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No sinking fund

  • 13-05-2019 2:54pm
    #1
    Fiftyfilthy
    Registered Users Posts: 554 ✭✭✭


    I was 99% completed to purchasing an apartment that I really liked

    However, my solicitor has informed me that the mgt company has no sinking fund in place

    Solicitor advised me to walk away , which makes sense and I will do just this


    A little astonished as mgt fees were around 1800e pa and no lift in the block


    Panic now as my mortgage approval expires in 6 weeks too


«1

Comments

  • #2
    Horusire
    Registered Users Posts: 158 ✭✭Horusire


    Fiftyfilthy wrote: »
    I was 99% completed to purchasing an apartment that I really liked

    However, my solicitor has informed me that the mgt company has no sinking fund in place

    Solicitor advised me to walk away , which makes sense and I will do just this


    A little astonished as mgt fees were around 1800e pa and no lift in the block


    Panic now as my mortgage approval expires in 6 weeks too

    In the market for an apartment myself. Found this particular issue myself on a few occasions. At some stage all of those apartments will in my opinion be worthless.


  • #3
    Jaster Rogue
    Registered Users Posts: 175 ✭✭Jaster Rogue


    There was a recent thread on this here which I learned some useful info from:

    https://www.boards.ie/vbulletin/showthread.php?p=109933971

    particularly this post:
    https://www.boards.ie/vbulletin/showpost.php?p=109936269&postcount=20


  • #4
    partyguinness
    Registered Users, Registered Users 2 Posts: 8,203 ✭✭✭partyguinness


    The market and legal protections in Ireland are just not as well developed as in other countries. In all honestly Ireland is about 40 years behind the UK in terms of statutory rights and protection for tenants vis a vis management company/structures.

    Personally I wouldn't touch a flat/apartment with a 100 foot pole to live in especially with all the nonsense surrounding them with management companies etc bleeding the tenants.

    While this not really help the OP- my only advice is stay away from apartments if you have any doubts.


  • #5
    Dolbhad
    Registered Users, Registered Users 2 Posts: 782 ✭✭✭Dolbhad


    A sinking fund is to deal with any issues beyond the usual fees like refuse etc. Say a life needed maintenance or work to building done, you’d sue the sinking funds. It’s a requirement under the MUD’s Act that a sinking fund must be in place. But under law it’s a small amount like €500 as far as I know. So most companies hold the bare min to ensure they don’t breach laws. In reality it’s not enough but they aren’t in break.

    But the min no way covers the expense of when a company needs to use a the sinking fund. So if a management company can’t even put in the small amount required that’s a big red flag to me.

    Also management fees were the 1st thing to go when recession hit. People couldn’t pay the mortgage let alone management fees. So that effects the sinking fund. If your really set on it, have a look at management accounts and see how they look? Is a lot of money owed to management company? Why don’t they have the money?


  • #6
    silent_spark
    Registered Users, Registered Users 2 Posts: 461 ✭✭silent_spark


    You might have difficulty finding a MUD that has a sinking fund to be honest. Apparently only 12% have a separate fund, and less than a quarter are ‘adequately’ funded. See if you can have a look at the bigger financial picture of the development, it might not be as bad as you think. Or, it might. Just don’t take the existence of a sinking fund as a black and white thing.


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  • #7
    Fiftyfilthy
    Registered Users Posts: 554 ✭✭✭Fiftyfilthy


    silent_spark wrote: »
    You might have difficulty finding a MUD that has a sinking fund to be honest. Apparently only 12% have a separate fund, and less than a quarter are ‘adequately’ funded. See if you can have a look at the bigger financial picture of the development, it might not be as bad as you think. Or, it might. Just don’t take the existence of a sinking fund as a black and white thing.

