Non-payment of Management fees in an apartment complex.

Cupra280 · 16-03-2016 3:53pm #1

What are people's views on the non-payment of fees?

When I bought my apartment, I was advised by my solicitor about the fees, and what they covered. I was then happy to pay, as it saved me having to worry about insurance, refuse, and all the rest.

However, shortly afterwards, our Management Agent stated that in their experience, 25% of people pay in full, 25% quarterly, 25% monthly, and 25% not at all. (This would eventually be paid to the Company when the ownership of the particular apartment changes).

I do have a problem with non-payment. Especially if people go out of their way to avoid paying.

I would be interested to here others views on the matter. In particular, it would be interesting to here what initiatives others took in order to secure payment by defaulters.

gerarda · 16-03-2016 3:57pm

We paid them in our old house for the best part of 10 years. Or old neighbour never paid a cent and got numerous phone calls and letters about being threatened with court action. That was 3 years ago, still waiting to hear. He laughed in my face when I said I paid them. Each house had two parking spaces which were clearly painted on the ground with the house number. Over time this faded and could be repainted by the mgmt co if you asked for it. He called them to repaint his and couldn't understand why they wouldn't do it!

MarkAnthony · 16-03-2016 4:09pm

If it's a minority of people it's a not an issue. We have a one or two, a couple that are working with the OMC to pay others that just say feck it. At the end of the day it's them that will be saddled with a huge bill when they go to sell. We don't bother with court action, however where it's a large number there can be issues.

Mrs OBumble · 16-03-2016 4:50pm

Not paying is theft, pure and simple. For which you will - eventually - get caught.

Lux23 · 16-03-2016 4:54pm

If I can pay, I will pay. No matter what the bill is, and how much I don't like, I hate the feeling of owing money to someone. The type of people who don't pay bin charges or whatever always astound me, they will spend €100 on a night out but won't pay ten euro for some bin bags. So if I knew my neighbours were doing this, I would probably go out of my way to embarrass them into paying.

lawred2 · 16-03-2016 5:05pm

Mrs OBumble wrote: »

Not paying is theft, pure and simple. For which you will - eventually - get caught.

In some cases it's the management fees that are theft pure and simple

A previous estate I lived in had management fees - supposedly for a whole raft of maintenance and bin collections reasons etc

Maintenance was minimal, irregular and haphazard. Issues and defects could often go months after notifying the management company without remedy..

common grounds (grass etc) - was lucky if it saw a lawnmower once every 4 - 6 weeks even in the middle of summer

They started cost cutting with regards to refuse collection and reduced in half overnight the available number of refuse tips.. end result badly overflowing bin sheds that became health hazards..

Did the management company deliver reductions in fees? Pfft

Who was robbing who?

P. Breathnach · 16-03-2016 5:31pm

lawred2 wrote: »

In some cases it's the management fees that are theft pure and simple

A previous estate I lived in had management fees - supposedly for a whole raft of maintenance and bin collections reasons etc

Maintenance was minimal, irregular and haphazard. Issues and defects could often go months after notifying the management company without remedy..

common grounds (grass etc) - was lucky if it saw a lawnmower once every 4 - 6 weeks even in the middle of summer

They started cost cutting with regards to refuse collection and reduced in half overnight the available number of refuse tips.. end result badly overflowing bin sheds that became health hazards..

Did the management company deliver reductions in fees? Pfft

Who was robbing who?

Management companies are not profit-making bodies. All the revenue should be applied to the benefit of the development.

Where services are curtailed as you describe, it is almost certainly because the company does not have the funds to do the work. It might be that the fees are set at too low a level, but it is more likely because many of the members are not paying their fees.

There may be cases where management companies are run inefficiently or even dishonestly, but they are very much the exception.

lawred2 · 16-03-2016 5:40pm

P. Breathnach wrote: »

Management companies are not profit-making bodies. All the revenue should be applied to the benefit of the development.

Where services are curtailed as you describe, it is almost certainly because the company does not have the funds to do the work. It might be that the fees are set at too low a level, but it is more likely because many of the members are not paying their fees.

