Is a Management Company a Landlord, and Unit Owners tenants?

Milk & Honey

LawnMower Man wrote: »

Well some apartment owners owe money since the start.
There is no way on earth he is going to get a penny from any of them.

He can go to the PRTB

Paulw

Milk & Honey wrote: »

He can go to the PRTB

PRTB have no remit in relation to management fees.

Your management company have the right to take people to court, for non-payment of fees. They can also contact the insurance company and remove the unpaid units from block insurance, and hence this would require the insurer to notify the mortgage company/bank.

Plenty of options.

Milk & Honey

The PRTB remit covers all landlord and tenant disputes unless exempted by the Residential Tenancies Act. Apartment owners are not exepmt. Management fees are charges levied by a landlord and so must be referred to the PRTB.

The_Conductor

Milk & Honey wrote: »

The PRTB remit covers all landlord and tenant disputes unless exempted by the Residential Tenancies Act. Apartment owners are not exepmt. Management fees are charges levied by a landlord and so must be referred to the PRTB.

Incorrect.
All unit owners are shareholders in the Management Company. The property in its entirety is vested in the Management Company- and assigned to the shareholders by manner of perpetual lease (taken to be 900 year lease- but this can vary). The Management Company is not a landlord, and the those in whom units are vested are not tenants.

Milk & Honey

smccarrick wrote: »

Incorrect.
All unit owners are shareholders in the Management Company. The property in its entirety is vested in the Management Company- and assigned to the shareholders by manner of perpetual lease (taken to be 900 year lease- but this can vary). The Management Company is not a landlord, and the those in whom units are vested are not tenants.

Each owner gets a lease. Where there is a lease there is a landlord and tenant situation. The management company is a separate legal personality from thge shareholders. Apartment owners are indeed tenants.

Paulw

Try checking with the PRTB. They'll disagree with you. They will not deal with issues between unit owners and management companies.

The Residential Tenancies Act 2004 deals with the private rented sector. This does not have any powers with regards to management companies and apartment buildings, outside the dealings between tenant, landlord and management company (with regards to the private tenant having issues with the management company).

The_Conductor

Milk & Honey wrote: »

Each owner gets a lease. Where there is a lease there is a landlord and tenant situation. The management company is a separate legal personality from thge shareholders. Apartment owners are indeed tenants.

You are splitting hairs.
Legally- apartment owners are *not* tenants. Fullstop.
The Management Company may be a seperate legal personality from the shareholders- however it is wholly comprised of the unit owners as its shareholders, and the presumption is that it is under the instruction of the unit owners to act on their behalf.

Management companies are messy as hell- and will probably have to be urgently revisited in law- however to suggest the relationship between management companies and the owners of units is as of Landlords and tenants, is very much mistaken.

S.

antoinolachtnai

But that is the relationship in most cases. Generally, the apartment is not owned freehold, it is held on a lease. The lease of necessity has a landlord and a tenant.

Of course, there may be some isolated situation where this is not the case and the apartment is held freehold.

There is nothing per se wrong with management company arrangements. The problem is that the arrangements are often operated badly.

Milk & Honey

Section 3 of Deasy's Act

"The relationship of Landlord And Tenant shall be deemed to be founded on the express or implied contract of the parties and not upon tenure or service, and a reversion shall not be necessary to such relation, which shall be deemed to subsist in all cases in which there shall be an agreement by one part to hold land from or under another in consideration of any rent."

An apartment owner (one party) holds land in consideration of rent from another party (the management company). There is thus deemed to be the relationship of landlord and tenant. The composition of the membership of the management company is irrelevant.

The_Conductor

Milk & Honey wrote: »

Section 3 of Deasy's Act

"The relationship of Landlord And Tenant shall be deemed to be founded on the express or implied contract of the parties and not upon tenure or service, and a reversion shall not be necessary to such relation, which shall be deemed to subsist in all cases in which there shall be an agreement by one part to hold land from or under another in consideration of any rent."

An apartment owner (one party) holds land in consideration of rent from another party (the management company). There is thus deemed to be the relationship of landlord and tenant. The composition of the membership of the management company is irrelevant.

I disagree fundamentally with what you are asserting. I am splitting this off into its own thread where it can be properly debated.

Regards,

SMcCarrick

antoinolachtnai

Do you agree that the (typical) apartment is leasehold, or do you feel it is freehold?