    I didn’t know that

    My solicitor is advising strongly not too

    There are no lifts in the estate and the money in the cash account of the mgt company is 10k


    However, a new management company has been formed and a sinking fund in place starting July 2019

    No big immediate deposits will be placed in the fund which means there is still nothing to cover any expenditure next few years


    I’m in a bad situation as currently renting the place and it’s going to be sold one way or another


  • #8
    silent_spark
    Registered Users, Registered Users 2 Posts: 461 ✭✭silent_spark


    Fiftyfilthy wrote: »
    I didn’t know that

    My solicitor is advising strongly not too

    There are no lifts in the estate and the money in the cash account of the mgt company is 10k


    However, a new management company has been formed and a sinking fund in place starting July 2019

    No big immediate deposits will be placed in the fund which means there is still nothing to cover any expenditure next few years


    I’m in a bad situation as currently renting the place and it’s going to be sold one way or another

    €10,000 seems very, very low, but it’s difficult to know the bigger picture without knowing creditors and debtors balances, average annual expenses, number of units, the current state of repair etc. If your solicitor has seen the accounts, has an understanding of them, and is advising you to steer clear, perhaps you should. No harm in asking for another professional opinion in real life though.


  • #9
    Fiftyfilthy
    Registered Users Posts: 554 ✭✭✭Fiftyfilthy


    silent_spark wrote: »
    €10,000 seems very, very low, but it’s difficult to know the bigger picture without knowing creditors and debtors balances, average annual expenses, number of units, the current state of repair etc. If your solicitor has seen the accounts, has an understanding of them, and is advising you to steer clear, perhaps you should. No harm in asking for another professional opinion in real life though.


    Yes indeed. I work with numbers and the accounts are very poor

    I believe the reason you pay a solicitor is for their expertise and knowledge

    If they are telling me not to, then I’ll take that advice

    20 years living here and will have to leave the country with the way things are


  • #10
    Horusire
    Registered Users Posts: 158 ✭✭Horusire


    As an aside,

    Say there was a huge job that needed to be undertaken in one of these apartment blocks and there is no sinking fund present.

    What happens? I assume the cost is divided amongst the apartments but not a lot of people have say 10k on hand.


  • #11
    Dolbhad
    Registered Users, Registered Users 2 Posts: 782 ✭✭✭Dolbhad


    Horusire wrote: »
    As an aside,

    Say there was a huge job that needed to be undertaken in one of these apartment blocks and there is no sinking fund present.

    What happens? I assume the cost is divided amongst the apartments but not a lot of people have say 10k on hand.

    Or management fees are increased.


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  • #12
    JJJackal
    Registered Users Posts: 1,016 ✭✭✭JJJackal


    Dolbhad wrote: »
    Or management fees are increased.

    you probably need the cash pretty quick if its a big job - can management companies take out loans? or does each owner have to give lump sum


  • #13
    Fiftyfilthy
    Registered Users Posts: 554 ✭✭✭Fiftyfilthy


    JJJackal wrote: »
    you probably need the cash pretty quick if its a big job - can management companies take out loans? or does each owner have to give lump sum



    As far as I’m aware mgt companies can’t take out loans, from the bank anyway


    A lot of people don’t pay their mgt fees as it is , so if they were increased to cover an expense, can’t see them starting paying

    No idea what would happen? Apartment block eventually condemned and forced to leave?


  • #14
    Samuel T. Cogley
    Registered Users, Registered Users 2 Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    Recently needed €120K out of our sinking fund for lifts, which didn't deplete it in case you're wondering what a healthy sinking fund and set of accounts looks like.


  • #15
    Horusire
    Registered Users Posts: 158 ✭✭Horusire


    Samuel T. Cogley wrote: »
    Recently needed €120K out of our sinking fund for lifts, which didn't deplete it in case you're wondering what a healthy sinking fund and set of accounts looks like.

    Wow... I assume if it didn't deplete it your looking at circa 300k in the fund or there abouts.

    I definitely cannot see how an apartment block will ever be able to accumulate that from zero.


  • #16
    riclad
    Registered Users, Registered Users 2 Posts: 8,184 ✭✭✭riclad


    if you want to live in a city ,in a certain area ,
    you may have no choice, as a first time buyer .
    Buy an apartment or buy nothing, houses are going up in price.
    my friend bought a 1 bed apartment,
    she was happy to live there .
    it went up in value before she sold it.
    She could have bought a house ,
    she choose to buy an apartment .
    the management fee,s are 1000 per year .
    I would stay away from buildings with lifts they tend to have high
    management fees
    .
    The trend is young people will find it difficult to buy 3 bed house in dublin if they are on the average wage.We are in a housing crisis ,
    the time when there are enough house,s in citys for all potential
    buyers is long gone.
    IF you live in a rural area you may be better off buying a house
    if you can afford to do so, versus buying an apartment.
    Apartments tend to be close to bus routes and shops .
    everyone is different ,
    buying a one or 2 bed apartment is a good investment for some people .


