[Article] Mangement Companies

Marcais

Thanks to Evelyn Cawley for sending me the link to this very interesting article re. management companies from The Sunday Business Post.

Struggling To Manage New Homes

Sunday, February 11, 2007 - By Michelle Devane

Relationships with a property-management companies may be the most worrisome new issue facing homebuyers. The increased popularity of apartment and multi-unit housing developments in Ireland, over the past number of years, has opened up an entirely new source of anxiety.

Owners of properties such as apartments and duplexes, and even some house owners, have another burden to face in their daily lives with fees to pay, meetings to attend and, in many cases, arguments with management agents about problems that have not been remedied. Broken windows, leaking roofs, faulty lifts, and uncollected rubbish are just some of the common complaints from apartment owners in recent years. But what are management companies and why are they so important?

The purpose of a management company, which is subject to company law, is to maintain areas and manage services within a development that are under the shared ownership of all residents including halls, corridors, lifts, footpaths, gardens, refuse collection and water.

In the past, housing estates were ‘taken in charge’ by local authorities, which provided maintenance when the development was complete. But the relatively new phenomenon of apartment complexes does not lend itself easily to this formula. Management companies have become the norm in such schemes.

The complexities involved in management companies are head-spinning and there is a general lack of awareness about them among the 500,000 people living in multi-unit developments across the country.

Yet the standard at which these companies operate and what agent they appoint is of vital importance to the future resale value of an owner’s property.

According to Paul Appleby, the director of corporate enforcement, management companies have been a frequent topic of complaint to his office in recent years. Appleby’s office received 20 written complaints about apartment owners’ management companies last year and 11 in 2005.

A spokesman said there have already been seven written complaints this year but added that this figure does not reflect the high number of queries and complaints the office receives daily by telephone and e-mail.

The government has said it will establish an interdepartmental committee to legislate for the operation of property management firms, for apartment complexes and other multi-unit developments. It is also to examine the possibility that the proposed property services regulatory authority would have a direct role in regulating these companies.

There are a number of common problems with management companies.

The main one is a lack of knowledge among property owners. To most, management companies and property management firms might sound the same but it is vital that owners can distinguish the difference.

Each management company is composed of the apartment owners - who are its members - while the managing agent is a contractor of the management company.

At a conference on multi-unit developments held in Dublin last month, the chairwoman of the National Consumer Agency, Ann Fitzgerald, said: ‘‘The reality is that many multi-unit development owners, typically younger persons, may only be vaguely aware of the existence of a ‘management company’ which they might quite easily confuse with a property management company, also known as a management agent.’’ Another problem arising frequently is when the developer refuses to hand over a residential development to the residents when it is built. Equally, residents may be reluctant to take charge of the development because they don’t want the responsibility or don’t want to inherit a company with legal and financial difficulties.

Both situations cause considerable headaches with upkeep and services.

Developers do not give control to the management company until the scheme is finished.

Until then, the developer takes care of maintenance and hires his own managing agent. In some instances, control is never transferred to the owners.

Currently, the only action owners can take is to bring the developer to court.

The issue of housing estates that are run by management companies and are not taken charge of by local authorities was highlighted by the Tyrellstown development, in west Dublin.

Construction there is ongoing. Up to 2,000 houses will be built in the scheme, mostly by Twinlite Developments.

It has set up - or will set up - eight estate management companies to maintain the common areas and manage services.

For the past four years, residents of Tyrellstown have been paying charges to an agent appointed by the developer.

Charlie Cleary, a resident and chairman of the Tyrellstown Action Group on Management Companies, said there have been difficulties from the start.

‘‘We’ve had considerable problems determining the boundaries of the common areas,” he said. ‘‘We also found out that the managing agents had billed us for street lighting that the local authority had already paid for - so people stopped paying their fees.”

Fingal County Council has been paying for the maintenance of some of the public lighting in Tyrellstown. The managing agent, maintains that the fact the residents were charged was a mistake.

‘‘We want to abolish the management structure and management fees for the houses in the estate, create a democratic management structure and fees to cover the internal common areas in the apartments, and have the upkeep of the public areas be the responsibility of the developers until they are ‘taken in charge’ by the local authority,” said Charlie Cleary.

In March of last year, two residents of Tyrellstown refused to pay their service charges, claiming that it was double taxation.

They were ordered by court to pay over €1,000 to companies managing their housing estates. However, seven months later, on October 19, the action group won a substantial victory in the Circuit Court. In a case involving a Tyrellstown householder, the management company was found to be at fault for pursuing a householder for fees, while the common areas were still in the ownership of the developers.

The court also found that the fees being sought were not properly certified.

Judge Alan Mahon ruled that the defendant was entitled to know what precisely he was being asked to pay for so that he could then dispute any aspect of it. Secondly, he ruled the plaintiff lacked proper legal standing - simply being the agent for the developer, did not give them a right to claim.

According to Charlie Cleary, following this ruling, 24 further cases were heard in the small claims court, including his own, and similar decisions were made.

‘‘The majority of residents here want management companies to take care of the upkeep of common areas in the apartments, but not in the houses,” Cleary said. ‘‘The management companies were never supposed to be in the housing areas - we wish the council would get more involved in the situation, because it’s the residents against the developers at the moment.”

Even when management companies have taken control of developments following completion, problems can persist.

Ann Fitzgerald said the most regular complaint in apartment blocks arises when the management company has not made adequate provision for the upkeep of common areas. This is often due to a genuine lack of information or understanding.

‘‘There can be a problem of lethargy amongst apartment owners and burnout among committed members of the management company, leading to problems with property maintenance,” she said.