There may be cases where management companies are run inefficiently or even dishonestly, but they are very much the exception.

Who on earth told you that?

SarahMollie · 16-03-2016 5:48pm

Any profit made should go into the sinking fund to cover any unexpected costs that may arise in the future.

OP, if you really want to make a difference, put yourself forward to be on the board of directors.

I'm a (new) director of my management company, and from what I've seen so far, the managing agent is extremely thorough about dealing with non payment so its not really an issue for us. If there is ever an issue, the agent instructs that legal letters be sent straight away. Currently our creditors owe less than €1k and there is due to be paid by the end of the month.

P. Breathnach · 16-03-2016 6:06pm

lawred2 wrote: »

Who on earth told you that?

http://www.irishstatutebook.ie/eli/2011/act/2/enacted/en/html

Cupra280 · 16-03-2016 6:10pm

lawred2 wrote: »

In some cases it's the management fees that are theft pure and simple

A previous estate I lived in had management fees - supposedly for a whole raft of maintenance and bin collections reasons etc

Maintenance was minimal, irregular and haphazard. Issues and defects could often go months after notifying the management company without remedy..

common grounds (grass etc) - was lucky if it saw a lawnmower once every 4 - 6 weeks even in the middle of summer

They started cost cutting with regards to refuse collection and reduced in half overnight the available number of refuse tips.. end result badly overflowing bin sheds that became health hazards..

Did the management company deliver reductions in fees? Pfft

Who was robbing who?

This is exactly the reason that I started this thread.
The reason that services could not have been provided is because of people not paying, therefore there is no cash in the bank to pay for the provision of these services.

I wholeheartedly agree, non-payment is theft.

I could type for hours about my Company, and the core group of non-payers, but I do not want to get too caught up in that. Besides, I could be here for days!

I am thinking about approaching my TDs and lobby for the Multi-Unit Development Act to be amended about making the fees more enforceable.

selous · 16-03-2016 6:12pm

I'm in an estate where 50% are vacant and of the other 50%, 30% are rented out, The management agent resigned last Christmas as there was no money in the account because according to him, only 25% of people paid the fees, the agent couldn't enforce payment as the common areas hadn't been taken over by the management company, due to substantial infrastructure defects,

As a result, there is now no bin collection and hasn't been since 2nd week in Jan, but people are still contributing to the mountain of rubbish that's there, block insurance has lapsed and with spring coming, there will be no gardening done or lawns mowed,

The receiver/NAMA was paying for all the vacant units, but they were sold on to a "vulture fund" company either late last year or early this year, so it's now a waiting game to see what happens, Council or T.D's are not interested at all, haven't replied to anyone's calls or emails to date.

Arbiter of Good Taste · 16-03-2016 6:40pm

lawred2 wrote: »

In some cases it's the management fees that are theft pure and simple

A previous estate I lived in had management fees - supposedly for a whole raft of maintenance and bin collections reasons etc

Maintenance was minimal, irregular and haphazard. Issues and defects could often go months after notifying the management company without remedy..

common grounds (grass etc) - was lucky if it saw a lawnmower once every 4 - 6 weeks even in the middle of summer

They started cost cutting with regards to refuse collection and reduced in half overnight the available number of refuse tips.. end result badly overflowing bin sheds that became health hazards..

Did the management company deliver reductions in fees? Pfft

Who was robbing who?

As an owner you are the "management company". If there is a third party managing the estate on your behalf, they are your "agent". If you are unhappy with the level of service, then vote to change the agent - or better yet arrange with the other owners to run the estate yourself.

Or is it just easier to come onto boards and whinge about being "robbed"? :rolleyes:

cloneslad · 16-03-2016 6:43pm

I'm renting in an apartment complex that has had issues with non payment of management fees for years. So much so that about two years ago there was no electricity in the common areas for two days and the agent employed by the management company resigned.

We have an underground car park that allowed you to park wherever you liked, they decided to change this and now you have to have a sticker to park in the car park, if not you get clamped.