  • #17
    Fiftyfilthy
    Registered Users Posts: 554 ✭✭✭Fiftyfilthy


    riclad wrote: »
    if you want to live in a city ,in a certain area ,
    you may have no choice, as a first time buyer .
    Buy an apartment or buy nothing, houses are going up in price.
    my friend bought a 1 bed apartment,
    she was happy to live there .
    it went up in value before she sold it.
    She could have bought a house ,
    she choose to buy an apartment .
    the management fee,s are 1000 per year .
    I would stay away from buildings with lifts they tend to have high
    management fees
    .
    The trend is young people will find it difficult to buy 3 bed house in dublin if they are on the average wage.We are in a housing crisis ,
    the time when there are enough house,s in citys for all potential
    buyers is long gone.
    IF you live in a rural area you may be better off buying a house
    if you can afford to do so, versus buying an apartment.
    Apartments tend to be close to bus routes and shops .
    everyone is different ,
    buying a one or 2 bed apartment is a good investment for some people .


    Thanks, with all due respect the question I was asking was in regards to the sink funds (or lack off)

    Pros and cons of apartment living isn’t what I’m querying


  • #18
    partyguinness
    Registered Users, Registered Users 2 Posts: 8,203 ✭✭✭partyguinness


    Bottom line OP is that if there is no sinking fund and major repairs are needed then all the leaseholders will have to cough up to pay for it and that's where the fun starts.

    You will find some leaseholders will simple not pay or they will query everything and the whole situation becomes intolerable drags out for years and all the while the work is not being done and getting worse.

    All assuming the insurance does not cover it which it wouldn't in the case of normal wear & tear.

    The biggest most expensive repair will be the roof if not elevator.


  • #19
    Phileas Frog
    Closed Accounts Posts: 946 ✭✭✭Phileas Frog


    riclad wrote: »
    if you want to live in a city ,in a certain area ,
    you may have no choice, as a first time buyer .
    Buy an apartment or buy nothing, houses are going up in price.
    my friend bought a 1 bed apartment,
    she was happy to live there .
    it went up in value before she sold it.
    She could have bought a house ,
    she choose to buy an apartment .
    the management fee,s are 1000 per year .
    I would stay away from buildings with lifts they tend to have high
    management fees
    .
    The trend is young people will find it difficult to buy 3 bed house in dublin if they are on the average wage.We are in a housing crisis ,
    the time when there are enough house,s in citys for all potential
    buyers is long gone.
    IF you live in a rural area you may be better off buying a house
    if you can afford to do so, versus buying an apartment.
    Apartments tend to be close to bus routes and shops .
    everyone is different ,
    buying a one or 2 bed apartment is a good investment for some people .


    Was that a poem or a post?


  • #20
    voluntary
    Registered Users Posts: 871 ✭✭✭voluntary


    Get a good surveyor to write down all the issues with the property so you know what expenses can be expected.
    Sinking fund value without the context is irrelevant. One place may require a lot of investment, another place will not.

    Would you rather buy an aparment with 100k sinking fund, which however require 200k work or would you buy one with no sinking fund in a good condition and no structural issues?

    Also, the fund size needs to be divided by the numer of homes to share the pot.

    Large structural issues and/or fire safety issues in apartments usually cost no more than 5-10k per aparement to rectify. Compare that to structural issues in houses, where rectifying may go up to 70-100k and no funds/gov willing to assist.


  • #21
    Fiftyfilthy
    Registered Users Posts: 554 ✭✭✭Fiftyfilthy


    voluntary wrote: »
    Get a good surveyor to write down all the issues with the property so you know what expenses can be expected.
    Sinking fund value without the context is irrelevant. One place may require a lot of investment, another place will not.

    Would you rather buy an aparment with 100k sinking fund, which however require 200k work or would you buy one with no sinking fund in a good condition and no structural issues?

    Also, the fund size needs to be divided by the numer of homes to share the pot.

    Large structural issues and/or fire safety issues in apartments usually cost no more than 5-10k per aparement to rectify. Compare that to structural issues in houses, where rectifying may go up to 70-100k and no funds/gov willing to assist.


