MUD Act Replies and services charges - Buying an apartment

brenbrenlim

Hi everyone,

I'm trying to understand if this is a red flag or not.

I'm currently in the very last stages of closing on a deal for an apartment in South-west Dublin. However, the process is now stuck because the management company will not release the  MUD Act Replies. They will only release it if the service charges for 2023/2024 will be paid in full as soon as practicable following completion.

My solicitor thinks this is surprising as we should know how much the fees are before giving an undertaking.

From my understanding, this is because the management company has not agreed on what the management fee for 2023/24 will be. So the fear is that they can just put whatever amount they want (instead of the advertised fees in the property ad).

What do you guys think? I like the property, but I don't know if this is a common thing or if I should go ahead or not. Bear in mind that this is just an undertaking from me (the buyer) and it's subject to the deal actually closing.

goingnowhere

So service charges are paid in advance, the exact date will depend on the OMC 'year'

So on closing you would pay (days remaining in OMC year/365 * 2023 charge) to cover the rest of the year until the next years fees become due. That applies for new or second hand sales and is routine practice. You can't be forced to pay in advance for 'next' year until they fall due, even then the above math remains. Anyway that balance is paid to the vendor not the OMC, as the vendor should have paid the fees in full to the OMC already.

Most likely case here is the current owner has not paid the 2023 fees (or going back further) and the OMC has not got through the legal process to get an attachment order to ensure they get paid on sale. If this is the case the OMC Agent is probably under instruction to refuse any inquiry until they have payment or have the attachment order in place.

If it is a new apartment i.e. first sale the 'OMC' is a signatory to the lease, so can block the sale (well kind of) however the 'OMC' will be the same as the Developer at this point effectively as the OMC directors will the developers employees/directors.

Advice - get the CRO returns for the OMC and see the financial status, this could reveal issues with non-payment etc. If they are not up to date, submitted late etc it points to poor management and potentially bigger issues.

Your solicitor could make inquiries as to the title to see if there are any liens/attachment orders in place already

walterking

I doubt if an attachment order is required - never heard of one being required or applied.

A buyer via their solicitor will want all fees paid up to date and if there is a balance, this would be withheld from the vendor and paid directly to the management company from the sale proceeds.

The fees will be much the same as last year. They can't charge you a different fee to someone that has a similar unit. I think they are just making sure that a new buyer knows and understands fully that a management fee is due .

But it is unusual and your solicitor could suggest that a complaint will be made if the replies are not forthcoming.

It is also possibly a warning sign for you that there is a very authoritarian OMC and they can be utter hell. I'd maybe chat to one or two other owners and ask a few questions

brenbrenlim

Thanks, everyone.

So, it's not for a new build.

I called my solicitor and they explained to me that even though this is a very unusual request, it's not legally binding until the deal actually closes. So I went ahead with the undertaking so we could get the MUDs.

I assume that we will know more if there's anything fishy about it once we get the MUDs.

Claw Hammer

Is the undertaking from you or the solicitor?

brenbrenlim

https://www.boards.ie/discussion/comment/120723091#Comment_120723091

What's the difference?

goingnowhere

Until contracts signed the vendor has no hold on you at all.

As per my first post its almost a certainty the OMC is owed money and is trying to secure payment before the sale occurs to ensure they get the money, but the vendor won't have the cash until the sale closes so there is the classic legal limbo.

The OMC response should be interesting.

Dav010

Op, this is one way of ensuring that OMCs get the outstanding management fees from the current owner. The requested information will not be provided, and the sale will stall until all fees are paid, unless you give a commitment to pay any fees owed by the current owner, which of course you would be mad to do, they could own years of fees. I’m curious as to why your solicitor is surprised that the replies from the OMC are not forthcoming until the membership fees are paid, this would be a common practice in MUDs.

Typically what happens is that the current owner pays the management fee for the year, you then reimburse the current owner pro-rata from the day the purchase is completed.

Dav010

https://www.boards.ie/discussion/comment/120723350#Comment_120723350

The response from the OMC is very straightforward, the vendor is informed that the replies to the buyer will not be given until the management fees for the year are paid in full.

brenbrenlim

So, I ended up pulling out on the 7th. They've asked for an undertaking with my personal details, even before the contracts were signed. Both my and the vendor's solicitors agreed that this was against GDPR, but I agreed to send it anyway.

Then when we sent that, they asked for another undertaking saying we were going to complete everything in 7 working days. The vendor's solicitor then said that both themselves and the OMC were going on PTO and would only be back in August, so they pushed the closing date to the end of August. That was just too much for me and I'm back on the search again.

It's a very frustrating process :/