I am the owner of an apartment in Galway which I have rented out through an estate management company. The apartment is on the top floor and has suffered water damage from the roof on two occasions in the past few months. The redecoration of my apartment necessitated by the damage caused by water ingress from the roof has cost me more than €1,000.
I inquired about claiming this amount from the Management Company Insurance policy but discovered that there is an excess of €1,000 on the policy. Because the water damage was caused by a failure of the management company to maintain the roof to a standard so as not to cause damage to my property, I feel that I should be reimbursed (from the management company's funds) for the cost of its redecoration. To date my request has fallen on deaf ears. I would be interested to hear your opinion on this matter please.
Owners Management Companies (OMCs) and their operation are covered by the Multi-Unit Developments Act which was introduced in 2011. The legislation put in place additional obligations (on top of the Companies Act) on OMC boards of directors relating to consulting with owners and reporting on all aspects of the OMC’s role including use of funds.
As a property owner, you are a member of the OMC and should have a say in how the common areas owned by the OMC are maintained and managed. When you purchased your property, the legal documents you received should have set out the services the OMC has to provide.
Owners can usually expect block insurance (including public liability), cleaning of common areas, maintenance/management of the car park, repair of roofs and gutters and electricity to be some of the common services that are provided. These services are generally budgeted on an annual basis, the budget should be approved by owners at the company’s AGM. Service charges are then levied on all owners, however, these are to pay for the approved budget only.
Sinking fund
The annual service charge should also include a contribution towards a long-term sinking fund. The Multi-Unit Development Act 2011 introduced a legal requirement for OMCs to establish and maintain a sinking fund and the amount to be paid is agreed at the AGM as part of the budget approval process.
However, the Act also guides the use of a sinking fund; refurbishment, improvement or once-off maintenance, or advice from a qualified person in relation to these types of work. It is a requirement under the Act that money in the sinking fund must be held in a separate account from management fees and the authorisation of the directors of the OMC is required to access the fund.
As a general guide some of the most common uses of a sinking fund are repair, refurbishment or replacement of common area elements such as:
Building structure
Windows and walls
Roof and roof finishes
Internal partitions
Floor structure
Plumbing and water services
Heating and ventilating
Lifts and escalators
Mechanical and electrical services and infrastructure
It is difficult to say without knowing the full circumstances of the situation, but this may explain your OMC’s approach to this matter. Further information can be found on the Office of the Director of Corporate Enforcement or on the Property Services Regulators website. Alternatively, if you are renting out a property, you should have a specific landlord insurance policy in place and, subject to the type of policy, you may have cover in this instance.
Enda McGuane is a chartered property manager and member of the Society of Chartered Surveyors Ireland, scsi.ie