How is this opinion grounded?

The_Conductor

antoinolachtnai wrote: »

Do you agree that the (typical) apartment is leasehold, or do you feel it is freehold?

How is this opinion grounded?

I agree that a typical apartment is a leasehold. I dispute that Management Fees are 'rent' or comparable to rent. I also dispute that they are considered 'rent' in law, and that tenancy law and its provisions governing the payment of rent from a tenant to a landlord have anything whatsoever to do with Management Fees.

While an apartment is a leasehold, the leaseholder is a member of the Management Company by virtue of the leaseholding, and ultimately the units, as a whole are vested in the Management Company, as a holding body. Thus- while the leaseholder has an obligation towards the Management Company, as the issuer of the lease, they also have a beneficial ownership of that lease via their Management Company Membership.

I can see where you are coming from, and why you would be approaching the position in the manner you are, I just have a different viewpoint.

antoinolachtnai

If it is a leasehold, who do you think are the parties to the lease? Who is the landlord and who is the tenant?

It is not really a matter of the way I see it. This is just the terminology that is used. If you are not comfortable with that language, you could use 'lessor' and 'lessee' (although it would be unusual for property) but it amounts to the same thing.

The fact that the management company and the homeowner are company and member does not mean that they cannot also be landlord and tenant (just as your father might also be your boss or your golf partner might also be your brother).

jd

Interesting one. If there is a landlord/tenant relationship that needs to be registered with the PRTB, most apartment owners and management companies are in breach of the law.

The registration of a tenancy is a legal requirement on the landlord. Landlords failing to register a tenancy may be guilty of an offence and upon conviction shall be liable for a fine of up to €3,000 and/or up to 6 months in prison, along with a daily fine of €250 for a continuing offence.

I doubt they have to be registered- big huge can of worms (everywhere).

The_Conductor

antoinolachtnai wrote: »

If it is a leasehold, who do you think are the parties to the lease? Who is the landlord and who is the tenant?

It is not really a matter of the way I see it. This is just the terminology that is used. If you are not comfortable with that language, you could use 'lessor' and 'lessee' (although it would be unusual for property) but it amounts to the same thing.

The fact that the management company and the homeowner are company and member does not mean that they cannot also be landlord and tenant (just as your father might also be your boss or your golf partner might also be your brother).

I disagree with the analogies you're using- they are not comparable. An apartment owner has a lease on their own apartment, but also owns the company that owns the lease. Its a seperate ownership- however its irrevocably associated with ownership of the apartment, and the lease associated with it. A more comparable analogy- would be someone who bought a house and then tried to say they were renting it from themselves- and the bills associated with the ownership were the 'rent'.

Managment Companies (not management agents- the companies) are normally structured as non-profit organisations- indeed their articles of association tends to prohibit the generation of a profit. I have argued that any excess funds could be ploughed into sink funds- thus negligating the 'profit' aspect of any transaction- however I have been told that legally this is not an appropriate transaction.

Management Fees are thus fees levied to reflect the actual costs (current and future) of maintaining a complex- it is not an economic rent associated with the units- simply a service charge.

I also argued that as a defacto service charge- it should be tax deductable- and tried to get people in this forum to lobby in such a manner- however it didn't happen, and in the current climate, its not going to happen......

antoinolachtnai

It's not a matter of analogy. It's not that a person with a lease in an apartment block is like a tenant. They actually are a tenant.

Not that relevant to this discussion, but why would the service charge be tax-deductible, any more than maintenance or insurance of a house you live in is tax-deductible?

Not-for-profit is not a category of corporation here the way it is in the US. Management companies are often limited by guarantee and do not pay a dividend, but that is not quite the same thing.

Lots of landlords are in fact legitimate, bona fide registered charities with specifically charitable aims. The fact that they are charities does not mean that they are not landlords, however.

A rent doesn't have to be 'economic' for you to be a tenant. You can have a house on a billion year lease at a penny a year, and you are still the tenant and the guy who owns the property and gets the money is still the landlord.

Management companies can and should generate and keep a surplus. I don't know that there is an issue with this.

The_Conductor

antoinolachtnai wrote: »

It's not a matter of analogy. It's not that a person with a lease in an apartment block is like a tenant. They actually are a tenant.

In law they are not considered to be a tenant.

antoinolachtnai wrote: »

Not that relevant to this discussion, but why would the service charge be tax-deductible, any more than maintenance or insurance of a house you live in is tax-deductible?

