Query: Management company fee

View Profile

To the mods: I'm not looking for legal advice just some guidance based on other boardsies experiences. Thanks.

Sorry to bore you guys and gals with another management company fee query but a friend is in need of some helpful advice or opinions.

Here is her query:

I own an apt in a very small apt block with only 6 apts. The management company comprises of all owners (5 in total). The builder, who still owns two apts, is the self-appointed director of the management company, therefore he looks after all expenses & maintenance etc himself. The only expenses are electricity for the year & insurance. There is no garden / lift etc.

The management fee is decided by him and the company auditors (!) every year and went from €700 in 2006 to a proposed €1400 this year. Last year it was €1200 and this year he is saying that he must add 5% of the outlays from the previous year (approx €200) to last years figure, PLUS 200€ extra into a sinking fund. He keeps quoting some bill passed by the senate last summer. He is willing to write off the 200€ for the sinking fund if we all sign a legal document agreeing to same.

The problem is that he is saying that the 5% extra will be added to the previous year's management fee every year from now on, and on average it's €200 per year. This means that in ten years time the management fee will be €3400 for each apt in the small complex!! It's just beyond affordable. Myself and two other owners are anxious to get this sorted now before it gets to that level.

Does anyone have any advice or has anyone been in a similar situation? I'm not entirely sure how to tackle this because the director is fairly over-bearing.

Cheers!

Paulw

He's talking about the Multi-Unit Developments Bill 2009, which has a clause that requires a minimum sinking fund contribution of €200 per unit per annum. It's not law yet, but will most likely be passed this year.

We also updated our management fees to include that for this financial year, in anticipation.

Even though he does it all, all accounts need to be audited, and a proposed budget should be put to all shareholders and agreed at the company AGM.

Even with all that, you should be looking at ways to elect your own directors and removing him.

Victor

A company needs a minimum of two directors. Who is the other director?

While a sinking fund looks like a cost to you, you need to realise that it is closer to saving money in a separate bank account.

antoinolachtnai

If all the apartments have been occupied, then it is time for you to have a more democratic basis for running your apartment block. You would be mad to agree to regular 5 percent increases, especially when inflation is actually running in reverse, and you would be mad to agree not to have a sinking fund.

The owners really have to have a meeting and sort this out. You need to find out what the actual legal situation is. The fact that the guy has an overbearing personality is not really here or there.