Property management company rights

bilbo66

Approx 8 years ago I purchased a house in what was technically an unfinished estate although the developer still owned the development (ie Banks had not foreclosed). When I purchased my house, some houses had been completed to different degrees but with all services and a finished access road. In 2016 a new developer purchased the development, finished and sold all the other sites. This developer is claiming that I am liable for a share of the costs to finish the development and that I am bound by the rules of a management company incorporated in 2016/2017. My question is "is he correct?" I feel that he purchased the development and completed for his own commercial gain with the associated costs of common areas and meeting planning constraints. I have recently received a statement of "my account" with interest charged from 2016 so I can no longer ignore. Any advice or recommendation for a good property solicitor would be very gratefully received.

Dav010

Property owners in developments covered by the MUD Act are automatically members of the management company and legally required to pay the annual service charge associated with that MC.

When you say you are being charged to complete the development, what exactly are you being invoiced for?

As with all queries with MC workings, did you attend the AGMs?

Graham

OP the only personal likely to have sufficient information to answer your question is a solicitor.

Is your original solicitor still around?

Is the statement of account from the developer or the Management Company?

bilbo66

I asked in about the legal requirement for an AGM in July 2020. The reply was that it would be too difficult to get all owners to attend and that I was the only person requesting one. Nothing more came of it. There has never been an AGM.

The statement of account is from the Management Company. We have paid the requested annual charge raised by the management company as non payment would only impact on our neighbours.

We are being asked to pay 1/15th of communal work eg roads, footpaths, drainage as well as highway access work required to meet planning conditions. The road and footpaths, as far as our property, existed when we purchased.

Caranica

All the owners do not have to attend an AGM for it to be valid, just a quorum as set out in the articles of association. In our development of 81 units, the quorum is 2. There is a legal requirement to have an AGM and legislation was enacted last year to allow those to take place online for the duration of pandemic restrictions on indoor meetings.

OP you really need proper legal advice

FromADistance

bilbo66 wrote: »

I asked in about the legal requirement for an AGM in July 2020. The reply was that it would be too difficult to get all owners to attend and that I was the only person requesting one. Nothing more came of it. There has never been an AGM.

The statement of account is from the Management Company. We have paid the requested annual charge raised by the management company as non payment would only impact on our neighbours.

We are being asked to pay 1/15th of communal work eg roads, footpaths, drainage as well as highway access work required to meet planning conditions. The road and footpaths, as far as our property, existed when we purchased.

What does the original planning permission state about the development in terms of "taking in charge"? Was it always the intention to setup a management company or pass the estate over to the local county council? Was there any amendments following the sale to the new developer? My concern would be that if the original intention was to hand over the estate to the council, what happened in the interim? The original developer would have had to provide the council with a bond to cover communal work in the event of insolvency.

In terms of the present, an AGM could be easily setup over Zoom / conference call and to be honest (IMO) that alone would be cause for concern. Even so, you are entitled to a set of unabridged accounts. Obviously the scenario described is not something most people would come across regularly and I think it will need further investigation by a solicitor.

Graham

My concern would be the original developer was obligated to finish the works but didn't transfer the obligation when the remainder of the development was sold to developer 2.

If this were the case I'd expect the OMC to be pursuing the original developer rather than the owners.

None of this is to be considered legal advice by any stretch but if I were in the OPs position I'd certainly want to know who the directors of the OMC are and I'd want to be sure they were acting in the interests of the owners.

OP, I assume you have neighbours in the same position, have you discussed with them?

bilbo66

There was no attempt to ever hold a Management Company AGM.
Originally my neighbours said they would not pay but they have all since paid.
The original development company wend into liquidation but due to family money the
site was retained. the site lay dormant for approx 7 years before being sold.
The directors of the Management Company have never been changed from
those who incorporated the company. The current developer and his wife
are the directors of the MC. The MC is functioning correctly for the normal
upkeep of the development and has produced annual accounts.
I do not know if the site was to be passed over to the council but new developer
applied for changes to the original planning (change of house type) and the new planning
had additional conditions regarding site access development and footpaths. It is paying a share of these costs that really stings.

It appears it is by no mean clear cut and a solicitors advice would be required. At this stage we want a quite life and have tried to contact the developer to say we will pay the charge but not the added interest. So far the developer has ignored emails, phone calls and messages. Rather than try to solve whether the original bill is legitimate, if we pay the original charge, can anyone tell me if the developer can legally chase us for the interest?
I would clearly prefer to get agreement from the developer prior to making any payment but if he won't communicate with us.

Meeoow

Usually when you buy in an estate, those costs are in the house price already. What does your contract say?
Did you get your house cheaper than market value?

Graham

bilbo66 wrote: »

The directors of the Management Company have never been changed from
those who incorporated the company. The current developer and his wife
are the directors of the MC. The MC is functioning correctly for the normal
upkeep of the development and has produced annual accounts.

Unless the current developers still own property in the development and have been elected as directors by the owners I'm not convinced your OMC is running normally.

Even if they do still own property in the development the board of the OMC should be elected by the owners.

OMC = Owners Management Company

So much relies on the detail that yes, you have no option but to take solicitors advice.

FYI I understand you can call an EGM if you have the. support of 10% of the owners. There's a good summary here: https://byrnewallace.com/news-and-recent-work/publications/key-aspects-of-the-multi-unit-development-act.html

pinkypinky

The situation sounds irregular & complicated.
You really need legal advice.

Dav010

I would not pay anything until you get legal advice. Sounds very irregular.

Just in relation to late payment penalties, I was a MC Director for a couple of years, during that time we received legal advice that late payment penalties were unenforceable.

bilbo66

Thank you all for your time and constructive comments. I will seek legal advice.

Caranica

Also the developer will have lodged a bond with the local authority to ensure completion of roads etc so if the same people are involved, surely they were able to reclaim that bond?

Graham

I vaguely recall bonds were often waived but don't quote me on that. Definitely worth looking into.