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Unsold units cause Management Service Charge costs to 'spiral'

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  • 24-02-2009 3:41pm
    #1
    connundrum
    Registered Users Posts: 5,563 ✭✭✭


    A local council is sounding a warning about management companies collapsing at apartment complexes.

    Dublin City Council says apartment owners are facing spiralling property management costs because some developers refuse to pay fees for units they can't sell.

    And it says the problem's getting worse, because more units are going unsold, and because there are no laws governing the area.

    http://newstalk.ie/newstalk/news/17048/unsold-units-cause-costs-to--spiral-.html

    I meant to start a thread on this ages ago, and am glad that its being brought up at a semi official level now.

    I saw this happening just over a year ago, when I was working in the property management sector. An example of one developement would be where there were 110 units, of which 45 were sold in the first year. This would mean that the new owners would have paid their 1st year's service charge on closing - grand.

    The developer refused to pay the service charges for the oustanding 65 units for the first year.

    The second year saw a further 30 units being sold - again with the new owners paying their 1st year's service charge on closing.

    The developer again refused to pay the service charges on the remaining 35 units. The devloper could not sell any further units from then on in (until I left anyway) and was forced to make a contribution of approx 25% of the service charges for the remaining 35 units.

    The developer was not legally obliged to pay any service charges for the unsold units, despite the fact that the unsold units were benefitting from the services that the new owners were paying for i.e. communal ESB, landscaping, security, external window cleaning etc.

    What I'll say is unlucky to anyone living in a half sold development, because according to the lady from DCC speaking on Newstalk this morning - the owners could be forced to split the cost of the entire development if the above situation continues.


Comments

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    #2
    godtabh
    Moderators, Science, Health & Environment Moderators Posts: 23,215 Mod ✭✭✭✭godtabh


    In my development the builder owes around €40k on managment fees for unsold units and units he kept to rent


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    #3
    godtabh
    Moderators, Science, Health & Environment Moderators Posts: 23,215 Mod ✭✭✭✭godtabh


    connundrum wrote: »

    The developer was not legally obliged to pay any service charges for the unsold units, despite the fact that the unsold units were benefitting from the services that the new owners were paying for i.e. communal ESB, landscaping, security, external window cleaning etc.



    I dont think thats true. If a manamgnet company is in operation the fee is due on all apartments that are complete regardless of them been occupied or not. Or thats what we were told


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    #4
    Victor
    Registered Users Posts: 78,392 ✭✭✭✭Victor


    If the developer over does things, the residents should be able to claim oppression under company law.


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    #5
    connundrum
    Registered Users Posts: 5,563 ✭✭✭connundrum


    kearnsr wrote: »
    I dont think thats true. If a manamgnet company is in operation the fee is due on all apartments that are complete regardless of them been occupied or not. Or thats what we were told

    Not so in all cases, the one I referred to specifically states that the developer is not liable for any unsold units. I checked the Memo's & Articles of Association for the Mgt Co, along with a couple of leases.

    Yer man Robert Gogan who wrote The Essential Guide to Apartment Living Ireland was on Newstalk kinda confirming the same. He suggested that a test case may need to be brought forward to test the existing (non existant) legislation.

    As I also said, some developers may choose to make a contribution towards the running of the Mgt Co. In the case I mentioned, the developer chose to contribute following threats from existing owners of protests outside their office.


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