Fair apportionment of fees for rectifying fire defects

The_Conductor

I'm posting this on behalf of a forum regular who would rather not post themselves.

The development in which they live, a small gated community with a mixture of apartments and townhouses, was found to be non-compliant with fire regulations. There has already been an EGM to discuss this with the owners- apparently the wiring used by the developer (who coincidentally still owns almost a third of the units) is considered to be a hazard, and also there is no fire breaking between the different units.

Historically the management charges have been apportioned 100% to the 1 and 2 bed apartments and 60% to the 3 bed townhouses, on the basis that the townhouses don't share the lifts in the two main apartment buildings.

The management company propose to apportion the costs of rectifying the fire defects in a similar manner- 100% to the 1 and 2 bed apartments and 60% to the 3 bed townhouses- resulting in a bill of over 20k for the small apartments- but a much smaller bill of 13k for the owners of the townhouses.

The townhouses are 2-3 story dwellings in multiple rows with their own individual entrances- but fully integrated into the complex. They will likely require significantly more work than the apartments will- and the presence or absence of lifts is not a factor in rectifying the fire defects.

Personally I don't think that the proposed apportionment of costs associated with rectifying the defects is fair by any means or justifiable- and have said so to the individual- however, they're terrified of stepping out of line.

What are people's thoughts on this?

By the way I have deliberately not mentioned the development by name- its not one of the ones that has featured in the media- and the management company are determined to keep it quiet as it will obviously affect the resale value of any units if it ever comes out into the open.

The whole issue arose as a result of a very detailed survey of a unit that was being sold- and was initially denied by the management company- before they brought in their own surveyor who confirmed the matter.

Caranica

As I've posted on another thread, my belief is that the cost of repairs falls to the management company as they own the buildings. As such the costs should be split equally between all members of the company on a per unit basis. So if there's 100 units, bill divided by 100. Single unit pays 1% of the total cost, owner with 5 units pays 5%.

Just because you "own" a certain size unit should not make a difference as you also "own" a share in the structure and common areas of every other unit.

blackbox

Is the builder not liable for these defects? Management company should be pursuing this.

Dav010

The Conductor, unfortunately this is one of those rare scenarios where fighting for what you think is right may be counterproductive.


With that many units, keeping it quiet will be impossible and a legal dispute between owners and OMC about apportionment of fees will inevitably draw more attention and effect resale price. On the plus side, this is no longer as uncommon and newsworthy as it used to be, so once rectified, there is unlikely to be the stigma attached like there was/is with Priory Hall.

The percentage difference is typical of fee apportionment in mixed developments for common expenses, lifts are a disproportionate expense, also, maintenance and upkeep of common areas like halls and stairs relates more to apartment owners than house owners.

In relation to the upgrading the wiring and fire breaks, I'm not sure how a house would be more expensive than say two apartments with a similar square yardage, I looked at buying a Hotel which had closed and converting it to apartments 4-5 years ago, the building was very cheap, but the conversion to apartments was going to be extremely expensive due to the fire safety requirements.

Whatever the poster wants to do, unfortunately cannot be done alone, I would expect the Fire Safety would need to sign off on the whole development rather than individual units, a refusal to pay by a small group may well delay the work and stop any sales. The op needs to talk to other owners and try and get more to object to the apportionment, but it will get messy, some will refuse to pay, some will not be able to pay. By right, this should fall back on the builder/electrical contractor/FSO, but again, a court case would be long, expensive and counterproductive, if the cost is huge, no doubt he would liquidate company to avoid liability.

The_Conductor

blackbox wrote: »

Is the builder not liable for these defects? Management company should be pursuing this.

The original builder ended up in NAMA.
While he still owns a number of the units- he bought them out of NAMA, and is somehow divorced from the mess that he created, though he will of course have to pay the appropriate fee for any units still in his possession.
No idea why the MC aren't trying to formally chase him- however, they're not.

GreeBo

For something like wiring I would have expected it to be more related to square footage than anything else.

if there are 3 types of dwelling then it shouldnt be that onerous to get a quote for each type?

I dont see why a single bed apartment would be subsidizing the repairs on the 3 bed townhouse?

Dav010

The_Conductor wrote: »

The original builder ended up in NAMA.
While he still owns a number of the units- he bought them out of NAMA, and is somehow divorced from the mess that he created, though he will of course have to pay the appropriate fee for any units still in his possession.
No idea why the MC aren't trying to formally chase him- however, they're not.

If the building company was liquidated, no point in chasing him.

Thoie

For fairness, I'd do some complicated maths, splitting things in a few different ways. I'm making a random assumption that the apartments are in distinct blocks, but that may not be the case. E.g. Block A has 8 apartments accessed from a single door, Block B has 8 apartments, accessed through a different door.

