No management company

Ipro

Hi all , looking a small bit of advice on for me what is an unusuall situation .

Went to view an apartment for sale today.
The apartment is in an old converted building (total 6 units all together )

Obviously when speaking to the estate agent I asked about management fees and how many years were left on the leasehold etc , and was given the following information.

The building has no management company , their is a fee €250 a year which everyone pays which is for building/block insurance. Their is no common areas a such so therefore there is no maintenance really needed. If the building needs to be reprinted everyone is pretty co operative and they just agree the building needs to be reprinted and throw a few euro together to get this work carried out. There is no sinking fund!
As far as she knows all owners jointly own the free hold on which the building sits ( rather than everyone having a leasehold)

The apartment is exactly what I'm looking for so I don't really want to let the above put me off. I just wanted to know if this type of situation was known by anyone and if it's legal ? As I was under the impression that it was mandatory for apartment blocks to have a sinking fund.

Also , the conversion was only recently carried out , maybe 5 years ago so the place is still pretty much like new.

But even still , I look to you all for experience /advice.

Thanks

Prenderb

It does seem a bit strange. Good summary here of the multi unit developments legislation... http://www.citizensinformation.ie/en/housing/owning_a_home/home_owners/management_companies_for_apartment_blocks.

Ipro

Prenderb wrote: »

It does seem a bit strange. Good summary here of the multi unit developments legislation... http://www.citizensinformation.ie/en/housing/owning_a_home/home_owners/management_companies_for_apartment_blocks.

Thanks ,

Actually read though all of that earlier but couldn't really get my head around it .

I think , and I stress think what's happened is that the owners all form part of the management company but that they have decided to not have a managing agent ( someone from the outside to come in and look after everything on their behalf ) and have also chossen not to contribute to a sinking fund .

That seems to be the only thing I can think off. But I'm still convinced somehow that it's illegal to not have a sinking fund :-/

I'm sure I read somewhere earlier that each unit has to make a mandatory contribution of €200 a year.

Mrs OBumble

Is there a lift? They can need expensive maintenance.

Is the price low enough to compensate for the legal uncertainty you may face? I own something similar but more complicated overseas, and believe that the lower purchase price was worth the risk that one day I may have to pay more than my "share" of fixing something common

ted1

What happens when the roof needs to be fixed?

Ipro

ted1 wrote: »

What happens when the roof needs to be fixed?

I imagine everyone would go to the bank. , ask for a loan and make repayments till the loan clears. I think that's reasonable given that if I were to buy a house and it needed a new roof it would come out of my pocket.

Also theirs insurance on the building so if the roof were to become damaged I'm assuming the insurance would sort that out. As regards the roof needing to be replaced rather than being damaged well that's something people would plan to do . For example there's a new roof so everyone would know that we should look at replacing it in say 20/30 years or what ever.

Putting €200 now into a sinking fund isint going to be worth that much in 30 years with inflation etc.

I suppose I'm more looking at things from a legal point of view.

Ipro

Mrs OBumble wrote: »

Is there a lift? They can need expensive maintenance.

Is the price low enough to compensate for the legal uncertainty you may face? I own something similar but more complicated overseas, and believe that the lower purchase price was worth the risk that one day I may have to pay more than my "share" of fixing something common

There is no lift. It's a small building, the only maintenance really would be painting of the building , replacing windows every 20 years , roof every 30 years and cleaning the gutters every 1/2 years. Price wise it's being sold for 25% lower than other properties in the area. All apartments are owner occupied by people in the civil service /white collar jobs with the exception of one rental.

In my opinion the savings on fees are enough to go towards any costs that may arise , it's 1000 a year less than other places I've been looking at

The_Morrigan

Ipro wrote: »

I suppose I'm more looking at things from a legal point of view.

You need to go to a solicitor for that. Legal advice can neither be sought or given here.

/Mod

Ipro

The_Morrigan wrote: »

You need to go to a solicitor for that. Legal advice can neither be sought or given here.

/Mod

I appreciate that. I'm not looking for legal advice , I'm looking to see if anyone has had any experience of a similar situation and if such a thing exists in Ireland. I'm presuming my solicitor will advise me on any implications etc if the sale goes ahead but I would be greatfull to discuss people's experiences on this prior to going down this route.

Bepolite

Sorry if this sails a bit close to the wind in relation to legal advice, mod post is noted.

IIRC the MUD Act requires a management company where there are five or more apartments. You really do need proper legal advice here as a freehold shared between a number of people is odd to say the least. You are going to have to understand the different ways this can happen and the implications. (Joint tenants/tenants in common difference always made my head hurt).

If you are buying with a mortgage I doubt any bank will lend on the basis you've described. I'm open to correction, of course.