    I am thinking of leaning towards this train of thought. Pay for a surveyor to check the roof and structure and see if ok for next amount of years and take gamble that nothing happens in between

    Could be foolish but if I don’t buy my mortgage approval runs out next month, I’m over 40 and have no where for us to live


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  • #22
    Jaster Rogue
    Registered Users Posts: 175 ✭✭Jaster Rogue


    Fiftyfilthy wrote: »
    I am thinking of leaning towards this train of thought. Pay for a surveyor to check the roof and structure and see if ok for next amount of years and take gamble that nothing happens in between

    Could be foolish but if I don’t buy my mortgage approval runs out next month, I’m over 40 and have no where for us to live


    It's easy enough to re-apply for mortgage approval, have your circumstances changed that much since last approval? It's best not to rush into decisions like this when buying property if you're not 100% sure.


  • #23
    Jaster Rogue
    Registered Users Posts: 175 ✭✭Jaster Rogue


    voluntary wrote: »
    Large structural issues and/or fire safety issues in apartments usually cost no more than 5-10k per aparement to rectify.


    You can multiply that €5k by 10 if it's related to fire safety:


    https://dublingazette.com/news/news-fingal/blanch-fire-53839/

    The 274 homeowners in the apartment and duplex complex were initially told that the estimated cost for remedial work would be around €50,000 each.

    Compare that to structural issues in houses, where rectifying may go up to 70-100k and no funds/gov willing to assist.


    Apart from homebond? Also fire safety issues are far less important in houses, worst case scenario you can get out an upstairs window without much effort, the same jump could kill you from a 3rd floor apartment.


  • #24
    voluntary
    Registered Users Posts: 871 ✭✭✭voluntary


    50k is bad all right. I remember few previous cases where apartment owners were told to pay just above 5k to remediate fire safety issues. This development must be in need of a lot of work.

    Homebonds are for new houses, right? And in force 5-10 years depending on the defect type. New apartments would also be insured.


    EDIT: here's another example, 5k per apartment
    https://www.irishtimes.com/news/ireland/irish-news/apartment-owners-face-826-000-bill-to-fix-fire-safety-defects-1.3812750
    Residents have been told that a fire would not be contained within any compartment for more than 30 minutes. They should be able to contain a fire for 60 minutes in order to give residents time to get out safely.

    Minutes from the management company’s meetings show that this work – which was due to begin in February 2019 and take four months to complete – will result in a charge of between €4,246 and €6,676 per apartment, or €826,000 in total.


  • #25
    Jaster Rogue
    Registered Users Posts: 175 ✭✭Jaster Rogue


    Those numbers also assume 100% compliance rate of payment for remedial works. Some owners would have trouble coming up with the money, others would flat out refuse to pay, etc. What happens then - legal route? How much does that cost? This is why I would encourage OP not to rush into something like this just because of an expiring mortgage approval. Caveat Emptor.


  • #26
    caviardreams
    Registered Users, Registered Users 2 Posts: 5,613 ✭✭✭caviardreams


    Jaster Rogue wrote: »
    Those numbers also assume 100% compliance rate of payment for remedial works. Some owners would have trouble coming up with the money, others would flat out refuse to pay, etc. What happens then - legal route? How much does that cost? This is why I would encourage OP not to rush into something like this just because of an expiring mortgage approval. Caveat Emptor.

    If owners don't pay management fees or fees for remedial works etc. they won't be able to sell the property, so ultimately it castches up with them.

    Re a sinking find of 300k being achievable (somebody above mentioned it) if there are 100 apartments in a developments, that's 3k per apartment - very achievable over 5-7 years.

    OP if it is quite a new development (the last 2 or 3 years) I would not be worried about a sinking find not being set up yet as these things can take time. As an owner you can always table it at the next AGM


  • #27
    antoinolachtnai
    Registered Users, Registered Users 2 Posts: 9,814 ✭✭✭antoinolachtnai


    caviardreams wrote: »
    If owners don't pay management fees or fees for remedial works etc. they won't be able to sell the property, so ultimately it castches up with them.

    Re a sinking find of 300k being achievable (somebody above mentioned it) if there are 100 apartments in a developments, that's 3k per apartment - very achievable over 5-7 years.