Wiring
The wiring for each townhouse is "individual" if you want to put it that way, while the wiring for the apartments will also include the communal areas (hallway lighting, lift, intercom systems). So for the wiring aspect I'd use the square footage. If the townhouses are 1000sq feet and Block A is 6000sq feet, then the townhouse:apartment ratio for that would be 60:40. However, if Block A also has an underground carpark (with lights, gates, doors) that brings the area to 10,000sq ft, then the ratio would be 45:55.
Within that, the apartments might want to apportion between 1 vs 2 bed, but it's not as simple as saying the 2-bed should pay double the 1-bed price, as that doesn't take the communal areas into account.

Firebreaks
The townhouses will have at most 2 shared walls with other properties. The likelihood is that if there are gaps in the firebreak, it's probably in the attic near the ridge of the roof, which is handier to get to. Remedying firebreaks between apartments (which could have 6+ connections to other spaces) will probably be more difficult. I'd get separate quotes for "all the townhouses" and split that amount by the number of townhouses), then a quote for each block of apartments, and split that by the number of apartments. The number of bedrooms in the apartment is irrelevant, as each one has the same number of "external" walls.


If there is an underground carpark for the apartments, and not for the townhouses, the existing split doesn't look that bad to me.

The_Conductor

Wiring: Apartments have lifts and internal hallways- and external parking. The town houses, but not the apartments, have underground parking and storage.
Firebreaks: the apartments are over 3 floors with 8 units on each floor- opening down the middle in a T with all units having 3 external walls and one shared wall. There are 3 or 4 such blocks (I'm not sure how many- though I did visit the complex looking at property for sale some years ago).

The biggest difference of all- is the presence of lifts in the apartment blocks- from what I can gather- and it is the presence of lifts which was used as the previous reason to determine a higher proportional management charge for the apartments- versus the townhouses.

All units- incl. the townhouses, have access to intercom systems, security, an on-site caretaker etc etc

I think the townhouse owners are getting away with murder in this instance- however, they are stating the precedence of the management charge split as the justification as to why they should pay such a large amount less than the apartment owners to make good the fire issue (and I'm not 100% clear what the fire issue is, though they did specifically mention wiring- I only have limited secondhand information from the individual concerned).

I know no-one likes an unexpected bill out of the blue- esp. one as large as 20k (or 13k for the townhouse owners) but the manner of the split is leaving a sour taste.

SozBbz

I'd like to better understand the ownership structure of the development.

I own a duplex in a development of ground floor appartments, duplex, and 3,4,5 bed houses.

We had a firestopping issue approx 4 years ago which was kept quiet as above.

The development is structured such that the apartments pay a higher management fee than the houses, but benefit from block insurance etc and have a dedicated sinking fund. All owners pay into a separate sinking fund for the development as a whole and all owners pay for bins, public liability, lighting and grounds maintenance.

Now, in our case the apartments (meaning the duplexes and ground floor units) were effected, not the houses. The MC were involved as the attic spaces above these units are common areas and not the property of the duplex owners.

The houses in contrast, own their own attic space and are responsible for their own insurance and maintenance. They were written to and advised to review the fire stopping between units, but it was deemed outside the scope of the OMC. This was on the basis that the same developer had built all units, so we felt it prudent to advise that we had come across inadequate building standards in the case of the apartment units, but the OMC were not responsible for the houses.

This is happening up and down the country and being kept quiet as no one wants to be the next Priory Hall or Longboat Quay.

Fian

Can I ask a related question?

I have an appartment in a small complex which has a mix of one, two and 3 bed appartments.

We all pay the same fee. Is this the norm or is it usually apportioned in line with size/number of bedrooms? If so could people give me examples of the breakdown?

The_Conductor

Fian wrote: »

Can I ask a related question?

I have an appartment in a small complex which has a mix of one, two and 3 bed appartments.

We all pay the same fee. Is this the norm or is it usually apportioned in line with size/number of bedrooms? If so could people give me examples of the breakdown?

Sibling owns an apartment in a development with 1, 2 and 3 bed units.
Management charge is split in a 1:2:3 ratio, based purely on the number of bedrooms in the units. Each unit also has 1 parking space- and equal access to lifts, secure parking and a part-time caretaker.

So- it depends- different places have structured the payments differently- in all cases it will be set out in the leases people have on the units.

SozBbz

Fian wrote: »

Can I ask a related question?

I have an appartment in a small complex which has a mix of one, two and 3 bed appartments.

We all pay the same fee. Is this the norm or is it usually apportioned in line with size/number of bedrooms? If so could people give me examples of the breakdown?

As mentioned about, ours is a mix of 3 broad unit types.

The breakdown is roughly as follows;

2 bed ground floor apts - €1,100
3 bed duplexes - €1,400
houses - €700

The houses pay their own insurance and maintain the exterior of their properties. For their €700ish, they get use of the communal bins, maintenance of the roads and lighting and public liability insurance as well as overall grounds maintenance. The apartments have block insurance and some additional maintenance requirements, gutters for example

We have 2 sinking funds.
Sinking fund A is for everyone and contributed to by everyone.
Sinking fund B is for apts/duplexes only and therefore only those owners contribute to that fund.


Now you could say that the one area in which this isnt that fair is that we treat all houses the same, yet there are 3,4 and 5 bed units, however its a matter of how granular you want to get.