Because those who pay management charges are paying at least in part, for services conducted by councils in estates which have been taken in charge. There is no extra cost associated for the people whose estates are taken in charge- its paid from central funding. An apartment owner could legitimately argue that their charges are at least partially double taxation.

antoinolachtnai wrote: »

Not-for-profit is not a category of corporation here the way it is in the US. Management companies are often limited by guarantee and do not pay a dividend, but that is not quite the same thing.

It is my understanding that at least some management companies are structured in this manner. This may be related to the generation of funds from outside the owners of the units (referred to below)- I do not know.

antoinolachtnai wrote: »

Lots of landlords are in fact legitimate, bona fide registered charities with specifically charitable aims. The fact that they are charities does not mean that they are not landlords, however.

I'm not sure of the relevance of this. I know many landlords who are charities too. What is your point? Lots of companies are registered charities, or even charitable trusts. Even the Irish Times Newspaper is a charitable trust.

antoinolachtnai wrote: »

A rent doesn't have to be 'economic' for you to be a tenant. You can have a house on a billion year lease at a penny a year, and you are still the tenant and the guy who owns the property and gets the money is still the landlord.

However the owner of a lease in an apartment complex does not pay 1 penny a year in any charge which is described as 'rent'. They are obliged by their lease to pay their Managment Charge- which is to be for specific services rendered (which are itemised and described in detail, in the lease- as are the leaseholders obligations).

antoinolachtnai wrote: »

Management companies can and should generate and keep a surplus. I don't know that there is an issue with this.

I am not sure what the problem with this is. I argued that a Management Company should be entitled to rent out day-time parking for secure parking for employees of local businesses, and the income generated used to either bolster the sink fund, or reduce the contribution towards Management Fees demanded from owners. I was told it was not possible. Perhaps because it was/is income generated from other than the owners? I don't know? Perhaps there is some sort of a stipulation that their funding can only be from core activities? I don't know.

markpb

My understanding is that there is a landlord - tenant relationship but not between owner and company. The owner rents the apartment from the developer. Part of the lease states that they become a member of the compant and must pay contributions to the cost if running the company. This is why there are three parted to the lease.

Milk & Honey

In my apartment block there is a rent of 25c per year. In all apartment blocks there is some token rent reserved in order to ensure the relationship of landlord and tenant. The management fees are charged under covenants in the lease. In most leases there is provision for the original developer to assign his interest to the management company when the last unit is sold.

antoinolachtnai

Sometimes it is structured differently in terms of who is the landlord at the outset, but there is always a lease and where there is a lease, there is always a landlord and a tenant. It is impossible to conceive a lease without a landlord and a tenant. That is what a lease is. It is a relationship between a landlord and a tenant.

Going broader, all this stuff about double-taxation - when you bought the interest in the apartment, you agreed to pay all those charges. The local authority would never have given planning permission to the developer if agreements like that were not to be put in place.

How the management co. makes money could depend on the memorandum of incorporation. At first face, renting parking spaces to people other than the tenants/members looks like trouble. There could be planning issues, and there could also be conflict with residents, resulting in an increase in the cost of managing the spaces. Might be worth it if you had a lot of space and you were central, but might not be otherwise.

The reason I mention the issue of charities is that you are arguing that because of the characteristics of the management company, it must not be a landlord. I am saying that any company that owns an interest in land can be a landlord, regardless of whether it is intent on making a profit or not.

Borzoi

Milk & Honey wrote: »

In my apartment block there is a rent of 25c per year. In all apartment blocks there is some token rent reserved in order to ensure the relationship of landlord and tenant.

How do you get from something happening in your block - to something happening in all blocks?

In mine, there is no such arrangement.

Paulw

I actually read my Lease Contract again last night, to check details. In it, it specifies a "rent" of €1 per year. It might be worth people checking theirs, even in the fine print.

But, from reading the Residential Tenancies Act 2004, it does not seem to deal with issues between Management Company and people with a purchased Lease. It only deals with people renting from a landlord.

It would be very interesting to hear what the PRTB say on the issue, but I've never seen anything on their site or documentation about management company/shareholder issues.

Milk & Honey

Residential Tenancies Act 2004

3.—(1) Subject to subsection (2), this Act applies to every dwelling, the subject of a tenancy (including a tenancy created before the passing of this Act).