The only way you can get a sticker is to have your management fees fully paid.

This has worked well in that it inconveniences the non payers, however they have taken to parking on the footpaths and double yellows outside the complex so it's a bit of a pain in the ar$e at times with all the parked cars blocking the view of any oncoming traffic when coming out of the car park.

Paulw · 16-03-2016 6:56pm

cloneslad wrote: »

This has worked well in that it inconveniences the non payers, however they have taken to parking on the footpaths and double yellows outside the complex so it's a bit of a pain in the ar$e at times with all the parked cars blocking the view of any oncoming traffic when coming out of the car park.

Illegal parking like that should be reported to the council parking unit and/or the Gardai. It quickly stops when they get parking tickets.

Paulw · 16-03-2016 7:01pm

lawred2 wrote: »

In some cases it's the management fees that are theft pure and simple

Did the management company deliver reductions in fees? Pfft

Who was robbing who?

But, YOU ARE the management company. Every unit owner is part of the management company. You have the responsibility to review the accounts each year and attend the company AGM, where you can raise issues. Of course, if you haven't paid your fees, you may not be entitled to vote at an AGM and your lack of payment may be seen by others.

No one is robbing anyone.

It is your legal responsibility to pay your fees, as per the contracts you signed.

We have had a few people who won't pay, but we do take it all the way to court, and have won judgements. We have a very high rate of payment, with people on standing orders. Anyone over a year in arrears is asked to go on to a payment plan, and anyone with arrears over 5 years (2 units) is taken to court. In general, we have a 95%+ payment rate for the development. We do what we can to keep fees down, while keeping services up.

When unit owners taken an active role - attending AGMs, paying fees, asking questions, etc, then it can make the place run very well.

MarkAnthony · 16-03-2016 7:08pm

I think Lawred, and possibly others, are confusing a management company/agent with the OMC. The OMC (Owners Management Company). At the end of the day every owner is a member of the OMC and needs to being the directors to task if they believe that things are not being run properly. Every owner should be aware of the company accounts, not being so informed is just as bad as not knowing whether you have a few quid to fix your house if something happens.

endacl · 16-03-2016 7:12pm

Lux23 wrote: »

If I can pay, I will pay. No matter what the bill is, and how much I don't like, I hate the feeling of owing money to someone. The type of people who don't pay bin charges or whatever always astound me, they will spend €100 on a night out but won't pay ten euro for some bin bags. So if I knew my neighbours were doing this, I would probably go out of my way to embarrass them into paying.

It's comical in some parts of town on bin day. Visit at the right time to see hordes of <mod edit> people <mod edit> run out and chuck their bin bags into the back of the truck...

cloneslad · 16-03-2016 7:27pm

Paulw wrote: »

Illegal parking like that should be reported to the council parking unit and/or the Gardai. It quickly stops when they get parking tickets.

It's a private road but not covered by the clampers. It's not an issue I get worked up about so I wouldn't bother getting involved in it.

lawred2 · 16-03-2016 8:20pm

Arbiter of Good Taste wrote: »

As an owner you are the "management company". If there is a third party managing the estate on your behalf, they are your "agent". If you are unhappy with the level of service, then vote to change the agent - or better yet arrange with the other owners to run the estate yourself.

Or is it just easier to come onto boards and whinge about being "robbed"? :rolleyes:

Not living there anymore thankfully.

lawred2 · 16-03-2016 8:22pm

MarkAnthony wrote: »

I think Lawred, and possibly others, are confusing a management company/agent with the OMC. The OMC (Owners Management Company). At the end of the day every owner is a member of the OMC and needs to being the directors to task if they believe that things are not being run properly. Every owner should be aware of the company accounts, not being so informed is just as bad as not knowing whether you have a few quid to fix your house if something happens.

Erm I think that's very possible. What's the difference?

I think I might have misspoken.

April 73 · 16-03-2016 9:19pm

I spent 5years as a director of an OMC. It was a steep learning curve and an eye-opener regarding human nature.

