I live in an estate. Common areas consist of grass and flower beds, no buildings.
The current directors of the estate’s owners’ management company (OMC) have spent a lot of money having the area around where they live replanted and mulched, despite the fact that they didn’t need it and that other areas were more in need of a refurb.
Would you consider this behaviour a breach of their fiduciary duties, ie benefiting from their position, using OMC money to “feather their own nest”?
The Companies Act 2014 sets out the fiduciary duties of company directors. Directors must always exercise their powers in good faith and in the interest of the OMC.
Are owners in my estate’s management company using funds to ‘feather their own nest’?
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If certain locations of the common areas appear to benefit more than others, appointing additional directors to represent the overlooked areas may help. Directors representing varied property types and locations within the development should allow for inclusive, balanced debate and decision-making. And, of course, it avoids leaving people feeling left out. Consider lending your time as a director rather than a critic of the OMC so that progress can be achieved and your interests and those of other owners are represented.
To ensure that the OMC funds are appropriately deployed to the members’ satisfaction, a well-drafted plan should be drawn up in advance. The agreement of all the members of the OMC on how the service charges are to be spent will help avoid members’ disappointment and provide for a fair and equitable arrangement.
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Neighbourly relations can be fragile and will benefit from openness and fairness. If members are kept informed and expectations are well managed, the possibility of disputes will be minimised.
It is important for the OMC to demonstrate equitable use of funds as this will build community spirit and make it easier to recover service charges when they are due.
The OMC should seek quotations on the open market using the same tender specification document so that they can easily compare the quotes they receive from contractors. This will allow the OMC to see what works will be done, when and for how much.
A standard schedule of works for groundskeeping will indicate the frequency of weeding, litter picking, grass-cutting and leaf-collection. Additional works such as felling or planting would be separate and their proposal for this could be shared with members in advance of a general meeting if it is a contentious or ongoing issue. Avoid seeking tenders when groundskeepers are at their busiest, in spring or summer.
There is always a variation in the level of service that can be attained – from the minimum of grass-cutting to elaborate planting and maintenance. Knowing in advance what to expect is best.
Paul Huberman is a chartered property and facilities manager and a fellow of the Society of Chartered Surveyors Ireland
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