    OP if it is quite a new development (the last 2 or 3 years) I would not be worried about a sinking find not being set up yet as these things can take time. As an owner you can always table it at the next AGM

    A development may have a lot of debtors. If it does, when these debts are finally collected, there may be a surplus of cash.

    Then again there may not! But you have to look at the balance sheet in its totality, not just at the sinking fund line.


  • #28
    Fiftyfilthy
    Registered Users Posts: 554 ✭✭✭Fiftyfilthy


    caviardreams wrote: »
    If owners don't pay management fees or fees for remedial works etc. they won't be able to sell the property, so ultimately it castches up with them.

    Re a sinking find of 300k being achievable (somebody above mentioned it) if there are 100 apartments in a developments, that's 3k per apartment - very achievable over 5-7 years.

    OP if it is quite a new development (the last 2 or 3 years) I would not be worried about a sinking find not being set up yet as these things can take time. As an owner you can always table it at the next AGM


    New mgt company in place this summer

    They have already reduced insurance and bins charges going forward and started a sink fund from June 2019

    There are 218 properties in the estate

    Estate was built 2002 so would be expecting wear and tear

    Still thinking it over


  • #29
    listermint
    Registered Users, Registered Users 2 Posts: 34,105 ✭✭✭✭listermint


    Who in their right mind would buy any apartment with no sink fund in place.

    With the level of issues with builds in this country over the last two decades. From roofs peeling off in storms, to owners having to patrol halls at night in rotation for fire watch protection. Then there's basements and all that lovely water related issues.

    You'd want to be off your rocker to do it. Biggest single transaction in your life and you'd listen to someone on the internet giving you odds of how alright it can turn out ...


  • #30
    antoinolachtnai
    Registered Users, Registered Users 2 Posts: 9,814 ✭✭✭antoinolachtnai


    listermint wrote: »
    Who in their right mind would buy any apartment with no sink fund in place.

    With the level of issues with builds in this country over the last two decades. From roofs peeling off in storms, to owners having to patrol halls at night in rotation for fire watch protection. Then there's basements and all that lovely water related issues.

    You'd want to be off your rocker to do it. Biggest single transaction in your life and you'd listen to someone on the internet giving you odds of how alright it can turn out ...

    If there is significant wear and tear on the roof of the building or there is a lot of work to do on fire or mech elec systems, the existence of a sinking fund won’t necessarily save you. By way of example, a thirty unit purpose built flat roofed development built in late 60s without lift which has 250 euros per year per unit committed to the sinking fund since the Act will only have 45000 euros in the fund. Doing the roof and upgrading the fire doors and fitting a fire alarm will cost at least twice that.

    You need to look at the overall picture.


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  • #31
    Marcusm
    Registered Users, Registered Users 2 Posts: 10,437 ✭✭✭✭Marcusm


    Horusire wrote: »
    As an aside,

    Say there was a huge job that needed to be undertaken in one of these apartment blocks and there is no sinking fund present.

    What happens? I assume the cost is divided amongst the apartments but not a lot of people have say 10k on hand.

    That’s precisely the issue; a significant remediation or upgrade is required but no funds are available and/or only a limited number provide their portion. Work can’t get done, if the issue is serious enough either the costs ramp up (see Longboat Quay where they had to have people physically present to watch out for a fire which never happened or Priory Hall where the entire complex was decanted). In either case it is a ****show. Absence if a sinking fund means no attention is paid to planned preventative maintenance.


  • #32
    PhoenixParker
    Registered Users, Registered Users 2 Posts: 2,677 ✭✭✭PhoenixParker


    A few comments, questions and observations:

    1) what's the delinquency rate on fees? Is everyone paying up or is there a serious problem collecting the money? If there's already a big problem collecting fees it's going to be quadruply difficult if there needs to be an additional levy to pay something specific.

    2) 218 is actually a pretty decent number of apartments. A 20 unit management company with a few non-payers is in a tough position but typically a bigger management company will have deeper pockets to pursue fees. Costs are typically recouped when the fees are paid, but you gotta pay to chase up front. There are also usually some economies of scale when it comes to the bigger jobs which a bigger development can take advantage of.

    3) I'd expect a steep discount due to the lack of sinking fund. The owner has effectively saved themselves at least €250 per year since 2002, probably more like €500. On top of that you're taking on the risk of an apartment in such poor financial shape. That comes off the price ++ as far as I'm concerned.

