Transfer deadlines may stymie key players
NAMA, receivers and developers will be banned from selling off apartments unless control of the common areas in the developments are handed over to the owner management companies controlled by home buyers in the developments.
This is the implication of a new act recently signed into law by the president, Mary McAleese. In many cases, developers or receivers have retained control of the management companies.
Where control is not transferred, NAMA and the banks could be prevented or delayed in their efforts to recover hundreds of millions of euros worth of loans tied up in developments. The Government may also lose out on collecting millions in VAT which is charged at 13.5pc on new home sales.
According to Paul Mooney of the Irish Property and Facility Management Association (IPFMA) the new act is expected to come into force in April this year and give receivers and developers a further six months to transfer ownership to the new management companies.
Barrister Brian Walker told an IPFMA meeting that the Multi-Unit Developments (MUD) Act would also see apartment owners take more developers to court in order to force developers to transfer common areas in developments to the owners' management company.
The MUD Act will "shortly see hundreds of applications being made to the Circuit Court 'to fix' problems that have been festering over the past 10 years plus in typical apartment management company disputes," he said.
The ban on apartment sales could also affect home owners and investors in developments who are seeking to sell.
"Money will be at the heart of many disputes. Investors and residents are hard pressed with mortgages and will struggle with service charges and the challenge of the new sinking fund. Their management companies need to be properly funded to safeguard the asset," Mr Walker warned.
He added that the courts want the parties to do a lot more to resolve their differences between themselves. The new law allows a judge to order mandatory mediation.
He went on to say that "owners don't fully appreciate how valuable their property management company is and a complete culture change will be required in 2011, or else people will see their asset value diminished drastically.
"The act will bring some much tougher measures into place but it will create a strong structure for the resolution of disputes in a fair, transparent and uniform fashion," he added.