EDIT: In relation to no common areas, how does one get to the individual apartments? I assume there is no parking?

Ipro

Bepolite wrote: »

Sorry if this sails a bit close to the wind in relation to legal advice, mod post is noted.

IIRC the MUD Act requires a management company where there are five or more apartments. You really do need proper legal advice here as a freehold shared between a number of people is odd to say the least. You are going to have to understand the different ways this can happen and the implications.

If you are buying with a mortgage I doubt any bank will lend on the basis you've described. I'm open to correction, of course.

EDIT: In relation to no common areas, how does one get to the individual apartments? I assume there is no parking?

I'm a cash buyer so mortgage wouldn't come into it although you are correct in that the estate agent did mention it would be difficult to get a bank to lend to buy it. In saying that , the current owner of the apartment has a mortgage so I'm it's possible there was a change in curcumstances in relation to this issue.

The apartments all have their own entrances as in the door each apartment has it's own door accessible from outside the building (you don't go inside the building into a hallway to go into the apartments)

There is parking. It's surface parking
(Unallocated)

Victor

Is this a conventional apartment block or is it of some sort of novel layout?

Ipro wrote: »

, their is a fee €250 a year which everyone pays which is for building/block insurance.

That seems exceptionally cheap.

Bepolite

Ipro wrote: »

I'm a cash buyer so mortgage wouldn't come into it although you are correct in that the estate agent did mention it would be difficult to get a bank to lend to buy it. In saying that , the current owner of the apartment has a mortgage so I'm it's possible there was a change in curcumstances in relation to this issue.

The apartments all have their own entrances as in the door each apartment has it's own door accessible from outside the building (you don't go inside the building into a hallway to go into the apartments)

There is parking. It's surface parking
(Unallocated)

MUD Act is dated 2011 and enacted in parts at later dates. I'd make sure you've availed of detailed legal advice. I'm afraid other than this OP I can only share anecdotes which won't help you:

In Scotland apartments are treated like freehold properties, you get your own insurance ect. One place I lived the place was excellently run, we paid £30 a year for upkeep. I moved to a flat in Perth (Scotland) and the place was falling in around our ears.

Ipro

Victor wrote: »

Is this a conventional apartment block or is it of some sort of novel layout?
That seems exceptionally cheap.

The 250 a year is insurance only. Bins etc are done individually.
It's a novel layout , it's an old building that was recently converted.

Ipro

Bepolite wrote: »

MUD Act is dated 2011 and enacted in parts at later dates. I'd make sure you've availed of detailed legal advice. I'm afraid other than this OP I can only share anecdotes which won't help you:

In Scotland apartments are treated like freehold properties, you get your own insurance ect. One place I lived the place was excellently run, we paid £30 a year for upkeep. I moved to a flat in Perth (Scotland) and the place was falling in around our ears.

For a place that didn't have a management company I have to say the block etc seemed very well maintained but as I said it's low maintenance. The land which it sits on is all Tarmac /concreate . I viewed other places where people Wernt paying management fees and the company were letting the building fall apart so I was quite surprised to be honest.

Bepolite

Slightly off topic but the OMC (management company) are not the lads that you phone if you get a problem. They're just a managing agent and most OMCs seem content to hire barely literate monkeys. I live in a very well run complex in the city centre because the OMC is very well run, we have an excellent managing agent.

It just seems like you've come across that rarest of the rare in Ireland OP. A group of people that give a crap about the area in which they live

Ipro

Bepolite wrote: »

Slightly off topic but the OMC (management company) are not the lads that you phone if you get a problem. They're just a managing agent and most OMCs seem content to hire barely literate monkeys. I live in a very well run complex in the city centre because the OMC is very well run, we have an excellent managing agent.

It just seems like you've come across that rarest of the rare in Ireland OP. A group of people that give a crap about the area in which they live

Yeah it's unusual alright , I think it's just well maintained because it's mostly owner occupied , that's my guess anyway.

I think there is a OMC but no appointed agent ( the estate agent just said theirs no management company but I don't think this is possible) theirs obviously some kind of formation anyway because firstly a mortgage was originally taken out on the property I'm looking at , secondly if we all have to pay this insurance I'm sure someone in the building had to of organise the policy.

Is it possible there is a OMC but no appointed agent/external agent. ?

If you only have to pay €250 and your refuse while living in a apartment that be great,

I know they serve a purpose but some management fees are just ridiculous,

My one worry would be when maintenance of windows and such comes up in 20 years,
I know its a long way a way but what if say two apartments refuse to pay towards it or dont have money??

