Smart Consumer: Why apartment owners must protect themselves
Published 30/09/2010 | 05:00
You're sitting pretty in your clean and shiny apartment; the TV works, the heating is on and there is food in the fridge.
But outside in the hallway the carpets are dirty and the walls need a lick of paint, the grass is rarely cut and the lift is broken. An alarm goes off at 4am along with the noise of a neighbour's weekly party, but nothing gets done about it.
These are the experiences of many owners of apartments or houses in managed estates. So what has gone wrong?
There is no legislation in Ireland protecting apartment owners, and management companies remain unregulated. The Multi-Units Development Bill, which was published in May 2009, still hasn't been enacted. And it's badly needed.
When you buy an aprtment in a development, you're typically buying a leasehold. But common areas such as corridors, stairwells, gates, garden and parking zones are shared by owners, and so a management company is usually set up to become the legal owner of these shared spaces on behalf of the residents.
In theory, the developer or builder sets up a management company and as units are sold the purchasers become members of the company.
Then the developer pulls out and now the owners are the management company; they set rules and fees and decide by voting process how the place should be run.
But many developers have held on to control of the management company, often by holding on to apartments and ensuring voting rights are weighted in their favour.
This can mean that owners begin to feel like outsiders and become overly acquainted with the agent's voicemail service.
Rules are introduced without notice. Accounts and details of work carried out are requested and ignored and you're not even invited to annual management company meetings.
While the new law won't be a panacea for all ills, it does address a number of areas; within six months of enactment the transfer of all common areas to the ownership of the owners' management company must be completed; voting rights will be on a one unit/one vote basis; there must be transparency in the calculation of service charges and fees; a requirement to create a sinking fund and a dispute resolution mechanism.
What is needed is for owners to be paying proportionate fees for work carried out adequately in common areas and that owner members can vote equally on issues and have all the information provided to them.
Until the law comes in, remember that as an owner you are a member of the management company and should have voting rights and a say in how things are run. If you're having problems, start acting now.