I have seen many leases for apartment blocks. There is always a rent reserved and the lease is always for a term of years. Under Deasy's Act there is deemed to be a Landlord and tenant relationship.

Paulw

Well, if what you're saying is valid in law, then I'd guess that over 99% of managed apartment developments are in breach of the act.

Mind you, when you ask the PRTB, they will claim that it does NOT apply.

antoinolachtnai

The reason it is the case in all blocks is because of a defect in the law, whereby covenants on freeholds are not binding.

That's why apartments are always leaseholds.

Where there is a lease, there is always a landlord and there is always a tenant.

Milk & Honey

Paulw wrote: »

Well, if what you're saying is valid in law, then I'd guess that over 99% of managed apartment developments are in breach of the act.

Mind you, when you ask the PRTB, they will claim that it does NOT apply.

When did you ask the PRTB?

Milk & Honey

smccarrick wrote: »

In law they are not considered to be a tenant.

The courts has ruled on this. In law they certainly are tenants. See the last paragraph.

http://www.independent.ie/national-news/social-housing-clawback-ends-1708458.html

jd

More here
http://www.herald.ie/national-news/courts/judges-ruling-gives-residents-of-apartments-new-legal-rights-1708975.html

Bad news - it makes it easy for piss artists to refuse to pay management fees.

However

An amendment to the Residential Tenancies Act 2004 which would remove apartment owners from the remit of the Act is currently going through the Oireachtas. In the mean time it remains to be seen how many will avail of the dispute resolution services of the PRTB and whether it will cause improvement in the running of apartment blocks.

markpb

I can't see how it would be of any benefit to owners. (I'm not disputing the legality of it btw.) It can't address problems caused by underpaying residents, failure by developers to pay for voids or a whole host of other problems that apartment owners face. The Herarld has reduced the problem down to a sound-byte.

Ste.phen

jd wrote: »

More here
http://www.herald.ie/national-news/courts/judges-ruling-gives-residents-of-apartments-new-legal-rights-1708975.html

Bad news - it makes it easy for piss artists to refuse to pay management fees.

As someone here said before, this causes problems for the management company, but if they pursue it fully through the courts the 'piss artists' can eventually be made pay, or be jailed (extreme case I know). They also wouldn't be able to sell the apartment without clearing the management company debts first.

bobbysands81

jd wrote: »

More here
http://www.herald.ie/national-news/courts/judges-ruling-gives-residents-of-apartments-new-legal-rights-1708975.html

Bad news - it makes it easy for piss artists to refuse to pay management fees.

However

Quote:
An amendment to the Residential Tenancies Act 2004 which would remove apartment owners from the remit of the Act is currently going through the Oireachtas. In the mean time it remains to be seen how many will avail of the dispute resolution services of the PRTB and whether it will cause improvement in the running of apartment blocks.

__________________

My guess is a big fat zero will avail of it!

I presume the amendment will be in the Housing (Miscellaneous Provisions) Bill 2008... interestingly I don't think there is a mention of it as yet in the Bill as initiated but I presume this will change coming up to the Committee Stage of the Bill.

If it is in this Bill then this Bill is expected to be enacted in the next couple of months afaik.

Jo King

Anybody in a block where the original developer is still in control will undoubtedly move to force the developer to register the apartments. This will cause a lot of hassle for developers who have not handed over the running of the complex to the management company.

PIMPHO

Jo King wrote: »

Anybody in a block where the original developer is still in control will undoubtedly move to force the developer to register the apartments. This will cause a lot of hassle for developers who have not handed over the running of the complex to the management company.

We are in this situation where the builders have not sold all the apartments and have not paid any of the management fees. Development is just over a year old and management fees are due at the end of this month. The management company are a joke and keep saying there is no money in the account and no sinking fund. A few of us are considering not paying our management fee!

Any suggestions or advice?

Paulw

PIMPHO wrote: »

We are in this situation where the builders have not sold all the apartments and have not paid any of the management fees. Development is just over a year old and management fees are due at the end of this month. The management company are a joke and keep saying there is no money in the account and no sinking fund. A few of us are considering not paying our management fee!

Any suggestions or advice?

I would never advise not paying your fees. It doesn't help anything and only makes matters worse. No fees = no services.

As for what you can do ... I guess now you can lodge a dispute with the PRTB and see how far that gets you.