    4) are you willing to get involved in the management company and sort this yourself?

    5) see what the detailed surveyor/fire report says.

    If overall if it looks salvageable, I'd proceed cautiously with a steep discount. Do not panic yourself into proceeding due to mortgage approval. If this goes wrong it'll be very very expensive.


  • #33
    listermint
    Registered Users, Registered Users 2 Posts: 34,105 ✭✭✭✭listermint


    antoinolachtnai wrote: »
    If there is significant wear and tear on the roof of the building or there is a lot of work to do on fire or mech elec systems, the existence of a sinking fund won’t necessarily save you. By way of example, a thirty unit purpose built flat roofed development built in late 60s without lift which has 250 euros per year per unit committed to the sinking fund since the Act will only have 45000 euros in the fund. Doing the roof and upgrading the fire doors and fitting a fire alarm will cost at least twice that.

    You need to look at the overall picture.

    He's already said it matches nothing like your description


  • #34
    Fiftyfilthy
    Registered Users Posts: 554 ✭✭✭Fiftyfilthy


    listermint wrote: »
    Who in their right mind would buy any apartment with no sink fund in place.

    With the level of issues with builds in this country over the last two decades. From roofs peeling off in storms, to owners having to patrol halls at night in rotation for fire watch protection. Then there's basements and all that lovely water related issues.

    You'd want to be off your rocker to do it. Biggest single transaction in your life and you'd listen to someone on the internet giving you odds of how alright it can turn out ...

    I’m not listening to anyone in particular.


  • #35
    listermint
    Registered Users, Registered Users 2 Posts: 34,105 ✭✭✭✭listermint


    Fiftyfilthy wrote: »
    I’m not listening to anyone in particular.

    Not implying you are.

    I'm just saying you'd be mad on paper to do it. Huge money and it's easy for anyone in here to spend your money for you.


  • #36
    Fiftyfilthy
    Registered Users Posts: 554 ✭✭✭Fiftyfilthy


    PhoenixParker wrote: »
    A few comments, questions and observations:

    1) what's the delinquency rate on fees? Is everyone paying up or is there a serious problem collecting the money? If there's already a big problem collecting fees it's going to be quadruply difficult if there needs to be an additional levy to pay something specific.


    There does appear to be an issue regarding fees. I think the developer Owns a substantial amount of properties but has left the country years ago

    2) 218 is actually a pretty decent number of apartments. A 20 unit management company with a few non-payers is in a tough position but typically a bigger management company will have deeper pockets to pursue fees. Costs are typically recouped when the fees are paid, but you gotta pay to chase up front. There are also usually some economies of scale when it comes to the bigger jobs which a bigger development can take advantage of.

    3) I'd expect a steep discount due to the lack of sinking fund. The owner has effectively saved themselves at least €250 per year since 2002, probably more like €500. On top of that you're taking on the risk of an apartment in such poor financial shape. That comes off the price ++ as far as I'm concerned.

    The vendor was paying his mgt fees every year without fail around 1600 pa ( no lifts or underground parking) the money apportioned to the sinking fund never made it as the mgt company had to use the money just to keep up with general maintenance

    This in itself is alarm bells that something was/is very wrong

    4) are you willing to get involved in the management company and sort this yourself?

    New management company in place, I Have been in constant contact with queries and they have been great in providing answers with back up




    5) see what the detailed surveyor/fire report says.

    Exactly this. My solicitor is looking to find this out ASAP, when it takes place etc

    I’m also getting a surveyor to take a look at the building and roof too

    If overall it looks salvageable, I'd proceed cautiously with a steep discount. Do not panic yourself into proceeding due to mortgage approval. If this goes wrong it'll be very very expensive.


    As you can see by this thread I’m literally in 2 minds. Nothing will be decided hastily and the probability is I will not buy

    However, it is reasonable to explore all possible outcomes


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  • #37
    Glass fused light
    Registered Users Posts: 1,576 ✭✭✭Glass fused light


    Fiftyfilthy wrote: »
    New mgt company in place this summer

    They have already reduced insurance and bins charges going forward and started a sink fund from June 2019

    There are 218 properties in the estate

    Estate was built 2002 so would be expecting wear and tear

    Still thinking it over
    the change should be to the mgt agent who look after the property on a day to day basis.