In my experience there were two types of non-payers - those who were genuinely in difficult circumstances (these were often the people who would try to keep up with payment plans) and those who just wouldn't pay. They believe their neighbours should be the ones to pay to look after the development while they eat out in local restaurants & head off on holidays & buy iPhone 6s for their kids for Christmas.

Then there are the handful of owners who turn up at the AGM who care about the development, while the vast majority don't care or just moan.

To keep any management company running I think you need to be getting payments from about 75-80% of people. Otherwise you are going to run into difficulties. You might have another 5-10% on payment schemes or making haphazard payments. The rest you won't get to pay until you either get a judgement against them or they sell the property.

The problem is that you need to be forceful enough with non-payers so that the people who pay see that there are enforcement measures. Otherwise the numbers of payers will decrease year on year.

My best advice -
Offer discounts for early prompt payments.
Allow monthly & quarterly payments to make it easier. If people have difficulties allow reduced payments but keep them paying something regularly.
Threaten legal action & follow through on the big defaulters.
Don't provide Requisition 37 documents at sale until accounts are cleared.

davo10 · 16-03-2016 9:31pm

A lean is applied to all properties with outstanding management fees before they can be sold. Eventually the money is recovered. Our management company applies for a court order one year and six months after the fee is due, no exceptions.

SarahMollie · 17-03-2016 11:16am

The OMC is made up of all the owners - typically, one unit, one vote. In my place, we have 82 units, and then 6 of the members are elected to the board of directors who ultimately make the decisions.

In most cases, to make life easier, Boards of Directors will engage the services of a Management Agent, to actually handle the day to day running of the development. Obviously they are paid to provide this service. They collect the fees, organised our insurance, bins, gardening and other maintenance. They also peruse any non payers (of which we have very few - legal proceeding always started straight away) and retain a number of experts should they be required, like auditors, solicitors, planning experts (theres a site adjacent to us that may some day be developed). They also provide a 24 hour emergency service, so if a leak occurs in an apartment, the owner/tenant can call for repair. If a big bit of work needs doing, like replacing our gates or something substantial like that, they'll put it out to tender and the Board just needs to decide between the submissions.

I think they provide a pretty good service.

The Board just meet a few times a year in order to ratify decisions, and maybe also on an exceptional basis is something unusual crops up.

Edit: in the interest of full transparency, I'm a recently appointed member of our Board of Directors

Also, you'd be amazed how few owners show up to the AGM. About 10-15% attendance is typical for us apparently, and our managing agent told me that thats actually quite good compared to other OMC's she works with!

MarkAnthony · 17-03-2016 11:21am

lawred2 wrote: »

Erm I think that's very possible. What's the difference?

I think I might have misspoken.

The OMC is the company (limited by guaratee - although I think it's changed with the New Companies Act) that all the owners are members of. That company employs (in almost every case) a managing agent (known by most as a management company) to do the day to day running of the complex.

You're absolutely right that the company employed by the OMC is out to make a profit!

Edit: Better explanation above by Sarah

/ beaten too it :pac:

P. Breathnach · 17-03-2016 11:58am

MarkAnthony wrote: »

...
You're absolutely right that the company employed by the OMC is out to make a profit!...

The managing agent works for an agreed fee (or schedule of fees). Cutting back on services such as grounds maintenance or refuse disposal is not a way for the managing agent to increase profits.

The directors of the OMC should be on top of the management contract, both in relation to ensuring that the fees are not excessive and in checking that the duties are performed to a satisfactory standard.

caviardreams · 17-03-2016 12:22pm

I don't understand non-payment myself, or people who oversell the negatives of them e.g. "I'd never buy an apartment or house with management fees, it costs a fortune". Apart from the auditor's fees and the fees to the managing agent, all the other fees typically relate to explicit, tangible services on your property e.g. bins, insurance, lighting, electricity etc. which you often get for cheaper than it might cost individually (I pay about €60 or so for bins I think when you apportion out the overall spend).

