PROPERTY CLINIC: QI live in an apartment block to which a receiver has recently been appointed as the developer has gone bust. What does this mean? Will they take care of all the grounds maintenance and the running of the services in the development and will they be paid to do so?
AThis question covers two possible scenarios: the first is where the receiver is appointed over the development company and the second is where the receiver is appointed over the entire block, part of the block or certain apartments within the block owned by the developer.
My experience is that occupiers can easily and understandably become confused as to which scenario they are in. Whichever is the case, a receiver has a primary duty of care to the lender who makes the appointment. The receiver also has a duty of care to the borrower and to any of the developer’s tenants of units that have been “held back”.
The receiver is required to ensure that the debt is serviced, interest is paid, and to endeavour to see repayment of the debt.
Where the receiver is over the development company, the receiver has a duty to run the business and takes on all responsibilities that that entails.
In this case, this would likely involve finishing out the construction works where a building or buildings were incomplete or, at a minimum, making the site safe.
Where the block of apartments is fully or part sold and occupied, the common areas will have been transferred over to the Owners’ Management Company (OMC) and this was provided for under the Multi Unit Development Act 2011 (the MUD Act). Each owner will have a voting right.
This does not relieve the developer and hence the receiver from their obligation to finish the common areas. Separately, there may be incomplete and unoccupied blocks in the development and the receiver will isolate these blocks on health and safety grounds.
Where the development is fully complete, it is possible that the developer may have held onto a number of the units and this may give the impression that the entire block is in receivership.
You can easily check with the management company. In this case, the receiver is effectively acting as the new landlord of those units that have been “held back”. The developer’s role in the development is over, except that they will be responsible for the usual building warranties.
The management company assumes responsibility for the common areas and is paid to do so and it’s usually done via a management agent who is licensed under the Property Services Regulation Act 2011.
Two budgets will be presented annually – the operating service charge and the sinking fund. The developer and consequently the receiver will be responsible for such payments for any unsold units.
Peter Stapleton is director of Lisney, and a practising property receiver and member of the Society of Chartered Surveyors Ireland
Can I buy a house from Nama?
QI keep hearing about lots of great residential houses in Nama that are good value. How can I find them? How do I go about buying one if I'm interested?
A Firstly, Nama has a very useful and informative web site ( nama.ie) which has a section called "Properties Enforced". This section contains a listing of all Nama properties and is now relatively easy to search using the new search functions and is a good way of finding links to properties that you may have an interest in.
The website also contains some links to the full brochures of the properties, which provide more detail on them. In relation to the properties listed, in most cases, Nama appoints approved estate agents to market and sell properties on its books.
Therefore purchases are handled in the normal way, albeit Nama does have to approve all sales. If you are interested in any of the properties, you could contact the agents involved and perhaps register with them in case they might have other Nama properties on their books similar to what you are looking for in due course.
In relation to buying one of the properties, the purchase of such a property will normally be conducted by private treaty but the specific terms will be set out by the selling agents. Heretofore, Nama has avoided going down the large scale public auction route such as many of the banks/receivers are doing.
Nama has recently launched up to 750 properties for sale on a deferred payment initiative which aims to provide home buyers with a level of protection against a fall in residential property prices from current levels over the next five years.
The initiative is available to people who wish to buy a new home and allows approved purchasers to defer 20 per cent of the price of their property.
Further details of this initiative are available on the Nama web site along with a useful Frequently Asked Questions section.
Gerard O’Toole is Vice Chair of the Western Region Branch of the Society of Chartered Surveyors Ireland
Neighbours won’t pay service charges
QWe bought an apartment in a mixed development of apartments and houses in Co Meath around four years ago. At the last AGM it was brought to our attention that a number of people living in the houses are refusing to pay their service charges, saying that they don't need to pay because they don't get any of the services that people in apartments do – lifts, gates, cleaning, etc. The management company explained that they do benefit from street lighting, the water fountain and grass cutting and maintenance. The non-payers are now saying that they want the Council to take charge of the development. I am worried because the Council won't look after cleaning common areas in the apartment blocks, lifts maintenance and insurance, etc. If the houses continue not to pay, are we in effect subsidising the services they get? What can be done?
AIn multi-unit developments where there are both houses and apartments there are usually two separate service charges. One is for the apartments and is paid by the apartment owners. The second one is usually for the amenity areas (grounds and roads) which both apartment and house owners pay, generally on an equal basis.
The amenity (or common area) service charge should be the only charge payable by the house owners to cover services such as public liability insurance, street lighting, maintenance to the roads, signage, grounds and landscape and perhaps parking control or security, if operated.
In contrast, the apartment owners usually pay the common area service charge and also a separate apartment service charge to cover items that relate specifically to the apartments, and not the houses. These include building insurance and services within the buildings such as lifts, pumps, fire safety, lighting, cleaning, repairs and renewals as well as a sinking fund for future redecoration and refurbishment.
In multi-unit developments where there is a lack of information, frequently this gives rise to confusion and misunderstandings which then leads to some owners withholding payment of their service charges. Information and clarification on what items are included in your service charge and how much you are paying for each one is vital and it is important that each owner be provided with enough information so that they can familiarise themselves with how their management arrangements work. Their estate documents (or lease) will detail their rights to services and, equally, their obligation to pay for them and how they are apportioned amongst each type of owner within the development.
It may very well be that the house owners want to have certain services in the estate taken in charge by the local county council. However, in the meantime, and in accordance with the lease, a house owner must pay their service charge or in effect, those who do pay end up subsidising those who don’t, which is unfair and can significantly affect the ability of the management company to meet its costs for the running of the development.
In terms of what can be done, I suggest that you first obtain and furnish the information necessary (full service charge cost and category breakdown) to all owners so that owners from each dwelling type understand the services from which they benefit and for which they are legally responsible. The board of directors of your Owners’ Management Company (OMC) and your managing agent should have this information.
Secondly, you could ask the OMC to investigate if the option of requesting the council to take in charge certain services actually exists.
Generally, county councils may take roads, footpaths and street lighting in charge but this is usually conditional upon them being brought up to a “taking in charge standard” which might impose a heavy financial burden on the OMC and owners.
In the event of persistent non-payment the estate documentation will generally set down penalties and interest which may be applied to the accounts of owners who do not pay their service charges and ultimately these accounts can be passed to your OMC’s solicitors for collection. However, perhaps a meeting held by the managing agent for all unit owners to explain fully what the service charge covers and to discuss any concerns could be convened in the first instance.
Siobhan O’Dwyer is chair of the property and facilities management professional group of the Society of Chartered Surveyors Ireland