    The mgt company should not have changed since the start of the estate.

    A reduction in the insurance premium may indicate a change to the policy.
    So when will the policy kick in and what costs will each owner have to find before insurance applies?

    Fiftyfilthy wrote: »
    As you can see by this thread I’m literally in 2 minds. Nothing will be decided hastily and the probability is I will not buy

    However, it is reasonable to explore all possible outcomes
    You are buying 2 things. A lease to occupy the space and a share in the company that owns the physical infrastructure.
    In an ideal situation the market valuation for the share is you pay just paying the prior owner for their portion of the sinking fund.

    Management fees - annual current year costs = sinking fund for next year onwards.
    Or
    Cash lodged - expected costs as included in the fee calculation - unexpected costs = prepaid cash 'gain' as you don't have to fund in the future ( cash in your right pocket moving to your left pocket)

    So for the sinking fund also spend the money for the professional advice of an accountant who can read and interpret the management company's accounts. And who can work with the surveyor to total the estimated associated costs for each element that the survey brings up. And fit these into a reasonable timeframe and see if the calculation matches what the current agent is proposing.


  • #38
    voluntary
    Registered Users Posts: 871 ✭✭✭voluntary


    Marcusm wrote: »
    That’s precisely the issue; a significant remediation or upgrade is required but no funds are available and/or only a limited number provide their portion. Work can’t get done, if the issue is serious enough either the costs ramp up (see Longboat Quay where they had to have people physically present to watch out for a fire which never happened or Priory Hall where the entire complex was decanted). In either case it is a ****show. Absence if a sinking fund means no attention is paid to planned preventative maintenance.

    Many of the post 2000 apartment complexes have been already assessed for fire safety complience. The management company will have this information at hand wheter this particular one has or has not been assessed and if it was then they have an obligation to pass this info over to your solicitor.

    In case the building has already been assessed for fire safety complience then a big portion of the risk goes away.


  • #39
    JJJackal
    Registered Users Posts: 1,016 ✭✭✭JJJackal


    Fiftyfilthy wrote: »
    As you can see by this thread I’m literally in 2 minds. Nothing will be decided hastily and the probability is I will not buy

    However, it is reasonable to explore all possible outcomes

    You can money in escrow - ie a third party would hold say 50k for some time and if no issues with no sinking fund the vendor would then get the money. If the house fell down you would get the 50K but no more


  • #40
    Horusire
    Registered Users Posts: 158 ✭✭Horusire


    JJJackal wrote: »
    You can money in escrow - ie a third party would hold say 50k for some time and if no issues with no sinking fund the vendor would then get the money. If the house fell down you would get the 50K but no more

    I've read your post 5 times and still cannot make sense of it? From what I gather..

    You propose that the buyer puts the money in an escrow account and the seller will gain access to that money in say 5 years time providing nothing goes wrong?

    Are you insane?


  • #41
    partyguinness
    Registered Users, Registered Users 2 Posts: 8,203 ✭✭✭partyguinness


    Horusire wrote: »
    I've read your post 5 times and still cannot make sense of it? From what I gather..

    You propose that the buyer puts the money in an escrow account and the seller will gain access to that money in say 5 years time providing nothing goes wrong?

    Are you insane?


    Yeah that is a bit nuts- asking a seller to future proof a buyer against possible expenditure.

    Factor it into the asking price to try a negotiate a reduction but otherwise you take the property warts and all.


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  • #42
    Dolbhad
    Registered Users, Registered Users 2 Posts: 782 ✭✭✭Dolbhad


    OP your solicitor is saying don’t go for it so that would put me off. However if I was in two minds, like others say, see how bad the financial reports are. And also see if your solicitor can enquire with seller as to whether a sinking fund will be put in place. And also find out exactly why there is none at the moment. Also I would guess if your getting a mortgage, bank’s approval will need to be received since there is an issue with legal title.


  • #43
    Fiftyfilthy
    Registered Users Posts: 554 ✭✭✭Fiftyfilthy


    Dolbhad wrote: »
    OP your solicitor is saying don’t go for it so that would put me off. However if I was in two minds, like others say, see how bad the financial reports are. And also see if your solicitor can enquire with seller as to whether a sinking fund will be put in place. And also find out exactly why there is none at the moment. Also I would guess if your getting a mortgage, bank’s approval will need to be received since there is an issue with legal title.