Ipro

aaronc182 wrote: »

If you only have to pay €250 and your refuse while living in a apartment that be great,

I know they serve a purpose but some management fees are just ridiculous,

My one worry would be when maintenance of windows and such comes up in 20 years,
I know its a long way a way but what if say two apartments refuse to pay towards it or dont have money??

I'd tend to agree. :-)

You make a valid point , but the same could be said about what happens if there was a management company , what would happen if 2 apartments refused to pay the management fee

P. Breathnach

Ipro wrote: »

...
I think there is a OMC but no appointed agent ( the estate agent just said theirs no management company but I don't think this is possible) theirs obviously some kind of formation anyway because firstly a mortgage was originally taken out on the property I'm looking at , secondly if we all have to pay this insurance I'm sure someone in the building had to of organise the policy.
...
Is it possible there is a OMC but no appointed agent/external agent. ?

Yes, it's quite possible. It can work well if the members elect competent and reliable people as directors. I think there is a better chance of that happening in a small development.

It's also possible that the EA does not appreciate the difference between an OMC and a managing agent. I am in the market for an apartment, and as soon as an apartment interests me, I ask for the name of the OMC so that I can do a bit of checking on them (an easy, inexpensive, and oft-ignored exercise). More often than not, I am given the name of the managing agency.

That said, an OMC should operate under the MUD Act, and the MUD Act imposes a requirement that a sinking fund be maintained. The absence of a sinking fund would be a concern, and issue to be teased out and explained.

Lantus

highly unusual. whose name is the insurance in? and who is authorised to make claims and act and change the policy?

What if 50% of the owners don't pay one year? What happens then?

Check the land registry and see if its a free hold or lease hold. If its lease hold then some entity or individual must own the building.

Santa Cruz

Ipro wrote: »

Hi all , looking a small bit of advice on for me what is an unusuall situation .

Went to view an apartment for sale today.
The apartment is in an old converted building (total 6 units all together )

Obviously when speaking to the estate agent I asked about management fees and how many years were left on the leasehold etc , and was given the following information.

The building has no management company , their is a fee €250 a year which everyone pays which is for building/block insurance. Their is no common areas a such so therefore there is no maintenance really needed. If the building needs to be reprinted everyone is pretty co operative and they just agree the building needs to be reprinted and throw a few euro together to get this work carried out. There is no sinking fund!
As far as she knows all owners jointly own the free hold on which the building sits ( rather than everyone having a leasehold)

The apartment is exactly what I'm looking for so I don't really want to let the above put me off. I just wanted to know if this type of situation was known by anyone and if it's legal ? As I was under the impression that it was mandatory for apartment blocks to have a sinking fund.

Also , the conversion was only recently carried out , maybe 5 years ago so the place is still pretty much like new.

But even still , I look to you all for experience /advice.

Thanks

This is an unusual situation and I would be very reluctant to get involved without a proper management structure. It's grand all being "pretty cooperative" but how long will that last?

The MUD Act applies in this case and there should be a Management Company, Directors, Sinking Fund in place. Proceed at your peril

There is no obligation to have a Managing Agent as this work can be done on a voluntary basis and can work out well with dedicated people but there should be a Managing Company.

enda1

This type of situation is reasonably common in England, especially with Victorian conversions. The wording of the freehold is important to determine exactly what you would own. For example I've seen situations where the top level apartment would own the roof and would therefore be wholly responsible for the maintenance and replacement of it.

Check with land registry and ask solicitor for clarification.

MouseTail

enda1 wrote: »

This type of situation is reasonably common in England, especially with Victorian conversions. The wording of the freehold is important to determine exactly what you would own. For example I've seen situations where the top level apartment would own the roof and would therefore be wholly responsible for the maintenance and replacement of it.

Check with land registry and ask solicitor for clarification.

Yes, I owned one of those in London. It was called a flying freehold.

Ipro

Thanks guys , you've given me a few questions to ask the EA to try and get further clarification on the issue. Much appreciated.

If I get some kind of update ill let you all know how it's structured.

Mrs OBumble

Ipro wrote: »

Is it possible there is a OMC but no appointed agent/external agent. ?

Highly possible. The amount of work required to manage a complex like that could easily be covered by owners with a clue or two.

Someone mentioned work on the windows. Seems to me if there are no common areas, there will be no common windows, either. So owners could just fix their own as and when needed. Of course it may be cheaper per head if they all worked together. But not required.

odds_on

I would say that you go for it if you feel that it is good value. If your solicitor comes up with difficulties then you can always withdraw from the purchase at no cost except for your solicitor's costs. You'll get your deposit back.

odds_on

Ipro wrote: »

Thanks guys , you've given me a few questions to ask the EA to try and get further clarification on the issue. Much appreciated.

If I get some kind of update ill let you all know how it's structured.

