Management charges query

Hardtochoose

Hi all,

Living in a new build estate where there are management fees until the council take it in charge in possibly 5/6 years time. The managing agent has issued fees for the current year.
I’ve questioned with him as to what plan is in place for people who do not pay. His response was that recovery options are limited due to the low level (300) of management fees, and that there would need to be an outstanding balance of 1,000 minimum before a legal route was pursued.
Anyone else living in an estate with management fees able to how they go about getting 100% or as close as possible payment rate?

He has advised that he is limited to sending letters and making phone calls to get payment. In my experience of people, the majority will not pay unless they know it’s legally enforceable. I can see a situation whereby 50% of the estate are paying while 50% don’t.

Anyone with any experience in this matter? I’m thinking of withholding payment until he confirms better debt recovery options.

Thanks

dancingqueen

Management fees are usually part of the lease upon buying a property in a development like this. That said, it isn't always easy to get people to pay, especially in a residential complex.

€300 for a year seems like a very low amount for a new development - have you been provided with a budget? In my experience (collecting service charges as part of my job for a number of years) larger amounts are harder to collect in residential developments. These funds will have to cover bin collections, external lighting etc. If these services are not provided due to non paying residents, then you might see a turnaround. There is also a legal liability for a sinking fund (or savings account)

Hardtochoose

Thanks for your reply. Bins aren’t included, each house has their own private bin collection. It covers public liability insurance, lighting, maintenance of common areas, sinking fund contribution. Next years will be higher (450 approx) as there was uproar at the AGM over lack of any maintenance this year etc. so this years 2019 has been set lower.
I suppose what I’m wondering is what’s the average payment level for an estate where there’s no enforcement of non payment?. He’s claiming he expects 90%. I think he’ll be lucky to get half that. You surely can’t allow a case whereby some people simply don’t pay and there’s no consequences ?

dancingqueen

€300 is not a lot of money. A solicitor's letter might cost you €100 for a warning pre legal proceedings. All of these costs come out of the same pot. Your pot is lower due to the fact that a percentage of your unit holders are not paying their SVC as it is. It doesn't make financial sense. It will take time at the start to get things going and you will likely have problem units that will always pay late or some that don't pay at all (that's usual).

Dav010

Op, welcome to the joys of MC’s. I was a director on the board of a MC for 10 years and I can tell you the two most frustrating things are handling complaints from unit owners how didn’t bother attending the AGM about management fees, and trying to get fees from those who don’t/can’t pay. There is little you can do to force owners to pay. We used to name & shame at AGMs but you can’t do that anymore, going to court is just throwing good money after bad. We applied for a lien on the property which meant that we got our money when property sold and of course the MC would not confirm all fees paid to the owners solicitor.

Also, ours is a gated development, only those that paid fees got fobs to open them and some complexes with parking fines/clamping will only give the badges to those who pay.

Op, if this is a new development, you are required to have a sinking fund so you will be hit with a much larger fee in the not too distant future.

dancingqueen

Dav010 wrote: »

We applied for a lien on the property which meant that we got our money when property sold and of course the MC would not confirm all fees paid to the owners solicitor.

It would usually be a condition of sale (on the buyers side) to ensure that all SVC are paid before the sale closes.

Hardtochoose

It seems a complete nightmare alright. Being a director seems like a serious pain. People at the AGM bringing up completely ridiculous stuff, and giving out about paying for landscaping maintenance etc. The mind boggles really. What would you think are the benefits of being a director? Would possibly consider it, as I know it’ll be a headache but it seems the only way to actually protect your investment (your property). I’d be into having the place properly landscaped etc but some people just have no interest in the appearance of the estate

dancingqueen

I don't know if there are benefits to being a director - you just have to sign things and turn up to all the meetings! Majority usually wins at AGMS. If you didn't have an appointed agent and ran it yourself you may have slightly more input but a lot more work

Hannibal_Smith

I've never heard of a management company being set up between now and the time the roads and services are taken in charge.

It's not a bad idea I suppose, particularly if you want to sell in the intervening period. But ownership of the lands will never transfer over to the Management Company. So who applies for the insurance?

Usually there is an indemnity from the builder confirming they will manage and maintain the roads and services until taken in by the Council. Even in managed estates you get one of these untill the estate is transferred over to the management company. Did you not get this?

What is the benefit of having a management company when ownership and insurance are outside your control?

BTW. Withholding payment is part of the problem. Why should I pay when no one else is. But at the end of the day, its your estate and with no money in the kitty, how does the management company function?

Dav010

dancingqueen wrote: »

I don't know if there are benefits to being a director - you just have to sign things and turn up to all the meetings! Majority usually wins at AGMS. If you didn't have an appointed agent and ran it yourself you may have slightly more input but a lot more work

If only. As a director you are often the sounding board for unhappy owners, along with other directors I used to get letters through my door about all sorts and was named in correspondence from a solicitor on behalf of an owner who was unhappy at the letters he received from us about years of unpaid fees. It’s a pain in the ass, some misinformed owners who don’t attend AGMs blame directors for decisions taken.

