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Establishing a Management Company

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  • 22-03-2019 4:43pm
    #1
    chicorytip
    Registered Users Posts: 4,096 ✭✭✭


    I am interested in trying to set up a management company in the apartment complex where I live. It's a small development of duplexes and townhouses some owner occupied, others rented out. The areas requiring upkeep are a small central courtyard /car park and entrance gates. The original developer was responsible but went out of business. I have spoken to a couple of my neighbours who are like minded.
    What legal and other requirements might be involved?


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    #2
    happyfriday74
    Registered Users Posts: 194 ✭✭happyfriday74


    When was it built?

    There should be Owners Management Company set up an listed on the CRO by the Developer and this ultimately gets transferred to the control of the owners. You will have signed a lease with this Owners Management Company when you purchased so you solicitor should give you the detail.

    Accounts have to be prepared for this Company annually and filed and if this hasn't been done the company will have been struck off and its expensive to get it back listed.

    PM if you need more info


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    #3
    markpb
    Registered Users Posts: 9,254 ✭✭✭markpb


    A contact with the OMC forms part of the lease that you sign when you buy a managed property. If there's no company already, you can't easily create one. I'm not sure if it's legally possible to tie a property to a new OMC and, even if you could, you'd need 100% of the owners to sign it.

    What's more likely is a residents association. Owners or tenants can contribute voluntarily to the upkeep of the estate.


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    #4
    chicorytip
    Registered Users Posts: 4,096 ✭✭✭chicorytip


    markpb wrote:
    What's more likely is a residents association. Owners or tenants can contribute voluntarily to the upkeep of the estate.


    Yes, that seems to be the only realistic option in this particular situation.


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    #5
    Del2005
    Registered Users Posts: 18,915 ✭✭✭✭Del2005


    markpb wrote: »
    A contact with the OMC forms part of the lease that you sign when you buy a managed property. If there's no company already, you can't easily create one. I'm not sure if it's legally possible to tie a property to a new OMC and, even if you could, you'd need 100% of the owners to sign it.

    What's more likely is a residents association. Owners or tenants can contribute voluntarily to the upkeep of the estate.

    Won't they need an OMC to own the buildings otherwise all their mortgages are invalid, if no one owns the buildings then no one can insure them. They will have serious issues with their mortgage providers and possibly personal injury claims if there's no OMC to take the hit for public liability.


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    #6
    chicorytip
    Registered Users Posts: 4,096 ✭✭✭chicorytip


    Del2005 wrote:
    Won't they need an OMC to own the buildings otherwise all their mortgages are invalid, if no one owns the buildings then no one can insure them. They will have serious issues with their mortgage providers and possibly personal injury claims if there's no OMC to take the hit for public liability.


    The owner profile is mostly those, like myself, who were cash purchasers without mortgages so this is the only type of buyer likely to find these kind of properties attractive to buy - professional landlords, say. No financial institution will grant mortgages without a management company in place. As regards insurance, I had no problem getting cover.


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    #7
    Del2005
    Registered Users Posts: 18,915 ✭✭✭✭Del2005


    chicorytip wrote: »
    The owner profile is mostly those, like myself, who were cash purchasers without mortgages so this is the only type of buyer likely to find these kind of properties attractive to buy - professional landlords, say. No financial institution will grant mortgages without a management company in place. As regards insurance, I had no problem getting cover.

    How do you insure something you don't own? The company taking your money to insure your part of a MUD is the easy bit. Getting them to pay out for a property you don't own is a different matter.


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    #8
    chicorytip
    Registered Users Posts: 4,096 ✭✭✭chicorytip


    Del2005 wrote:
    How do you insure something you don't own? The company taking your money to insure your part of a MUD is the easy bit. Getting them to pay out for a property you don't own is a different matter.


    I am the owner in the legal sense.


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    #9
    Mrs OBumble
    Registered Users Posts: 25,723 ✭✭✭✭Mrs OBumble


    I'm not 100% sure, but have a feeling that a management company is a legal requirement.

    If the original developer went broke before handing off the responsibilities to a MC, then the ownership and responsibility should have been dealt with in winding up his/her/its affairs.

    Either way - you need legal advice which is based on the actual leases you signed when purchasing your properties. Not from randomers on the interweb who don't know what your leases say.


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    #10
    Del2005
    Registered Users Posts: 18,915 ✭✭✭✭Del2005


    chicorytip wrote: »
    I am the owner in the legal sense.

    Not in a MUD, you have a long term lease and the OMC is the owner. Every other MUD has the OMC is the policyholder for the buildings as they own them, how did you get the building transferred to you?


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    #11
    Graham
    Moderators, Society & Culture Moderators Posts: 17,642 Mod ✭✭✭✭Graham


    OP, I'd get professional legal advice if I were you.

    If there is no OMC I would guess ownership of the common areas is in question.

    Other important questions you might want to ask as they are usually covered by management fees:

    is there a sinking fund to cover future repairs to the fabric of the building
    is there block insurance
    is there PL insurance

    To be blunt, maintaining the courtyard has potential to be the least of your worries.


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    #12
    chicorytip
    Registered Users Posts: 4,096 ✭✭✭chicorytip


    Del2005 wrote:
    Not in a MUD, you have a long term lease and the OMC is the owner. Every other MUD has the OMC is the policyholder for the buildings as they own them, how did you get the building transferred to you?


    I purchased the property at public auction. The previous owner received no demand for management fees during his period of ownership. The reason the property was listed for sale at auction was because of the fact that there was no management company in position. The exchange of contracts, transfer of title, land registry, LPT charge etc. went through in the normal manner without difficulty and was handled by reputable firms of solicitors.


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    #13
    Graham
    Moderators, Society & Culture Moderators Posts: 17,642 Mod ✭✭✭✭Graham


    That's not surprising. Unless the OMC issue is addressed (fixed) it's the most likely way you'd need to approach any future sale.

    I suspect any future purchaser would have problems getting a mortgage against a property with no clear OMC.


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    #14
    L1011
    Moderators, Business & Finance Moderators, Motoring & Transport Moderators, Society & Culture Moderators Posts: 67,849 Mod ✭✭✭✭L1011


    Unless the duplexes are actually resting on solid ground and go all the way to the roof - you have severe, severe issues there that are not common in Ireland without an OMC and lease structure. Flying freeholds do exist but are extremely rare.


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    #15
    chicorytip
    Registered Users Posts: 4,096 ✭✭✭chicorytip


    L1011 wrote:
    Unless the duplexes are actually resting on solid ground and go all the way to the roof - you have severe, severe issues there that are not common in Ireland without an OMC and lease structure. Flying freeholds do exist but are extremely rare.


    Can you elaborate on what you mean by this?


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    #16
    antoinolachtnai
    Registered Users Posts: 9,774 ✭✭✭antoinolachtnai


    If I were you I would be looking to find the best way to sort out the title on your properties.

    This would cost a thousands of euros but could add enormously to the value of the individual properties.

    Setting up or getting the management company reinstated will be a part of that.

    The main thing you need to do this is legal advice from a solicitor. I would suggest your original solicitor be your first port of call to get an estimate of likely costs. The next step would be to collect pledges for that amount from the owners.

    If all you want to do is fix the gates and do some painting you could just set up a committee. There are two problems with this - firstly the committee members might attract personal liability to themselves and secondly you would be investing in property for which you may not have a saleable title, which is not a good business move.


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