Private Estate & Management Company

cajonlardo

Can anyone help me with some advise please?

My son is buying a new build semi in a new development.

He has been informed that he must pay a management company fee 590 euros annually

This isnt something I have ever heard of. I cannot see what services the management company would provide requiring anything near 590 annually

I do know there will be an apartment block within the estate and that the developer intends holding 250 of the apartments themselves

My main query is would this fee be common nowadays in new estates or is there something different here?

Thanks

Caranica

cajonlardo wrote: »

Can anyone help me with some advise please?

My son is buying a new build semi in a new development.

He has been informed that he must pay a management company fee 590 euros annually

This isnt something I have ever heard of. I cannot see what services the management company would provide requiring anything near 590 annually

I do know there will be an apartment block within the estate and that the developer intends holding 250 of the apartments themselves

My main query is would this fee be common nowadays in new estates or is there something different here?

Thanks

Most developments over the past 20 years have management companies and fees, whether houses, apartments or mixed use development. Sounds like your son is looking at a mixed use development. He should be able to get a copy of the proposed budget that was used to calculate fees.

Dav010

It’s a legal requirement under the MUD Act, and as all unit owners are members of the MC, your son is legally obligated to pay the annual fees. There will be an AGM every year which your son should attend, the calculation of the fees is discussed, your son can voice his opinion on all matters relating to the MC.

dubrov

Yes, it's very common nowadays.
Councils have gone cheap and decided to load the costs onto purchasers of new homes.
Meanwhile they continue to maintain public areas in older estates.

For houses, the fees general cover things like bins, public liability insurance, public lighting, landscaping.
You can request a breakdown from the management company.

Each unit generally has a vote and you could become a director yourself.
However, given the developer is holding on to 250 units, you will always be outvoted so I wouldn't expect to be able to change much with out their say so.

cajonlardo

Since I opened this thread I have been shown a list of what is included and it makes sense

Thank you all for your answers

Citygirl1

Hi OP. I would strongly encourage you/your son to investigate this arrangement further, given it's a mixed estate of houses and apartments.

Assume that the number you're being quoted now will increase.

Points I would query:
1) Are all the properties legally tied to the same management company?
2) Will the apartments and houses be included in the same budget? And have a common sinking fund?
3) Assuming yes, what will be the basis of allocating costs between the different properties each year?

Bear in mind that apartments incur significant costs not applicable to a house (lift maintenance, common area cleaning, painting etc).
And depending on how your "share" of the budget is determined, your son may end up subsidising the apartments.

More significantly, major costs such as lift replacement, could eat into the common sinking fund, or you may have to pay your "share" of this.

Most critically, any legal issues re the apartments could make it difficult/impossible to sell the house down the road.

I write all the above, based on personal experience of owning a house in an estate of mostly apartments.

In your case, the fact that the developer will own 250 apartments would be a concern, as it's likely all budgeting decisions could be made in favour of the apartments.

Dav010

Citygirl1 wrote: »

Hi OP. I would strongly encourage you/your son to investigate this arrangement further, given it's a mixed estate of houses and apartments.

Assume that the number you're being quoted now will increase.

Points I would query:
1) Are all the properties legally tied to the same management company?
2) Will the apartments and houses be included in the same budget? And have a common sinking fund?
3) Assuming yes, what will be the basis of allocating costs between the different properties each year?

Bear in mind that apartments incur significant costs not applicable to a house (lift maintenance, common area cleaning, painting etc).
And depending on how your "share" of the budget is determined, your son may end up subsidising the apartments.

More significantly, major costs such as lift replacement, could eat into the common sinking fund, or you may have to pay your "share" of this.

Most critically, any legal issues re the apartments could make it difficult/impossible to sell the house down the road.

I write all the above, based on personal experience of owning a house in an estate of mostly apartments.

In your case, the fact that the developer will own 250 apartments would be a concern, as it's likely all budgeting decisions could be made in favour of the apartments.

If the property falls under the MUD Act legislation, the property is legally tied to the MC, everything else you posted falls under the terms of that Act.

Citygirl1

Dav010 wrote: »

If the property falls under the MUD Act legislation, the property is legally tied to the MC, everything else you posted falls under the terms of that Act.

That is my point. The OP would be well advised now to investigate and understand what they're going to sign up for. As it is a new area for them. Key point: it's not as simple as a yearly charge of costs relating to their particular house.

Caranica

Citygirl1 wrote: »

That is my point. The OP would be well advised now to investigate and understand what they're going to sign up for. As it is a new area for them. Key point: it's not as simple as a yearly charge of costs relating to their particular house.

The OP has already come back to say they have all the information now?

