Relief may be in store for people with management company problems, says Edel Morgan
Is there finally some light at the end of the tunnel for those battling management company problems? The news that two publications are in the pipeline, from the National Consumer Agency and the Law Reform Commission, indicates that the campaign to regulate the management of multi-unit developments is gathering momentum - but it remains to be seen if they will provide a way forward in what is a complicated and highly fraught area.
Both publications will contain recommendations on how the area can be successfully regulated and should go some way towards educating people about what they are getting themselves into when they become a member of a management company.
The National Consumer Agency is due to publish its report next month. If the zealous way the agency is guarding its contents is anything to go by, it should be a ground breaking document. A consultant from DKM, who researched the report, contacted me several months ago for information on the types of problems prevalent in management companies and for any contacts I had for case studies, so I'm hoping it will cover the gamut of management company issues. If it does, it will provide management companies in crisis with an invaluable reference point, something few have had up to this.
There are a number of common scenarios that should be included in the report. A typical one is when the developer refuses to hand over a residential development to the residents when it is built. Or, as also happens, when the residents are reluctant to take charge of the development, either because no-one wants the responsibility of being a director of the management company or because they don't want to inherit a company with legal and/or financial problems.
Those residents who agree to become directors often find they have been thrown in at the deep end and are expected to negotiate the intricacies of company law and grapple with budgets - all on a voluntary basis with little training, or guidance when things go wrong. The agency's report will be accompanied by a booklet with top tips for consumers on understanding and dealing with management company set ups.
The Law Reform Commission is due to publish a consultation paper on multi-unit developments in about two months time. This will be followed by a report with recommendations to the Government with regard to regulation, although there is no publication date set for this yet.
According to a spokesperson for the Law Reform Commission, the consultation paper will look at other countries that are "further down the road with dealing with multi-unit developments than we are, like Australia, the UK and America and parts of the Continent. It is an area that has developed in this country without any great structures in place."
Labour TD, Dr Mary Upton, has called for a number of legislative amendments to enable apartment residents resolve management company difficulties. She has suggested that planning permissions should require developers to complete an apartment complex within a specified period and then ownership of the common parts be handed over immediately to the residents.
She suggests amending Section 180 of the Planning and Development Act 2000 to enable management companies, upon application to the court by a majority of owners, to gain ownership of the common parts of an apartment complex from the developer. In the UK, says Upton, residents of multi-unit blocks "simply have to service a notice to manage on the developer saying they wish to manage the property themselves and have set up a right to manage company to do so".
It remains to be seen whether Fingal County Council's decision to concede to residents' demands and take charge of some of the services in Castlecurragh estate in Blanchardstown, Dublin 15 will set a precedent for other areas. Castlecurragh had an unusual set up whereby buildings insurance for houses was included in the service charge, which also covered landscaping and general maintenance.
However, after a large number of residents refused to pay their service charge, the management company, which was presided over by two officials from Fingal County Council, fell into financial difficulty. Services were withdrawn from the estate for a period and residents demanded that the council take charge of cutting the grass and that that they should be allowed arrange their own house insurance.
The council did a U-turn and said that because of its "special interest" in the estate - it was developed by the council in a public private partnership with Shannon Homes - it would cut the grass and take responsibility for road sweeping, maintenance and public liability insurance for areas maintained by the council.
However, the council is adamant that the management company will not be dissolved and there will continue to be a service charge, albeit reduced. It appears that if residents want the landscaped areas tended to properly, they will have to pay for it themselves. A meeting to elect a new board of directors of Castlecurragh on August 28th is expected to involve "a lively cross-exchange of views to put it mildly", according to one source.
