I live in a multi-unit development and like many of the residents I’m unhappy with the management company and agent. Although we are paying them high service charges and additional sums towards the sinking fund, they are not addressing issues of concern. Because of Covid there has not been an agm for several years. Instead, we have had an online meeting where issues are not discussed fully.
Residents are charged for emergency calls outside of normal working hours to the agent while fees for repairing things such as broken door locks are also charged to owners. This is despite the fact that owners are paying a large security fee within the service charge. In addition, many residents don’t believe the management company and agent are fulfilling their obligations in caring for the common areas. Some residents believe the management is hiding behind the cover of the agent who reports to them.
While non-resident landlords can offset apartment charges from letting returns, that isn’t an option for residents. Shouldn’t the management company be made up of resident owners not non-resident landlords? What can we do if the management company and agent are failing to fulfil their duties? Some residents even believe they are acting in breach of the law. What can we do? Is there an ombudsman we can appeal to? If not, why not?
You raise a number of different matters that I will try to comment on.
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Firstly, it is important that owners’ management companies (OMCs) are run in the interest of property owners in a development. Ultimately, and the clue is in the name, these non-profit-making companies are controlled by the property owners, for the purpose of the management of the common areas, with each residential unit having one vote. Of course, different owners may have different opinions as to how best to manage the development but the OMC, as the collective of owners, should aim to be responsive to this. This is a challenge as the views of owners evolve and dialogue at OMC board level and at the agm is important in teasing out the balance of the owners’ wishes.
OMCs, as companies registered with the Companies Registration Office, are required by law to have an agm. If your OMC has not had an agm since 2019, then this is a serious matter, and one should be called as a matter of urgency. On just one point, it is required that the annual budget be approved at a general meeting before service charges are billed out. However, what did change during the pandemic was the requirement for general meetings to be held in person with meetings now permitted online or electronically. This facility has been extended several times by the Department of Enterprise, Trade and Employment and is currently in place to the end of 2023.
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For many OMCs, virtual agms work well as there are savings on renting a meeting room, a time saving for those travelling to the meeting and an enhanced ability for members who live at a distance from the development to attend. However, it is important that an OMC board does not use a virtual meeting as an excuse to shut down or reduce input from members. Members have rights to (among other things) comment on the annual accounts, comment and vote on the budget and annual sinking fund contribution, put forward nominations for new directors and raise matters under the “any other business” section of the agenda. A good board and agent should welcome input from members at general meetings as this will help them to do their jobs better.
As mentioned, the election of OMC directors is one agm agenda item and, if you feel somewhat excluded by your OMC, perhaps you would consider putting your name forward. You could start by checking the company constitution to see how many directors are permitted. No director can serve a term of office of longer than three years (although directors can stand for re-election). Once you know how the board operates, if interested, you should follow the rules for the nomination process and present your case to the members at the agm regarding what you can bring to the board.
You mention some specific cost areas and it is difficult to comment without further detail. However, many agents have an after-hours service in place to help deal with issues that arise outside normal office hours, such as plumbing leaks, antisocial behaviour, non-functioning car park gates and so on. Often such a service is outsourced to a specialist company that needs to be supplied with information on owners, tenants and preferred contractors, for example, which is updated regularly and which has to be briefed on how to respond to queries. As such, there may well be a cost incurred to supply such a service to owners (often incorporated into the annual charges). As a general comment in relation to charges, I would also note that OMCs have not been insulated from the wider cost pressures in the Irish economy in recent times with particularly sharp cost increases being seen around insurance and energy costs feeding directly into higher service charges for owners. I also note that your OMC is collecting sums each year towards building a sinking fund and this is critical as developments age.
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In relation to your point that the directors may be “hiding behind the cover of the agent”, in my experience the agent normally manages matters on a day-to-day basis with the board steering the operation of the company (between agms) and making decisions on large or non-routine matters. The board should not hide behind the agent and should be available to the agent at all times if an issue arises that needs to involve them. That said, in many blocks, OMC directors have full-time jobs and do not want to be contacted frequently. Also, directors often have no specific property expertise so will often be reluctant to express views on how specific property matters should be resolved. The directors should also be answerable to members at agms and can be removed by members at agms if members so choose.
In relation to your point that owners renting out their units and those who live in the development may have different interests, this can be the case to some extent but both will want the development to be well-maintained and costs actively managed. It is certainly the case that it can be good to have at least some directors who live on site as these can keep an eye on site issues, such as checking if non-domestic waste is building up in the bin shed, or if a door is not closing properly. That said, there is no mechanism to exclude non-resident owners from the board and they also have a right to have their interests represented. Indeed, a good board will take account of the interests of both types of owners.
If owners in any development are unhappy with either the agent or the OMC board, the best advice is to change them. The owners can vote in new directors at a general meeting and the agent cannot have a contract for a period of longer than three years under the Multi-Unit Developments (MUD) Act (although this can be renewed if both parties wish to do so). As such, if an agent’s contract is up for renewal, the OMC does not need to renew it but can employ a new agent.
There is not currently an ombudsman for OMCs, although the idea of some kind of a body that will hold information on OMCs at national level and potentially offer other services, such as advice or mediation, has been mooted. The current programme for government includes a commitment to a review of the operation of the MUD Act and it is possible that this matter will be considered in the context of any such review.
Finbar McDonnell is a chartered property manager and a member of the Society of Chartered Surveyors Ireland
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