Chris_5339762

They think they do, I'm sure, but I'd doubt they have a full understanding of what it entails. Management Companies in this country are awful, in general.

Dav010

Chris_5339762 wrote: »

They think they do, I'm sure, but I'd doubt they have a full understanding of what it entails. Management Companies in this country are awful, in general.

Based on?

Chris_5339762

...my own experience of a management company not set up in compliance with the MUD act and directors vetoing anything that made any improvements by measure of the fact that they controlled 25 out of the 40 votes. Then when they sold, the new majority owners wouldn't engage in ANYTHING to do with management, and we couldn't outvote them. We tried to get them removed, but their solicitor was also on the board of directors and stymied every attempt. In the end they left the place to rack and ruin, we couldn't do anything, they made a few million in easy profit and the third set of majority owners were left with an enormous bill, which the owners had to pay. I had managed to sell by this stage, through some miracle.

Also this forum - https://www.askaboutmoney.com/forums/management-companies-apartments-etc.67/

Management companies work well when everyone is involved and everyone pays. Unfortunately when either of those things goes wrong, there is actually very little anyone can do, despite what the law says.

Dav010

Chris_5339762 wrote: »

...my own experience of a management company not set up in compliance with the MUD act and directors vetoing anything that made any improvements by measure of the fact that they controlled 25 out of the 40 votes. Then when they sold, the new majority owners wouldn't engage in ANYTHING to do with management, and we couldn't outvote them. We tried to get them removed, but their solicitor was also on the board of directors and stymied every attempt. In the end they left the place to rack and ruin, we couldn't do anything, they made a few million in easy profit and the third set of majority owners were left with an enormous bill, which the owners had to pay. I had managed to sell by this stage, through some miracle.

Also this forum - https://www.askaboutmoney.com/forums/management-companies-apartments-etc.67/

Management companies work well when everyone is involved and everyone pays. Unfortunately when either of those things goes wrong, there is actually very little anyone can do, despite what the law says.

You derived this from your one, solitary experience?

Chris_5339762 wrote: »

Management Companies in this country are awful, in general.

I was a Director of a MC for a few years, complaints about how the MC works and fees were almost exclusively received from people who didn’t attend AGMs and/or didn’t understand how a MC works. Most owners in the MUDs I have/had properties in, do not want to be involved in MCs as demonstrated by their non attendance at AGMs. And there is a lot that can be done to collect unpaid subs, payment is a legal requirement under the MUD act, a lien can be applied for and it is virtually impossible to sell the property without fee payment being up to date.

cajonlardo

Citygirl1 wrote: »

Hi OP. I would strongly encourage you/your son to investigate this arrangement further, given it's a mixed estate of houses and apartments.

Assume that the number you're being quoted now will increase.

Points I would query:
1) Are all the properties legally tied to the same management company?
2) Will the apartments and houses be included in the same budget? And have a common sinking fund?
3) Assuming yes, what will be the basis of allocating costs between the different properties each year?

Bear in mind that apartments incur significant costs not applicable to a house (lift maintenance, common area cleaning, painting etc).
And depending on how your "share" of the budget is determined, your son may end up subsidising the apartments.

More significantly, major costs such as lift replacement, could eat into the common sinking fund, or you may have to pay your "share" of this.

Most critically, any legal issues re the apartments could make it difficult/impossible to sell the house down the road.

I write all the above, based on personal experience of owning a house in an estate of mostly apartments.

In your case, the fact that the developer will own 250 apartments would be a concern, as it's likely all budgeting decisions could be made in favour of the apartments.

Thanks for going to the trouble of providing your advise and experience. I was wary of the budget covering the apartment costs .
Given the written breakdown of the budget provided I would personally consider it reasonable ( based on my own costs annually in an old estate )

As you point out, costs will inevitably rise .

Again, I am grateful for everyones input as this was an area I had no experience in.

cajonlardo

Dav010 wrote: »

You derived this from your one, solitary experience?



I was a Director of a MC for a few years, complaints about how the MC works and fees were almost exclusively received from people who didn’t attend AGMs and/or didn’t understand how a MC works. Most owners in the MUDs I have/had properties in, do not want to be involved in MCs as demonstrated by their non attendance at AGMs. And there is a lot that can be done to collect unpaid subs, payment is a legal requirement under the MUD act, a lien can be applied for and it is virtually impossible to sell the property without fee payment being up to date.

Appreciate your advise . Picking up peoples input and experiences helps a lot- I knew nothing yesterday but am learning quickly

Chris_5339762

No, that was my own experience but I stand by my point.

