Questions & Answers:

Maintenance and Common Property

7 December 21

Ballincastle Property Services Portfolio Image: Maintenance and Common Property. What’s mine and what’s common property?  What is the management company required to maintain?

What’s mine and what’s common property?

The Multi-Unit Developments Act 2011 defines common areas as including:
   The external walls, foundations and roofs and internal load-bearing walls
   The entrance halls, landings, lifts, lift shafts, staircases and passages
   The access roads, footpaths, kerbs, paved, planted and landscaped areas, and boundary walls
   Architectural and water features
   All ducts and conduits, other than those within and serving only one unit in the development
   Cisterns, tanks, sewers, drains, pipes, wires, central heating boilers, other than such items within and serving only one unit in the development
   Other areas that are from time to time provided for common use

What is the management company required to maintain?

Owners’ management companies must comply with the specific obligations imposed by the Multi-Unit Developments Act 2011. They must also comply with company law, which plays an important part in determining the rights and responsibilities of owners, as members of the owners’ management company. The main piece of company law in Ireland is the Companies Act 2014. This Act covers matters including general meetings, directors’ duties, company record-keeping, annual returns, and financial statements. The main obligations of an owners’ management company are detailed below.

Company constitution

The governing document of the owners’ management company is called the constitution. It sets out the rules for the internal governance of the company, and its provisions must be in line with company law. Every owners’ management company must have a constitution.

Company directors

Generally, directors of owners’ management companies are members of the company and have been elected by the wider membership of the company. In most cases, a director’s term is limited to 3 years. However, a serving director can be appointed or elected at annual general meetings to serve for further terms, if this is not prohibited by the company’s articles of association (part of the company constitution) or other governing documents.

Register of members

You automatically become a member of an owners’ management company when you purchase a home in a multi-unit development. The owners’ management company must give anyone who buys a residential unit a share or membership certificate. The company must update the register of members with the buyer’s details. The register of members is a list of the names and addresses of all the members of the company. It is required under company law and must be kept at the company’s registered office and made available for public inspection. The members must keep the company informed of any relevant changes.

Annual report

The company must prepare an annual report and hold an annual meeting to discuss the report. The report must include details of:
   Income and expenditure
   Annual service charges
   The sinking fund accounts
   Planned expenditure on maintenance and repair
   Insurance cover
   Contracts entered by the company

The members must be given 21 days’ notice of the meeting and be provided with the report 10 days before the meeting. The annual general meeting must be held reasonably close to the multi-unit development unless 75% of the members of the company agree otherwise. The company must also file annual returns with the Companies Registration Office (CRO).

Service charges

The company must set-up an annual service charges scheme to pay for:
   The maintenance, insurance and repair of common areas within its control, and
   The provision of common services (for example, refuse collection, security, gardening) to unit owners

The initial charge can be set without holding a meeting of the members but, in general, these charges must be approved by a general meeting of the members. If over 75% of the members do not approve the proposed charge, the existing charge must remain in place.

The service charge cannot be used to pay for matters that are the responsibility of a developer or builder unless this is agreed in writing by 75% of the members of the company. This approval can only be given if 65% of the units are sold and can only come into effect 3 years after ownership of the common areas has been transferred to the owners’ management company.

Unit owners are obliged to pay the service charge (including developers in the case of unsold units). The service charge must be calculated on a transparent and fair basis and expenditure must be properly recorded.

Since March 2018, under design guidelines for new apartments planning applications for apartment developments must have a ‘building lifecycle report’. This report aims to ensure that new developments are properly managed into the future. It should include an assessment of the long-term running and maintenance costs of an estate. The report may be useful to the owners’ management company as it should show the measures the developer considered to manage and reduce running costs for the benefit of residents. It will also help the owners’ management company to calculate the annual service charge and the sinking fund contribution.

Sinking fund

The owners’ management company must establish a sinking fund within 3 years of being transferred ownership of the development. The sinking fund is used for spending on refurbishment, improvement or maintenance of a non-recurring nature in a multi-unit development. Unit owners must make contributions to the sinking fund (including developers in the case of unsold units). The 2011 Act provides that the amount to be contributed to the sinking fund is €200 annually per unit, or such other amount as the members agree. Contributions to the sinking fund must be held in a separate account.

House rules

The owners’ management company can make house rules for the effective operation and maintenance of the multi-unit development. These rules must be agreed by a meeting of members, but the first set of rules can be made by the company before the sale of the first unit. If a unit is let to tenants, one of the terms of the letting should state that tenants must observe the house rules.

Long-term contracts

The company may not enter contracts with providers of goods and services which are to last for more than 3 years.

Dispute resolution

You can apply to the Circuit Court for an order to enforce any rights or obligations imposed under the Act. This includes the owners’ management company, a unit owner, a trustee under a will or other settlement, a tenant and the developer. The Court, instead of making an order, may direct the parties to attempt to solve the matter by mediation.

Property management agents

A property management agent is hired by an owners’ management company to provide services to manage an estate, for example, refuse collection, repairs and maintenance. Generally, people living in a multi-unit development have more contact with the agent than with their owners’ management company, as the agent looks after the day-to-day running of the estate. The roles of the owners’ management company and the property management agent are separate, and the details of the relationship between them are set out in a contract or letter of engagement.

The agent follows the instructions of the board of directors of the owners’ management company and is accountable to them for the standard of services provided. An agent can be involved in the management of several different estates and can work for several different owners’ management companies. Agents are regulated by the Property Services Regulatory Authority and must hold a license.