Whether the management charges are justified is also becoming a divisive issue in apartment developments - transparency is a significant problem with these firms. ‘‘Service charges which were set without adequate transparency, lead to widespread dissatisfaction with the quality of work provided and resultant non-payment of charges,” said Fitzgerald.

The latest National Consumer Agency report on property management companies recommended that service charges should be determined by a professional quantity surveyor.

The obligations should the be set down in the lease between the buyer and developer.

‘‘Lack of clarity in the accounts of management companies is another problem facing owners and is an area which requires reform.

‘‘In many cases, owners are unaware of how the figures are arrived at, what the sum for the sinking fund is if the lifts break down, and what responsibilities the local authority has,” said Fitzgerald.

One apartment owner in Dublin said she had difficulty with her managing agent when contractors were being hired to carry out structural repairs.

When she queried the agent as to why the price being paid to the contractor was high, she discovered that there had been no tender for the job. The commission being paid to the contractor was double the national average for such a service.

Failure to pay the maintenance charge is another difficulty.

If annual fees aren’t paid the company could become insolvent or be forced to use reserves, for ongoing repairs and essential maintenance.

Many apartment complexes have a high percentage of buy-to-let investors. This adds another problem into the mix. Tenants are the forgotten factor in the equation - it is only owners who have a vote in the management company. Many investors have no interest in the management company and do not attend meetings.

Yet, some long-term tenants wish to attend meetings and have their say, as issues with the company affect their daily lives.

So what steps can disgruntled apartment owners take if they are unhappy with their management company or managing agent? Residents should tender for a new agent every few years to ensure they get the best value.

They should check that the management company is registered in the Company Registration Office. They should also ask to see all accounts, invoices, tenders and expenditure relating to the company.

The National Consumer Agency has produced a consumer friendly guide to management companies and agents, entitled Property Management Companies and You. It has also launched a public consultation on the difficulties facing consumers in mixed residential developments via its website, www.consumerconnect.ie. It is currently seeking submissions.

Apartment owners can complain about company law matters to the Office of the Director of Corporate Enforcement.

On at least one occasion, they have gone to the High Court remedy a problem with a management company.

It has also directed management companies to make accounts available to members who own apartments.

‘‘A common problem is that of directors of companies not having communicated with their members in four to five years - the residents have not had any AGMs and have no information on how the company has been operating,” a spokesman said.

‘‘Where management companies have been struck off for failing to discharge their legal duties, apartment owners have found themselves unable to sell their properties.

‘‘A recent case we handled was that of an apartment owner who had discovered that their management company has been struck off the register 15 years ago, not knowing, the owner continued to pay the management charge throughout the years,” said the ODCE spokesman.

Marcais

Anyone interested in hearing local management fees discussed, I think this will be discussed on East Coast Radio on Friday morning.

Hammiepeters

I refer again to our glorious minister for the envoironment, tricky Dicky Roche, who raised issues regarding the legality of these mgt. companies and the necessity for them''at a time when local authourities are awash with money''. Whatever his political reasons for raising the issue. He did not follow through in any meaningful way and even went as far as to say on radio '' the practice does not appear to be common in my own constituency of Wicklow'' mmmmmmmmmmm. Charlesland, hardly as small development that he might not have heard anyting about! Whatever your political leanings, and mine are not anti FF, this so and so should be punished come election time.

Marcais

Can't believe he said that re. Wicklow!

Dick runs a clinic every now and again in the Burnaby. A couple of us went along recently on another local issue but got talking to him re. fees, he said that the council should provide most of what we were paying for and would support us if needed, never replied to any correspondence since :eek:

ps. nice big newspaper from Dick tonight, "Wicklow News" contributing to Wicklow's paper recycling targets.

Hammiepeters wrote:

I refer again to our glorious minister for the envoironment, tricky Dicky Roche, who raised issues regarding the legality of these mgt. companies and the necessity for them''at a time when local authourities are awash with money''. Whatever his political reasons for raising the issue. He did not follow through in any meaningful way and even went as far as to say on radio '' the practice does not appear to be common in my own constituency of Wicklow'' mmmmmmmmmmm. Charlesland, hardly as small development that he might not have heard anyting about! Whatever your political leanings, and mine are not anti FF, this so and so should be punished come election time.

woodser

Management companies are here to stay unless residents themselves are prepared to take on the vested interests such as developers holding majority shares and agents levying excessive fees.
We can gripe about them all we like here but unless we challenge the companies head on then nothing will happen in the end a minister or politician can do little apart from leglislating for their abolishment in the future. But thats not any help to those already there as we signed alease and covenant on buying our units which supercedes the law --its a contract.What we should be doing is insuring we are getting the best deal possible under that lease and that its being honoured by the other parties which by all appearences and what Ive read here on boards nobody in Charlesland is.:mad:
Join the Management Company Revolution

woodser

Evelyn Cawleys flyer while her interest is extremely welcome is slightly innaccurate in that the council or anybody else has no juristiction over the street lighting until they actually take the estate over which as far as I can make out from the various lease agreements and web of management companies in charlesland may not happen for a very long time unless residents do something themselves about it.

Marcais

woodser wrote:

Evelyn Cawleys flyer while her interest is extremely welcome is slightly innaccurate in that the council or anybody else has no juristiction over the street lighting until they actually take the estate over which as far as I can make out from the various lease agreements and web of management companies in charlesland may not happen for a very long time unless residents do something themselves about it.

I havent' seen this flyer, has anyone in Grove or Park received it?

ps. The East Coast FM program on the subject is moved to Monday AM.

woodser

How did the programme go? Is available to download?