    Sinking fund in place next month (will take a few years for fund to have sufficient cash in it) 220 dwellings

    No issues with the titles and deeds

    Is a new management company and also a new agent too due to both being ran so poorly

    There’s no lifts or underground parking . Need to find out the imminent fire inspection first, a surveyor to check the building too

    I’m with rebuilding Ireland home loan , so to reapply and get to the stage I am now took me months and months

    Each time I look at an apartment I’m not going to know this issue until I go save agreed which will be both timely and costly as most estates don’t have sufficient sink funds


  • #44
    Glass fused light
    Registered Users Posts: 1,576 ✭✭✭Glass fused light


    If there is an actual new management company as in there the buildings were "sold"/transferred from company A to company B, I would suggest that you don't invest unless you want to be a director.

    You need to understand exactly what happened to create the mess and who were the key drivers in getting it sorted. It would suggest the majority of the 220 owners sat back and let their asset devalue to zero. They are not going to change and if the active people sell up it will revert back to a mess.


  • #45
    Fiftyfilthy
    Registered Users Posts: 554 ✭✭✭Fiftyfilthy


    2 of the residents from an agm stepped to to be directors

    The developer was the mgt company prior as far as I’m aware and left the country x amount of years ago

    This isn’t ideal


  • #46
    partyguinness
    Registered Users, Registered Users 2 Posts: 8,203 ✭✭✭partyguinness


    Fiftyfilthy wrote: »
    2 of the residents from an agm stepped to to be directors

    The developer was the mgt company prior as far as I’m aware and left the country x amount of years ago

    This isn’t ideal


    That is normal.

    The developer manages the block until the last unit is sold. The common areas are then transferred to the new management company that was set up and the developer is out of the equation. The developer will usually put Agents in place to run the day to day management of it which helps the leaseholders to get their feet under the table.

    The leaseholders as shareholders will appoint directors to run the company (existing leaseholders as you have mentioned), hold AGMs, appoint Agents if necessary but not mandatory, produce budgets and service charge accounts etc etc.


  • #47
    Fiftyfilthy
    Registered Users Posts: 554 ✭✭✭Fiftyfilthy


    One last question, if my solicitor is advising not too and the consensus on here is the same

    Who are the people buying these apartments in that estate? There are so many for sale and sold the last few weeks/months

    Cuckoo funds? Foreign investors or ftb just not caring about future possible consequences?


  • #48
    alwald
    Registered Users Posts: 1,289 ✭✭✭alwald


    Fiftyfilthy wrote:
    Who are the people buying these apartments in that estate? There are so many for sale and sold the last few weeks/months

    You will get a more accurate answers if you provide further details about the name and/or location of the estate.


  • #49
    Fiftyfilthy
    Registered Users Posts: 554 ✭✭✭Fiftyfilthy


    The apartments to the right of the shopping centre in Charlestown


  • #50
    Floppybits
    Registered Users, Registered Users 2 Posts: 7,736 ✭✭✭Floppybits


    Here is my take on this. I have lived in an apartment for 10 years or more. My advice would be to check the grounds and the common area of the apartments, are they well maintained? If they are not then don't go near the place, if they are maintained then it shows that the management company are looking after the place. Also how old is the apartment building? If it is older than 10 years then any structural problems are going to have appeared unless something happens during a storm or freak event.

    Like a I said the things to look out for are how well the common areas are maintained, if there are lifts are they working, if they break how soon are they fixed?

    How much of a sinking fund are you looking for the Management company to have? €500 or €500,000?


  • #51
    Fiftyfilthy
    Registered Users Posts: 554 ✭✭✭Fiftyfilthy


    No lifts
    No underground parking
    No electric gates

    Grounds are well maintained , I think volunteers also help with flowers and shrubs


    Apartments build early 2000s so is time for wear and tear potential but to the untrained eye, look well maintained

    If around 200 odd properties, I would expect there to be some money in it next 5 years


    My thinking at the moment is

    Surveyor in to check the building and see what this fire inspection comes back with



    I think anytime I go to see an apartment I’ll only find out about mgt accounts and sink funds when I’m in the final stages of closing a potential purchase


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