There are no benefits, it is a voluntary position.

Dav010

dancingqueen wrote: »

It would usually be a condition of sale (on the buyers side) to ensure that all SVC are paid before the sale closes.

It may be a condition, but cash buyers may not be too concerned about it. A lien means that you have a legally binding hold over the property until the unpaid fees are settled.

is_that_so

Dav010 wrote: »

It may be a condition, but cash buyers may not be too concerned about it. A lien means that you have a legally binding hold over the property until the unpaid fees are settled.

We get a query through on financials from the solicitor acting for the buyer anyway via the accountant so they are aware. I'd be surprised if a solicitor let it pass.

andekwarhola

Whatever about any grievances you have, withholding fees is a completely counterproductive and ineffective way to go about things.

Things you can do to make sure people pay could be stuff could be issuing parking permits to paying residents and clamping people without permits.

Or if you have communal bin sheds, just issue keys to people who pay fees.

I'd be amazed though if any managed estate in the country has 100% compliance unfortunately. If people don't want to sell their property, don't mind a public judgement or don't mind brass necking debt collectors, you're pretty much powerless long term to recoup arrears.

I echo the views on directors. Its an utterly stressful and thankless task

Dav010

andekwarhola wrote: »

Whatever about any grievances you have, withholding fees is a completely counterproductive and ineffective way to go about things.

Things you can do to make sure people pay could be stuff could be issuing parking permits to paying residents and clamping people without permits.

Or if you have communal bin sheds, just issue keys to people who pay fees.

I'd be amazed though if any managed estate in the country has 100% compliance unfortunately. If people don't want to sell their property, don't mind a public judgement or don't mind brass necking debt collectors, you're pretty much powerless long term to recoup arrears.

To be fair, some of the people in arrears simply cannot pay.

andekwarhola

Dav010 wrote: »

To be fair, some of the people in arrears simply cannot pay.

A minority maybe.

Hannibal_Smith

Dav010 wrote: »

It may be a condition, but cash buyers may not be too concerned about it. A lien means that you have a legally binding hold over the property until the unpaid fees are settled.

No solicitor would close without service charges being paid by the person selling, or a tight undertaking to do it from the proceeds of sale . The day you buy is the day you sell and when their client goes to sell it will raise its head.

Plus most MCs won't even deal with MUD Act queries until the service charges are addressed. A contract can't be signed until you've seen the MUD a Act info

Dav010

Hannibal_Smith wrote: »

No solicitor would close without service charges being paid by the person selling, or a tight undertaking to do it from the proceeds of sale . The day you buy is the day you sell and when their client goes to sell it will raise its head.

Plus most MCs won't even deal with MUD Act queries until the service charges are addressed. A contract can't be signed until you've seen the MUD a Act info

No solcitor should, but they take instruction from their client. Properties changed hands in the development I was a director of without MC fees being paid, the new owner just accepts the debt I presume. This is why we began applying for liens.

in relation to your earlier post about MCs and roads/services being taken into charge, I must be very lucky/unlucky, MCs have been set up developments I own in, years ago, and they still haven't been taken into charge because not all houses/apartments have been sold/completed. Not being in charge does not prohibit a MC being set up, how would the complex be maintained if no MC?

andekwarhola

Hardtochoose wrote: »

It seems a complete nightmare alright. Being a director seems like a serious pain. People at the AGM bringing up completely ridiculous stuff, and giving out about paying for landscaping maintenance etc. The mind boggles really. What would you think are the benefits of being a director? Would possibly consider it, as I know it’ll be a headache but it seems the only way to actually protect your investment (your property). I’d be into having the place properly landscaped etc but some people just have no interest in the appearance of the estate

If I was buying a property again, I'd run a mile from any managed development in Ireland unless it was a very small single unit type (as in apartments or houses, not mixed) and a pretty healthy AGM/EGM/financial history.

Really low service charges are a bit of a red flag to be honest. The whole point is to stockpile a good sinking fund for the future even if the estate is still relatively young. Believe me, I talk from bitter experience.

Hannibal_Smith

Dav010 wrote: »

No solcitor should, but they take instruction from their client. Properties changed hands in the development I was a director of without MC fees being paid, the new owner just accepts the debt I presume. This is why we began applying for liens.

in relation to your earlier post about MCs and roads/services being taken into charge, I must be very lucky/unlucky, MCs have been set up developments I own in, years ago, and they still haven't been taken into charge because not all houses/apartments have been sold/completed.

