell outside the management company clause due to an oversight on the council's behalf. It took me FIVE years of fighting, rowing & threatening to sue the Co. Co. to take the estate in charge. They don't want to take anywhere in charge as it eats into their budget & I can't see this stance changing anytime soon.

muttley-dps

Cheers folks for the replies so far!

Just to make things clear on the answers I'm seeking. While I now understand pros and cons of management companies the problem I have is that the management company exists only to comply with regulations.

People living in the estate (and I've talked to a few) do not pay this non-existent company a yearly fee, there is a residents association which they pay into which looks after the aestethics, nothing more. I've mentioned to these residents my solicitors have indicated any problems with drains/sewers ain't owned by anyone, probably causing these residents some worry! As no issues have arisen (yet) regarding these services then no one is overly worried, houses are of a sound standard and arcitectural survey I've had carried out verifies this. My worry is a main utility failing without recourse! I did ask when originally moving on the property were drains and sewers owned by local authority and received a positive reply from vendor but now is not the case. Am thankful my solicitors have been thorough.

I'd have no problem paying an annual management company fee so long as I've a number in an emergency to sort problems out. This thread would then be redundant as it would not be an issue for my solicitors.

So, to summarise, while house is perfectly sound, issue still exists even after pre-contract enquiries surrounding ownership of main utilities. Previous post mentions estate may be a bag of sh*te but speaking to residents doesn't bear this out. If unresolved to my solicitors satisfaction then will walk away relucatantly - solicitors have indicated this may be a reason for the bank (mortgage approval has alread been obtained in principle depending on final review of all contracts) to withhold loan cheque.

Given so many estates around the country may be in similar predicaments then wonder are mortgages been given on such properties!?

Original developer to my understanding still has indemnity but given precarious nature of so many contractors it may only take one unscheduled matter to send em over the edge!

Lucky to be in a position to be able to still walk away I suppose but being emotionally invested makes it that much harder. Given feedback we've had a reality check and as such thoughts of moving are now more tempered. STill hoping of a positive outcome and we can move in soon though!:)

Any other thoughts out there? Thanks in advance for constructive advice and contributions.

athtrasna

muttley-dps wrote: »

Cheers folks for the replies so far!

Just to make things clear on the answers I'm seeking. While I now understand pros and cons of management companies the problem I have is that the management company exists only to comply with regulations.

People living in the estate (and I've talked to a few) do not pay this non-existent company a yearly fee, there is a residents association which they pay into which looks after the aestethics, nothing more. I've mentioned to these residents my solicitors have indicated any problems with drains/sewers ain't owned by anyone, probably causing these residents some worry! As no issues have arisen (yet) regarding these services then no one is overly worried, houses are of a sound standard and arcitectural survey I've had carried out verifies this. My worry is a main utility failing without recourse! I did ask when originally moving on the property were drains and sewers owned by local authority and received a positive reply from vendor but now is not the case. Am thankful my solicitors have been thorough.

I'd have no problem paying an annual management company fee so long as I've a number in an emergency to sort problems out. This thread would then be redundant as it would not be an issue for my solicitors.

You need to read up on living in a managed development if you're considering buying in a managed development. Robert Gogan's book "A Guide to Apartment Living" is primarily about managed developments so despite the title would be really useful to you.

The Management Company is not "a non existant company" it is a legal entity of which all owners in the development are members. The MC own all common areas in a development. The MC in turn usually hire a Management Agent...like X Property Management to look after the day to day running of the development.

As an owner you would be a member of the management company and that brings rights and responsibilities. That book will explain in more detail. Alternatively see www.apartmentowners.ie for some really useful resources in connection with living in a development with a MC.

The_Conductor

Also note- that irrespective of whether or not the Management Company is there solely to comply with regulations- it is not simply a shelf company that can be allowed exist purely on paper. It is a company, and is required to comply both with Company Law and also any provisions specific to Management Companies- such as a sink fund to cater for the aforementioned potential problems with utilities etc. Imagining you can go to the Residents Association for a whip around when the main sewage pipe bursts (which does happen, thankfully not very often)- is naive in the extreme.

If proper returns are not kept for the Management Company and filed as prescribed with the CRO- you could find that the Management Company becomes struck off- and believe you me, you do not want to know the trouble it is to get it reinstated (plus if it gets struck off- all its assets become vested in the Minister for Finance.........)

I would be checking that you have Freehold of the property being purchased, not leasehold- in a leasehold situation you are buying a long term lease (it could be a thousand year lease) on the property- however the property physically remains vested in the Management Company. Avoid residential leaseholds, if at all possible- everything might be rosy for 10-15 years, but when you least need it- problems can arise (for example the aforementioned striking off of the Management Company through non-filing of annual returns........)

Personally- I wouldn't care if the property was the most wonderful place I had ever seen- once I hear the words Management Company- I would immediately take note and if I wasn't far progressed in the transaction- run.........

Hegarty

If there is a managment company in place and associated fees then this would be written into the leasehold so your solicitor should be aware of this, if residents are not paying these fee's then the management company that is in place will use a solicitor to try collect the debts, however this can take years in some cases, but the associated legal charges in collecting this debt are also billed to the non-paying properties but really can have a major impact in terms of cash flow for the managment company, also no avoiding paying this debt as it must be paid before selling your property, if buying you should check that these fee's have been paid. also you should be able to get a copy of the accounts of the management company will give you some idea how things are running

If there is a Management Company then every resident in the estate is a member and they call the shots, the directors are normally listed as the builders but its the actual mangement agency that control things nothing stopping the builder if he is a director giving the landscaping business to his best mate for €30k a year when it should only cost €10k, The Directors should be voted off at the annual AGM or by calling a EGM and every company must have an annual AGM in accordence to the CRO, if a few residents become the new directors they take control of the managment company & have complete control and direct the agency as to who and how money is been spent in the estate , by looking at the filed accounts you can see how money was been spent (wasted) and then its possible to start to make huge cost savings and pretty much turn thing around
for the better.