Every owner has a vote on a management company. Thats fine. A fair proportion don't bother with meetings etc. A fair proportion use every excuse in the book not to pay the fees they are contractually obliged to pay. The management company has no teeth really to get that money back. They can't fine tenants. They can't sue tenants really (you're effectively suing yourself as the delinquent tenant is a member) and they don't have a bottomless money pit to take high court action.

If a tenant trashed a lift, the management company has to pay lets say €30k to have it replaced. 20% of units don't pay and won't engage, you're left with lets say 30 units at €1,000 each, subsidising the ones that don't bother paying. What can ACTUALLY be done about this? Very little. The delinquent tenants if they ended up in court will play the poor mouth. The only way a management company can RELIABLY get their money back is through the sale of a property.

Yes, that is a way, but in the meantime cashflow becomes a major problem and the complex falls to rack and ruin which means more people won't pay out of protest. Vicious circle. Then owners effectively can't sell their properties.

They work up to a point, but they don't work very well at the same time. The MUD act has helped, but the whole sector IMO is really quite flawed. This comes from my own experience and eight years learning about others experiences. Personally, I would never, ever buy in a managed development in this country again.

Dav010

Chris_5339762 wrote: »

No, that was my own experience but I stand by my point.

Every owner has a vote on a management company. Thats fine. A fair proportion don't bother with meetings etc. A fair proportion use every excuse in the book not to pay the fees they are contractually obliged to pay. The management company has no teeth really to get that money back. They can't fine tenants. They can't sue tenants really (you're effectively suing yourself as the delinquent tenant is a member) and they don't have a bottomless money pit to take high court action.

If a tenant trashed a lift, the management company has to pay lets say €30k to have it replaced. 20% of units don't pay and won't engage, you're left with lets say 30 units at €1,000 each, subsidising the ones that don't bother paying. What can ACTUALLY be done about this? Very little. The delinquent tenants if they ended up in court will play the poor mouth. The only way a management company can RELIABLY get their money back is through the sale of a property.

Yes, that is a way, but in the meantime cashflow becomes a major problem and the complex falls to rack and ruin which means more people won't pay out of protest. Vicious circle. Then owners effectively can't sell their properties.

They work up to a point, but they don't work very well at the same time. The MUD act has helped, but the whole sector IMO is really quite flawed. This comes from my own experience and eight years learning about others experiences. Personally, I would never, ever buy in a managed development in this country again.

Again, this is a misunderstanding of how a MC, and legislation works in relation to annual fees. MC can sue non paying tenants for breach of contractual responsibilities, and can apply for a lien meaning the property cannot be sold without outstanding fees being settled.

MC are required to have sinking funds to pay for unexpected expenses and I see no reason why the MC cannot pursue someone for malicious damage to property. In reality, how often are lifts maliciously damaged to the point whereby they need to be replaced? In most cases the fees associated with lifts are expensive ongoing maintenance, but lifts are a preferred option for many buyers, so you have to accept that fees will apply, same with electric gates.

Chris_5339762

Dav010 wrote: »

Again, this is a misunderstanding of how a MC, and legislation works in relation to annual fees. MC can sue non paying tenants for breach of contractual responsibilities, and can apply for a lien meaning the property cannot be sold without outstanding fees being settled.

MC are required to have sinking funds to pay for unexpected expenses and I see no reason why the MC cannot pursue someone for malicious damage to property. In reality, how often are lifts maliciously damaged to the point whereby they need to be replaced? In most cases the fees associated with lifts are expensive ongoing maintenance, but lifts are a preferred option for many buyers, so you have to accept that fees will apply, same with electric gates.

But thats the thing - a lien on the property is all well and good but in the short term that doesn't help, and cashflow will be a big issue.


I accept that sinking funds are badly required - but a lot of places have totally inadequate ones - mostly because AGMs vote to put in the bare minimum because people can't afford any more than that. And you can sue a tenant, but the management company will have to pay large court fees to do that, and even then an owner likely can't or won't pay, or they get a sympathetic judge because the judicial system here is broken when it comes to scumbaggery or delinquency.


I appreciate you have a lot of experience as a director, but I feel the picture being painted in general is too rosey. I find the entire management company situation in Ireland is simply broken, and a large number of major issues are going to come out as expensive, required works start to come up and companies just can't pay it, nor convince owners to ACTUALLY pay it.

Caranica

Sorry Chris but I'm with Dav on this one. To collect unpaid fees you need a good agent and a good solicitor. We have both and have almost completely cleared any long-standing non paid fees. Ditto a good agent, and good directors,will make sure that enough money goes into a sinking fund. Not everyone has the experience you had and that doesn't justify making inaccurate sweeping generalisations.