I've never heard of a solicitor closing without clarifying management fees. That's why you don't give out the mud act info until its been discussed. Most leases will have a condition dictating that the consent of the man Co is required before any sale takes place. So there were all sorts of incorrect things done there.

I've never seen a man Co set up for the intervening period between sale and roads and services taken in charge. I've sold properties in all sorts of managed estates and have never come across it. The builder is responsible for management of the roads and services until they're taken in charge. How did you deal with insurance? There must have been an agreement between the man Co and the builder regarding any remedial works the council might request?

Dav010

Hannibal_Smith wrote: »

I've never heard of a solicitor closing without clarifying management fees. That's why you don't give out the mud act info until its been discussed. Most leases will have a condition dictating that the consent of the man Co is required before any sale takes place. So there were all sorts of incorrect things done there.

I've never seen a man Co set up for the intervening period between sale and roads and services taken in charge. I've sold properties in all sorts of managed estates and have never come across it. The builder is responsible for management of the roads and services until they're taken in charge. How did you deal with insurance? There must have been an agreement between the man Co and the builder regarding any remedial works the council might request?

Every MC has its own rules about giving info, and if a cash buyer is willing to buy and take on the MC debt, I doubt there is anything to stop them.

Many builders went bust before developments were finished or wound up their companies shortly after. There is nothing to stop a MC being set up before it is taken into charge nor indeed getting insurance.

Hannibal_Smith

Dav010 wrote: »

Every MC has its own rules about giving info, and if a cash buyer is willing to buy and take on the MC debt, I doubt there is anything to stop them.

Many builders went bust before developments were finished or wound up their companies shortly after. There is nothing to stop a MC being set up before it is taken into charge nor indeed getting insurance.

It doesn't matter where the buyer is getting money from. A solicitor is absolutely instructed by their client, but they still have practice and procedures to follow. Their client will now be liable when they go to sell, for a debt their client didn't accrue.

Where companies wound up applications were made to have the estates taken in charge. The councils dip into the insurance bond the developer put in place when constructing, if its still in place. Where its not still in place, some councils have funded the cost themselves. The residents should not be liable or paying for any cost in relation to it.

If they decide to club together and decide to set up something up that's their own prerogative. But it's not like the Ops situation. In your case it's more a residents association with no obligation on any of the other residents to contribute anything. There's therefore no right to collect any debt

Dav010

Hannibal_Smith wrote: »

If they decide to club together and decide to set up something up that's their own prerogative. But it's not like the Ops situation. In your case it's more a residents association with no obligation on any of the other residents to contribute anything. There's therefore no right to collect any debt

The development, where I lived and was a director, has a Management Company, with a managing agent, set up and compliant with the MUD Act, we have been granted likens on properties, and I can assure you that the roads have not been taken in charge, we are awaiting judgement in a High Court case between the developer and Reciever after which the few remaining units can be sold and the roads taken into charge. The MC has been in place since 2008.

Just having a look at the MUD Act, all developments must have an OMC in place before the first unit is sold. In case of developments completed before 2011, developers are legally required to establish an OMC.

Hannibal_Smith

Dav010 wrote: »

The development, where I lived and was a director, has a Management Company, with a managing agent, set up and compliant with the MUD Act, we have been granted likens on properties, and I can assure you that the roads have not been taken in charge, we are awaiting judgement in a High Court case between the developer and Reciever after which the few remaining units can be sold and the roads taken into charge. The MC has been in place since 2008.

I think there is confusion here. The man Co was set up by the residents as an interim measure until the roads and services were taken in by the council?

How could you compel other owners to become members and liable for a service charge?

Dav010

Hannibal_Smith wrote: »

I think there is confusion here. The man Co was set up by the residents as an interim measure until the roads and services were taken in by the council?

How could you compel other owners to become members and liable for a service charge?

Sorry, added a bit onto previous post, under MUD Act, a developer is legally required to set up an Owners Management Cimpany before first unit is sold.



https://www.ccpc.ie/consumers/housing/apartments-and-duplexes/owners-management-companies/

Unless you are saying all roads/services must be taken in charge before the first unit is sold, so an OMC can be set up, I’m not sure that your opinion can be right.

Hannibal_Smith

Dav010 wrote: »

Sorry, added a bit onto previous post, under MUD Act, a developer is legally required to set up an Owners Management Cimpany before first unit is sold.

Yes, but the MUD act relates to Multi Unit developments. If you're talking about an apartment block, there has to be a management company set up. It's not an interim measure until roads and services are taken in charge. It will survive that and the binding in of other owners will be contained in the lease, along with an obligation to pay service charges.

Dav010

Hannibal_Smith wrote: »

Yes, but the MUD act relates to Multi Unit developments. If you're talking about an apartment block, there has to be a management company set up. It's not an interim measure until roads and services are taken in charge. It will survive that and the binding in of other owners will be contained in the lease, along with an obligation to pay service charges.