If it is a well run and managed development, where the agent gets several quotes for any contracts/services, it is likely that the fees are reasonable, and I can't see how anyone should have issue paying them. As others have said, if it is not well run and the accounts show that some services may be needlessly expensive (e.g. paying €300+ per unit for bins), then it is time for the OMC to get a new agent. It's an owner's responsibility to raise this if they feel it is an issue, and not to just stop paying fees.

MarkAnthony · 17-03-2016 1:13pm

P. Breathnach wrote: »

The managing agent works for an agreed fee (or schedule of fees). Cutting back on services such as grounds maintenance or refuse disposal is not a way for the managing agent to increase profits.

The directors of the OMC should be on top of the management contract, both in relation to ensuring that the fees are not excessive and in checking that the duties are performed to a satisfactory standard.

Of course not, but at the same time if it's thier fee or mowing the lawns which do you suppose it going to get paid for first?

Cupra280 · 18-03-2016 10:19am

MarkAnthony wrote: »

Of course not, but at the same time if it's thier fee or mowing the lawns which do you suppose it going to get paid for first?

But, that goes back to the original point, the Agent is not getting anything over and beyond the fee that would be agreed in the Budget at the AGM of the Company.

If they are paying themselves before services, that would indicate that there is a problem with people not paying fees, if there is not enough cash to pay both bills when they become due.

seamus · 18-03-2016 10:49am

caviardreams wrote: »

I don't understand non-payment myself, or people who oversell the negatives of them e.g. "I'd never buy an apartment or house with management fees, it costs a fortune". Apart from the auditor's fees and the fees to the managing agent, all the other fees typically relate to explicit, tangible services on your property e.g. bins, insurance, lighting, electricity etc. which you often get for cheaper than it might cost individually (I pay about €60 or so for bins I think when you apportion out the overall spend).

People just don't really get it. They think it's like a tax, you pay it and it disappears into the ether. When a kerb gets cracked by a truck reversing into it and isn't fixed within a week, they wonder where the hell their money has gone.

The place we lived in had relatively expensive fees. At the AGMs, it was explained why the fees were high* and why they were going up*. Every year the management agent sent out a full set of accounts and budgets with very clear details about how much money was collected, how much was spent/will be spent on various services, and how the fee was calculated per unit. It all added up, it all made sense, even if the fees were high.

Yet 90% of the neighbours at one point or another would say, "Like, where is our money going, what are we paying for?"

The management agent couldn't have made it clearer, but people don't pay attention, they don't understand what their fees are for. And the fact that all communications came from the management agent rather than the OMC probably muddied the waters a bit.

*Our fees were high because the developer built the place with no locks on bin sheds or bin areas. When the OMC put locks in place, people just broke them off (someone actually rammed the door with their car to open it) or dumped their rubbish outside. Monitored CCTV is expensive, so it was decided in the medium-term that simply paying the bin company a special rate to just take everything away, whether in a bin or not, was the best option, but expensive.
They were increasing because the developer didn't build a sinking fund while in charge. So there were ten years of backpayments that had to be made to rebuild a sinking fund

P. Breathnach · 18-03-2016 11:09am

Cupra280 wrote: »

But, that goes back to the original point, the Agent is not getting anything over and beyond the fee that would be agreed in the Budget at the AGM of the Company.

If they are paying themselves before services, that would indicate that there is a problem with people not paying fees, if there is not enough cash to pay both bills when they become due.

Non-payment of fees is a problem for every MUD. I looked at the accounts for a number of complexes, all of them in areas where you might expect relatively few low-income households. Unpaid fees ranged from about 10% to about 25%. I suspect it might be higher in areas where incomes are low.

The most important - and usually the largest - item in the budget is block insurance. Probably next is refuse disposal.

I think that even the most grasping managing agent would not let the insurance lapse, even if that meant not getting paid. I suspect that no agent would entirely eliminate refuse disposal services.

I'd have some sympathy for an agent who took the position that his/her fees be paid before anything is spent on repainting the common areas.

Non-payment of Management fees in an apartment complex.

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