Management company cannot collect fees

bertie1

I own property in a complex where we run it ourselves. We do our utmost to keep the annual managment fees as low as possible, by doing most of the maintenance ourselves ( the various owners get together a few days a year)

Problem is there are fees that have to be paid , site insurance , ESb , grass cutting,etc. A few houses are well in arrears to the extent that it is costing the rest of us an extra 300.00 this year to pick up the slack that they owe

Any suggestions on how to get the few defaulters to pay up their share.

Paulw

If there's a legal contract, (eg a Lease Contract) then you can simply get a solicitor, and take them to court.

Start with the simple option - send them registered letters, informing them that they are in arears. Give them 30 days to pay their debts, or you will take further action - such as forwarding their details to a debt collection agency, and within 7 days of that, you will prosecute them.

connundrum

Idea - possibly something like this could be done?

Unfortunately going down the legal could be costly and unnecessarily so considering you're trying to keep costs down.

Try every other route before going legal i.e. withholding insurance docs, blocking refuse collection etc. You should also get a copy of the lease, highlight the section which states that all units are legally obliged to pay service charges.

Have you tried knocking on the offender's doors? Finding out what their actual grievance is? If it is something like they do not want to pay the lump sum every year - offer them payment options i.e. quarterly, or monthly direct debits.

How Strange

If you live in an estate then phase out their services as connundrum said.... don't get their grass cut outside their houses, don't give them letters of indemnity for the insurance, don't repair lighting outside their houses.

Firstly the MC should write to them and inform them that they have x amount outstanding with a statement of account detailing that payment should be received within 30 days or legal action will be taken. Then send a statement the each week until the 30 days are up. Send one final letter on day 30 saying legal action will be taken. In your initial letter say services will also be withdrawn until payment is received.

In the letter explain why this will happen; honestly some intelligent people are so ignorant as not to understand that for refuse to be collected etc then charges have to be paid. So explain it very clearly.

On day 30 withdraw all services. I wouldn't stop refuse collection as this move might backfire on you in court as it would be encouraging people to dump refuse, attracting vermin etc. But stop the landscaping and repairing the lighting and anything else that you can.

You have to consider legal action as well. It costs between €10- 30 to send a legal letter but isn't it a better course of action than everyone else having to pay extra to fund the freeloaders. Out of all the houses who haven't paid 80% will pay up before going to court. But remember you can apply a percentage of legal fees to their account and they will have to pay. Check the lease and see if you can apply interest. If you can then do so from day 30 and explain that this will happen in your letter.

connundrum

How Strange wrote: »

You have to consider legal action as well. It costs between €10- 30 to send a legal letter but isn't it a better course of action than everyone else having to pay extra to fund the freeloaders. Out of all the houses who haven't paid 80% will pay up before going to court. But remember you can apply a percentage of legal fees to their account and they will have to pay. Check the lease and see if you can apply interest. If you can then do so from day 30 and explain that this will happen in your letter.

Whilst it would be great if the legal letters only costed €10 - €30, I would check with a solicitor before going ahead to make sure that further costs aren't involved.

Some solicitors will state that the service charge should be sent directly to them, at which point the solicitor will extract a 'handling fee' or 'retreival fee' which could be between 5-10% of the service charge collected.

If you can, ask the solicitor for the price of one off letters, which would ask that the service charge be sent directly to the management company.

And on second thoughts, maybe pulling their refuse service may not be the best plan. Thanks how strange. This will lead to further costs in vermin control

bertie1

Bins ,grass cutting , public lighting are all communal. We cannot withhold from the 2 or 3 defaulter as the rest will suffer. The letters mentioned were sent out . I was looking for another angle

How Strange

bertie1 wrote: »

Bins ,grass cutting , public lighting are all communal. We cannot withhold from the 2 or 3 defaulter as the rest will suffer. The letters mentioned were sent out . I was looking for another angle

There's no other angle. The owners have a contractual obligation under the lease to pay the charges to the MC so if some aren't doing it then going legal is the only option.

Get in touch with a few solicitors and negotiate some good rates for legal letters etc and as connundrum said make sure the fees are paid direct to MC not through the solicitor.

You may find next year that most of the chancers will pay up on time as they will see you are serious about legal proceedings.

davros

It won't help you directly but I believe there needs to be some incentive to pay on time. We offer a discount of 10% for paying up immediately when the fees fall due.

We have also switched to a mobile phone-based gate system. If you don't pay your dues, we'll take your phone number out of the system and you won't get your car in or out of the complex.

Paulw

davros wrote: »

It won't help you directly but I believe there needs to be some incentive to pay on time. We offer a discount of 10% for paying up immediately when the fees fall due.

We have also switched to a mobile phone-based gate system. If you don't pay your dues, we'll take your phone number out of the system and you won't get your car in or out of the complex.

Blocking someone in or out of a complex where they own a property can be technically illegal.

As for a discount, there should be no need for such. It's their legal duty to pay their fees.

How Strange

Paulw wrote: »

Blocking someone in or out of a complex where they own a property can be technically illegal.

As for a discount, there should be no need for such. It's their legal duty to pay their fees.

I agree with Paulw, don't do anything that may backfire on you if the MC has to bring an owner to court for unpaid fees. This would include not collect refuse and locking people out of the development.

Also, no need for a discount. If you are offering a discount then you have to up the budget by 10% to begin with to cover the discount so its a false economy. The budget should be based on actual costs along with an estimated amount for reactive costs ie repairs so where would the 10% discount come from? Encourage all owners to pay by standing order half yearly, quarterly or monthly. That way you are guaranteed regular income and reduce the likelihood of bad debts.

davros

This thread was started because people don't pay their management fee when they should, legal requirement or not. We have had times when owners have been two or three years in arrears leading to unnecessary problems with our cashflow. We even had an apartment sold in this state, which supposedly is impossible.

As for the "discount" (call it what you like), if there is none then you are penalising those who pay in full, up front. Pay late, pay more. All invoicing works like that.

The_Conductor

Technically the properties are on longterm leases, not owned outright- if a lease holder breaks the terms of their lease, as a final step they could legally be evicted and the property sold to offset the losses accrued to the Management Company. It would be legal to do so, but I am not aware of it having happened previously. More normal would for the management company to inform the non-payer that they are in breech of their lease, and that legally if they do not satisfy their obligation within X amount of time that the MC will approach the bank with whom the property is mortgaged and inform them that a second legal mortgage must now be placed on the property which must be satisfied along with costs, before the property may be sold. The costs associated with this, including legal liens on the property deeds normally come to about 2 grand, but the threat is normally sufficient for the person to pay. I am personally only aware of one case where a MC secured a seperate mortgage to offset ongoing costs associated with a non-paying member- but there is a precedent nonetheless.

antoinolachtnai

I think it would be more of a lien than a mortgage, no?

The_Conductor

antoinolachtnai wrote:

I think it would be more of a lien than a mortgage, no?

It was explained to me as a second legal mortgage on the property- which would be satisfied after the Bank (the initial mortgage), and before preferential creditors should they exist (e.g. the Revenue Commissioners- the guy in question had serious tax problems).

antoinolachtnai

A mortgage grows with interest, but as I understand it, a lien doesn't. But you have legal advice and I bow to that.

In any case, the bill for the management company will usually have to be settled when the property changes hands. Can be avoided, I know, but would be very unusual.

Have you done the thing with removing details of his and his bank's interest in the property from the insurance policy?