Surely the apportionment of expenses is set out in the basic deed?

Its not something that can be decided on a case by case basis.

Last apartment i owned was very clear on the % of management company costs to be paid by each unit, was related to area, with the only exception being that the ground floor didnt contribute to the elevator.

Otherwise management company could decide that roof repairs have to be paid by the guy on the topfloor as he would have most benefit...

Caranica

Management fees divided proportionally makes perfect sense, it's at least in theory related to the benefits you get from paying those fees.

My point in relation to levies for fire repairs or other defects that need to be repaired stands. The management company owns the buildings and therefore every member should pay an equal share (per unit owned). Every member has a interest in the buildings, whether it's their own unit or not.

Webstarx

What's the issue with the wiring?

I'm presuming it's the type of cabling used for the fire alarm system

hmmm

In our estate, there is a budget prepared showing allocations to apartments and town-houses, with certain line items being allocated to apartments or the entire estate depending on who they effect - e.g. lift maintenance for the apartments only, grounds maintenance allocated to all. So there is no flat rate (e.g. 60%).

If something similar would ever arise, I'd expect an equal share allocation.

I have lots of sympathy for the OMC & the volunteer directors however. They have to make a decision, and a large proportion of owners will be annoyed either way. Any legal or public way of dealing with this will be counter-productive for whoever takes it, and the best thing to do is make their case at the AGM/EGM.

Caranica

Caranica wrote: »

Management fees divided proportionally makes perfect sense, it's at least in theory related to the benefits you get from paying those fees.

My point in relation to levies for fire repairs or other defects that need to be repaired stands. The management company owns the buildings and therefore every member should pay an equal share (per unit owned). Every member has a interest in the buildings, whether it's their own unit or not.

Yes, but you cant rewrite the terms under which you all bought the property.


It is what it is.

ted1

When getting a price , ask for a breakdown per block of apartments and per block of townhouse and then just divide it up between each block.

Dolbhad

As the owner checked their original Deed of Lease? I have often seen Deed of Leases in work where it says in them the breakdown of the cost of the management fees based on a share i.e 1/35 of the fee. Share can depend on the size or mixture of types units in the estate. I’ve seen a Deed of Lease of a house in a managed estate to be less than an apartment in the same managed estate. Then the management company set the fee.

Just trying to think about it from another angle.

Caranica

[Deleted User] wrote: »

Yes, but you cant rewrite the terms under which you all bought the property.


It is what it is.

But this isn't a management fee. It's an emergency works levy.

dubrov

Caranica wrote:

But this isn't a management fee. It's an emergency works levy.

This would be just another service charge and the apportionment will be set out in the lease.

What is fair is irrelevant

Caranica

dubrov wrote: »

This would be just another service charge and the apportionment will be set out in the lease.

What is fair is irrelevant

I'm not talking about fair, it's not a service charge.

dubrov

Caranica wrote:

I'm not talking about fair, it's not a service charge.

The management company is providing you with the service of being compliant with the fire regulations. It is a service charge.

The same applies for repair of any part of the common area.

You can get legal advice to be sure if you like

Lantus

As above. The reason why apportionment exists is to prevent arguments on who should pay what.

All costs like regular maintenance or replacing roof or lift are paid like this whether wear or tear or defect.

It's a terrible industry that's places all onus on the owner with the legal structures just non existent to deter developers from doing a dangerous job.

I could build a death trap apartment block tomorrow. Sell every unit and just liquify the company and walk away with a warm fuzzy feeling... Its a wonder more builders are not doing it. no deterrence and easy money.

STB.

@ The Conductor.

Firestop and wiring issues, are these not latent defects ?

I assume the Premier/Homebond insurance has expired or they are not playing ball ?

I see the developer ended up in NAMA, but somehow managed to buy his own stuff back (at a considerable discount no doubt). So I assume the developer is absolving themselves of responsibility for the overall issue, whilst holding 33% of all properties on site. How convenient.

The question is what the other 67% of the MC can do to make him legally pay more, rather than fight it out about apportionment based upon size. I am guessing that a fire officer might give them notice if its a big issue.

Lantus

STB. wrote: »

@ The Conductor.

Firestop and wiring issues, are these not latent defects ?

I assume the Premier/Homebond insurance has expired or they are not playing ball ?

I see the developer ended up in NAMA, but somehow managed to buy his own stuff back (at a considerable discount no doubt). So I assume the developer is absolving themselves of responsibility for the overall issue, whilst holding 33% of all properties on site. How convenient.

The question is what the other 67% of the MC can do to make him legally pay more, rather than fight it out about apportionment based upon size. I am guessing that a fire officer might give them notice if its a big issue.

Just to give an experience of a chief fire officer I battled for over a year as an omc director to get the fire officer to take action against a company not yet liquidated. Eventually one day she gleefully told me the limitation time limit has expired so she wasn't liable. If I didn't take action to remedy she would take me to court. She was delighted at this outcome. Symptomatic of a broken industry whose only real redress is to punish the owner.