In today’s Irish Times Property Clinic supplement some interesting questions are addressed about Self-Management of Multi-Unit Developments by OMCs (Owner’s Management Companies) and the pitfalls that should be avoided by such an undertaking. i.e. Licensing requirements, Financial Controls, Protection for the OMC against negligent decisions etc.
Q I live in a complex of 240 units and am very concerned about recent decisions made at our agm. It appears that the secretary/director of the owner’s management company is going to be the managing agent as well, so almost all the functions will be controlled by one person. Who is going to monitor this? What happens if that person becomes incapacitated? In addition, the common areas have not been handed over under the MUD (multi-unit development) act and a director of the developer company has been re-appointed to the board which seems reluctant to pursue the transfer as required under the MUD act.
A With 240 units in your development it is likely to be a complex one. Self-management by any board of directors can be difficult, unpaid and thankless. You are right to think that there are concerns and risks that should be addressed.
The Property Services (Regulation) Act 2011 states that anybody providing property management services to an owners management company requires a licence.
A licence is granted to a property service provider if they meet certain Property Services Regulatory Authority (PSRA) criteria, which include evidence of qualifications, proper control of client monies and professional indemnity insurance.
Simply, anyone being paid to provide property management services to a multi-unit development should have the relevant licence and, as such, must have professional indemnity insurance.
In addition, the PSRA has started to build up a compensation fund for victims of fraud, or similar activity, caused by a licenced property service provider.
Licenced property management agents should also have a depth and breadth of knowledge not only regarding the health and safety requirements for multi-unit development, its insurance requirements, lease interpretation and benchmarking of service providers but also from a problem-solving perspective because many of the issues that arise in apartment complexes have arisen before, and the OMC can benefit from such experience.
Continuity and record-keeping are a vital part of the operation of any owners management company: not only are there statutory requirements regarding the keeping of company records but there may also be practical reasons, from a building-maintenance perspective.
Self-management of any multi-unit development can be an admirable, economic and beneficial route for a board of directors, its OMC and development, but it is time-consuming and does remove some of the protections and benefits of having a licenced PSP.
The conveyance of the reversionary interest in a multi-unit development can be extremely difficult and complex, particularly if the development is not complete or all the units have not been sold.
In any conveyance, a willing vendor and a willing purchaser is preferable and saves legal fees.
In summary, I believe that your concerns are genuine and that you should write to your management company requesting the following:
1. Is the director acting as a manager who will be paid a salary and as a direct employee of the OMC?
2. Is it the manager’s intention to be licensed by the PSRA?
3. What reporting mechanism is in place between the manager and board of directors?
4. What protection does the OMC have should he make negligent decisions?
5. What controls are in place to protect against fraud and how is the OMC bank account controlled?
6. What steps are being taken to transfer the common areas?
Paul Mooney is a chartered surveyor and member of the Property and Facilities Management Professional Group of the Society of Chartered Surveyors Ireland.
Also in the same piece, a problem with the use of car parking spaces is raised. How to solve the problem of unauthorised parking, assigned v unassigned parking spaces, parking of commercial vehicles and how the management agent can assist with this problem.
Q I live in an apartment block and one of my neighbours parks a large commercial truck in the parking space beside mine which often takes up some of my parking space and sometimes I cannot park my car there. I have left a note on the windscreen but to no avail. Is there anything I can do?
A There are generally two ways in which parking is dealt with in residential multi-unit development. The first is where there is unassigned parking and owners/tenants have the right to park in the development on a first-come-first-served basis.
The second is more preferable and is known as assigned parking. This is when a specific space is bought with the property, is usually numbered, and is outlined on a map with the title document.
In the majority of cases, the lease agreement binding the owners’ management company (OMC) and its members (who are the home owners) specifies that commercial vehicles are not permitted in residential development and you should clarify this.
Usually, the cheapest and most effective way to resolve a situation like this is to discuss the matter with the vehicle owner yourself.
It is plausible that the vehicle owner is unaware that there is a problem and that they did not see the note.
Alternatively, you could contact the management agent of the development who should have the details of the parking space owner, in the event that space is assigned, and can in turn advise the owner (or tenant) of the situation.
If this fails you could seek legal advice but I would recommend you talk to the property brokers first. If parking is a serious issue in the development, you could ask the directors of the OMC to place it on the agenda for discussion at the agm.