As regards EA giving you information, I have found that they are usually clueless even as to what I would think 'normal' for a purchaser. Also, don't take their word for it as being correct.

Have a chat with one or two of the other owners is best.

Bepolite

MouseTail wrote: »

Yes, I owned one of those in London. It was called a flying freehold.

It is possible they are flying freeholds, but the OP seems to suggest some sort of sharing (as in tenants in common/joint tenants) arrangement.

Hopefully it is a flying freehold with an OMC. I'm a bit confused by the windows aspect people are bringing up. That's the responsibility of the individual owners, at least it was in my case.

Ipro

Bepolite wrote: »

It is possible they are flying freeholds, but the OP seems to suggest some sort of sharing (as in tenants in common/joint tenants) arrangement.

Hopefully it is a flying freehold with an OMC. I'm a bit confused by the windows aspect people are bringing up. That's the responsibility of the individual owners, at least it was in my case.

What would be the positive / negatives of a flying freehold?

Everyone would replace thier own windows or else we would all get to getter to try and get some deal from the local window supplier.

It would be more things like the roof I would be worried about , or rising damp etc

Bepolite

Ipro wrote: »

What would be the positive / negatives of a flying freehold?

Everyone would replace thier own windows or else we would all get to getter to try and get some deal from the local window supplier.

It would be more things like the roof I would be worried about , or rising damp etc

One negative that springs to mind if I'm not sure how common they are and what sort of fee you'll get hit with on conveyancing.

There would be easements of support built into the freehold, beyond that you'd probably have to come to an agreement with the other owners. Basically they will have to make sure that your unit unit does not become structurally unsafe by their actions. This is extremely common: think terraced houses.

TBH it's 13:37 on Monday - the solicitor should be out of bed at this stage :P

Victor

Ipro wrote: »

What would be the positive / negatives of a flying freehold?

I don't know the current position, but I understood it had legally dubious status in Ireland.

Bepolite

Victor wrote: »

I don't know the current position, but I understood it had legally dubious status in Ireland.

I'm not sure that's the case from my understanding of them, just highly unusual. I'm realise we're both trading stuff at the back of our minds here but if you do have something you could point me in the direction of I'd be much obliged purely for my own education.

OP if you can confirm this is a flying freehold I'll dig out some articles for you off of westlaw - assuming there are any!

Kelly06

Op where is this, if you pm me the address I'll look it up in the land reg for you and see how it's held. Don't worry I'm not in the market to buy anywhere, I have a tracker mortgage !!

Victor

Bepolite wrote: »

I'm not sure that's the case from my understanding of them, just highly unusual. I'm realise we're both trading stuff at the back of our minds here but if you do have something you could point me in the direction of I'd be much obliged purely for my own education.

Sorry, its a long times since I did this in college. I think one of the points is to do with historical differences in law between Ireland and Britain relating to types of lease and the other relating to rights of way type issues.

Ipro

Hey guys , I was with my solicitor yesterday and brought up the issue with him , and he reckons like a few of you have said that it's probably flying freehold. He advised me to just leave it sit , that it might annoy the estate agent if I keep digging into it. To just get the place sale agreed , taken off the market and that he's do all the digging then.

So I guess I'll be back with an update in a few weeks :-)

lud

Hi,
I know its been a while but how did it go?

aaronc182

aaronc182 wrote: »

If you only have to pay ?250 and your refuse while living in a apartment that be great,

I know they serve a purpose but some management fees are just ridiculous,

My one worry would be when maintenance of windows and such comes up in 20 years,
I know its a long way a way but what if say two apartments refuse to pay towards it or dont have money??

Why wouldn't the owners just pay for maintenance on their own windows if needed and if people don't want to pay they make do with the windows they have. That's what happens in a house.

As an aside some of the predicted time frames I often see here are quiet extreme. Windows shouldn't need work in only 20 years. I know the windows are over 30 years old in our house and they are perfect and no where near even needing maintaience never mind replacement and I know plenty of houses with windows in much longer.

Victor

Francesca Rancid Paper wrote: »

As an aside some of the predicted time frames I often see here are quiet extreme. Windows shouldn't need work in only 20 years. I know the windows are over 30 years old in our house and they are perfect and no where near even needing maintaience never mind replacement and I know plenty of houses with windows in much longer.

It's not to say that windows will need replacement after 20 years. However, some maintenance may be required, especially handles and seals (and sash cords with sash windows). Having money available and not having to do major work is a much better position than not having money and needing work. You do know what will go wrong X years down the line.

athtrasna

lud wrote: »

Hi,
I know its been a while but how did it go?

The OP hasn't posted in over a year and the thread is 3 years old. Unlikely to get a response.