For the purposes of the MUD Act, multi unit developments include apartments, duplexes, townhouses or stand alone houses that share facilities. I’m not sure where you are going with this, the setting up of an OMC is not dependent on roads and services being taken in charge.

Hannibal_Smith

Dav010 wrote: »

Sorry, added a bit onto previous post, under MUD Act, a developer is legally required to set up an Owners Management Cimpany before first unit is sold.



https://www.ccpc.ie/consumers/housing/apartments-and-duplexes/owners-management-companies/

Unless you are saying all roads/services must be taken in charge before the first unit is sold, so an OMC can be set up, I’m not sure your opinion on this is based in fact.

No, the roads can't be taken in charge by the council until after every unit is sold. The builder won't have finished the roads and services until then. The builder puts a bond in place, so that if they don't finish the roads and services, the council can collect on the bond to finance the works themselves (after the residents have made an application to them).

The builder then also provides an indemnity to each individual purchaser stating that they will maintain and manage the roads and services until the council take them in charge.

It is therefore very rare that the residents will go to the expense and of setting up a management company and taking on the likes of insurance themselves. Theyre doing the job of the builder.

During the crash when a lot of builders went caput, it left a lot of estates unfinished. The bond only lasts for 7 years, so may well be out of place. I can understand residents wanting to set something up in those circumstances, but I've never seen a management company set up in such circumstances. There's no covenant to bind owners in and no obligation on any one to pay. I've seen a residents association where people club together to pay for grass cutting, but that's very rare. And you'd be lucky to collect in the event of a sale.

Hannibal_Smith

Dav010 wrote: »

For the purposes of the MUD Act, multi unit developments include apartments, duplexes, townhouses or stand alone houses that share facilities. I’m not sure where you are going with this, the setting up of an OMC is not dependent on roads and services being taken in charge.

That share facilities, with a multi unit development. Otherwise Mn cos would be set up all the time.

An OMC is not dependent on setting up roads and services, I never said it was. My point was earlier in the thread that its unusual to set up a man Co as a stop gap in a development until roads and services are taken in charge. You said you'd seen it before, but you're talking about Multi unit developments, where a management company would be set up any way. Regardless of what was happening with roads and services. That's not the same thing.

Dav010

Where are you going with this? You seem to be saying that an OMC cannot be set up until the roads are taken in charge, yet the MUD Act states it must be set up before a single unit is sold. Those two points are very much at odds.

Title to the common areas can pass to management company whose members consist of the house owners. There is no issue with this provided the residents ensure that the MC’s affairs are conducted properly with Annual Service fees charged and collected and a sinking fund accumulated. The builder/developer may maintain the common areas in the Estate also.

Hannibal_Smith

Dav010 wrote: »

What are you going with this? You seem to be saying that an OMC cannot be set up until the roads are taken in charge, yet the MUD Act states it must be set up before a single unit is sold. Those two points are very much at odds.

Title to the common areas can pass to management company whose members consist of the house owners. There is no issue with this provided the residents ensure that the MC’s affairs are conducted properly with Annual Service fees charged and collected and a sinking fund accumulated. The builder/developer may maintain the common areas in the Estate also.

No I'm not saying that at all. You're misunderstanding me.

I have never seen a management company set up at the time of sale to deal with issues between the time the house is sold until the time the roads and services are taken in charge. Never a management company for this specific purpose.

You said you had. But you're talking about Multi Use Developments where a management company would have been set up anyway. And not specifically as an interim stop gap until the council step in.

Dav010

Hannibal_Smith wrote: »

No I'm not saying that at all. You're misunderstanding me.

I have never seen a management company set up at the time of sale to deal with issues between the time the house is sold until the time the roads and services are taken in charge. Never a management company for this specific purpose.

You said you had. But you're talking about Multi Use Developments where a management company would have been set up anyway. And not specifically as an interim stop gap until the council step in.

But its a legal requirement that an OMC be set up in a multi unit development, irrespective of whether it has been taken in charge, to deal with those issues such as collecting annual service fees which the op is asking about. It is literally in the MUD Act.


Conditions relating to sale of units in multi-unit developments.

3.— (1) A person to whom this section applies shall not, after the coming into operation of this section, transfer his or her interest in a residential unit in a multi-unit development to which this section applies unless—

(a) an owners’ management company has been established at the expense of the developer of the multi-unit development concerned,


The OP is in a managed estate with service fees, an AGM and the op is considering being a Director of the OMC, what exactly are you saying cannot be done in the OP's OMC and any other where the roads have not been taken over by the Council?

Hannibal_Smith wrote: »

I've never heard of a management company being set up between now and the time the roads and services are taken in charge.

But ownership of the lands will never transfer over to the Management Company.

Both of these statements are wrong.

Edit: sorry, only the second one is wrong, you just may not have heard of OMC being set up in other estates.