Management company accounts

PommieBast

One of the things I do before bidding on apartments is to get a copy of the management company accounts. I have seen quite a few that have a few too many numbers in brackets, but otherwise what would constitute a reasonably healthy financial position?

The_Conductor

PommieBast wrote: »

what would constitute a reasonably healthy financial position?

A few things- there isn't a single knock-out figure that determines whether a Management Company's financial position is healthy, or not.

E.g.

Is there a sink fund- and is there a clear history of contributions to the sink fund. How does the level of the sink fund relate to the number of units.

Are there any periodic, predictable works that have been postponed (for whatever reason) that are going to need to be accounted for (lots of things could factor here- resurfacing a carpark, painting, replacing woodwork, new security systems etc etc)

Is there a history of the MC spending within its allocated budget, as voted on at the AGM?

Have there been any insurance claims- if so- what are they and how do they relate to financial well being of the Management Company.

Are there arrears from some members- if so, what is being done about them.

Has there been any events uncovered by periodic surveys of units that might indicate underlying issues with the MC or the development (it could be fire issues, water ingress or any of a string of other possibilities)

Etc etc

Essentially- you'll need more than the current years financial statements- and you'll need a broad picture of how the management company is operating and what issues they have encountered or dealt with.

PommieBast

Thanks for that.

I've yet to see any accounts so far where the sinking fund, if present at all, has actually had the recommended €200 per unit per annum. I can only obtain abridged accounts so in practice it looks like the only thing I can really work on is how much cash they keep in the kitty..

The_Conductor

Any member of the Management Company (aka any owner in the development) is entitled to a full copy of the Annual Accounts and Statements- get the owner to seek them so you can review them. An abridged version isn't worth the paper its printed on...….

Go through it- with a fine tooth comb- and if you have any questions- get the member to pose them to the secretary for clarification.

CIARAN_BOYLE

PommieBast wrote: »

Thanks for that.

I've yet to see any accounts so far where the sinking fund, if present at all, has actually had the recommended €200 per unit per annum. I can only obtain abridged accounts so in practice it looks like the only thing I can really work on is how much cash they keep in the kitty..

Ask for full accounts as part of your bidding process.

As to what is healthy I would make a list of major assets (lifts gates etc) and base the need for a sinking fund on that.

Also look if there are a lot of debtors. That means people aren't paying for fees which means fees are higher than they need to be because they need the cash from the people who will pay.

Caranica

PommieBast wrote: »

Thanks for that.

I've yet to see any accounts so far where the sinking fund, if present at all, has actually had the recommended €200 per unit per annum. I can only obtain abridged accounts so in practice it looks like the only thing I can really work on is how much cash they keep in the kitty..

Not every development needs that kind of money. If you've no lifts or electric gates or underground car park the size of the sinking fund you need is nowhere near as big as the one you need if you do have those

gebbel

Caranica wrote: »

Not every development needs that kind of money. If you've no lifts or electric gates or underground car park the size of the sinking fund you need is nowhere near as big as the one you need if you do have those

Exactly. This €200 per unit per annum sinking fund contribution is a pie in the sky figure. Each apartment development is different and some don’t need to put this much aside. It’s all about a healthy management company with proper accountability from the Directors, and good attendance at the AGM where all the owners agree whatever sum they believe is necessary (based on an engineer or surveyor report on future expenditure items as the development ages.)

The_Conductor

The_Conductor wrote: »

Any member of the Management Company (aka any owner in the development) is entitled to a full copy of the Annual Accounts and Statements- get the owner to seek them so you can review them. An abridged version isn't worth the paper its printed on...….

Go through it- with a fine tooth comb- and if you have any questions- get the member to pose them to the secretary for clarification.

Minutes of the AGM can be useful as well as long standing problems, often non financial, tend to get raised which might not feature in the accounts.

Calahonda52

The other consideration is : are the members of the MB independent of the developer, who can sometimes own multiple units in the newer blocks, so will .....

PommieBast

gebbel wrote: »

Exactly. This €200 per unit per annum sinking fund contribution is a pie in the sky figure.

So far I have yet to see anywhere that seems to put anything into it on a regular basis..

Calahonda52 wrote: »

The other consideration is : are the members of the MB independent of the developer, who can sometimes own multiple units in the newer blocks, so will .....

One thing I have been looking for is whether some of the directors have addresses within the blocks.