Management Company & Services
What is a Management Company?
Upon the commencement of a development, the developer sets up a Management Company specific to that development to acquire, own, maintain and manage the common structures and services of the buildings and estates. This is defined and set down in the legal title of the development.
Who Controls the Management Company?
Initially, the Management Company's Board of Directors is made up of the developers and/or their solicitors. The developers and their representatives maintain formal control and responsibility throughout the initial stage of a development as the units are selling. During this time, the owners have a limited role in the company but when all the units are sold, the development then passes to the control of the members.
Each owner has an interest in and a right to information and a say in how the Management Company operates. All owners are therefore known as members of the management company.
What Services does the Management Company provide?
The Management Company is responsible for providing the following services to the development:
- Legal, Corporate & Administrative
- Buildings Management
- Administration
- Insurance Management
- Communications Management
How can I get information on my Management Company?
Each financial year, your Management Company invites its members to an Annual General Meeting, an agenda for which is sent out in advance to you, the member. This meeting is an opportunity for members to meet the Board of Directors of the Management Company and find out more information about what is happening in their development. The financial accounts of the Management Company are presented at this meeting and resignation and election of board members also take place.
Managing Agents
Who is the Managing Agent?
The Managing Agent should be an expert professional person/body in the Property Management Industry, appointed by the Management Company to carry out the management of the estate under the instruction of the Board of Directors.
Why do we need a Managing Agent?
Management of residential estates is an ongoing and long-term commitment which should not be left to one/two individuals alone, or embarked upon without due regard to the future. The task is largely a practical exercise and demands considerable expertise, time and professional training. Most professional developers appoint a Managing Agent to carry out the operation of management. This ensures the proper administration of the estate from the outset.
What is the difference between the Managing Agent and the Management Company?
The Management Company is the legal body which is responsible for the management of the common areas of the development. The Managing Agent is a professional firm engaged by the Board of Directors of the Management Company to provide a range of services. The Management Company and the Managing Agents are two separate entities. The Managing Agent reports and works under the instruction of the Management Company.
Can we not manage the estate ourselves?
Professional managing agents bring an organised approach to the day-to-day management of the estate, from the planning and collection of the service charges and reserve funds to the timetable for redecoration, repairs and inspection and supervision of works. An Agents assessment of what needs to be done and when it should be done is independent of private interests and preferences and is based upon their duty to all residents to keep the development in good repair.
How is the Agent selected/appointed?
The Agent is appointed by the developer following a formal tender process at the outset of the development and on behalf of the Management Company. This appointment is made so that essential services are in operation as soon as people being to take up residence in the estate.
Who instructs the Agent?
The Agent follows the Board of Directors’ instructions and direction and a good relationship between the two is essential to ensure successful running of the development.
How can I be sure my Agent is professionally qualified, reliable & honest?
Members should ensure that their Managing Agent has the following:
- Membership of a professional body such as IPFMA
- Professionally trained & experienced staff, systems & procedures
- Professional Indemnity Insurance
- Qualified & Insured contractors who can provide services to your development
- Appropriate Health & Safety procedures specific to your development.
If I am not happy with the service being given by the agent what can I do?
A contract should exist between your Management Company and the Managing Agent which should set out details on how to make a complaint about your Agent.
Members should complain directly to the Board of their management company, whilst tenants should ask their landlords to forward any complaints they may have to the Board on their behalf.
Withholding of service charges due to dissatisfaction with services from your Agents is not advisable. The lease, which you would have signed on the closing of sale of your home contracts you as member of the Management Company to your development and in turn binds you to the lessee’s covenants therein, one such covenant being the payment of service charges. Admonition or dissatisfaction in service is not a permitted means to excuse any owner from payment and irrespective of the complaint, non-payment renders the owner liable for interest accruable from the date the debt was due.
Handover of Developments
When will the Developers hand over Control of the Development?
After the sale of the last unit, and in accordance with the Management Agreement as contractually set down in Title, the developers will arrange for the transfer of the ownership of the common areas to the Management Company.
Generally, the developers remain in control of the development until the estate is finished and all units sold. As is contractually set down in title, the developers at this point arrange for the transfer of the common areas of the Management Company. The Managing Agent is usually retained by the developer to work on behalf of the residents and it is their job to ensure that the best service is provided to the residents.
If finishes are bad or I have concerns over the completion of the development what can I do?
Completion and Certification of the satisfactory completion of the estate is a matter for the developer and is not within the remit of any Managing Agents role. Managing Agents can assist in compiling finishing issues and lists and pass them on to the developer; however they have no control or responsibilities for the developers attendance or time frame.
Finishing issues within the estate are not within the standard remit of a Managing Agent although professional managing agents, in practice, generally endeavour to assist with these matters at the owners’ committees’ request.
Service Charges
What are Service Charges?
Service Charges are annual charges which owners in private estates are legally obliged to pay to their Management Company to administer the Management Company to maintain the common areas of their development.
How is the Service charge calculated?
The apportionment methods by which the service charges are calculated are set down in each owner’s title deeds to their development. The percentage or portion of the service charge payable by each member cannot be changed or altered.
What is Apportionment?
Apportionment is the method by which the service charges are calculated and is used to determine what percentage of the overall service charge budget each owner pays annually. Generally, the method by which the percentage is calculated is based either on the size (1-bed, 2-bed, Duplex) or size (square footage) of the unit.
What do owners receive in return for their Service Charges?
The Service Charges ensure services such as the following are provided to the development: Security, Waste Disposal, Buildings Insurance, Cleaning, Electricity, Lighting, Gate Maintenance, Repairs, Lift Maintenance, Grounds Maintenance, Building Investment Fund (Sinking Fund) and all or other services appropriately set down in Title and specific to each development.
Am I legally obliged to pay the Service Charge?
Yes. On closing the sale of your property, your solicitor would have overseen you sign a legal agreement which makes you a member of the Management Company of your development and in turn binds you to the lessee’s covenants therein, one such covenant being the payment of service charges.
What happens if I don’t pay my Service Charges?
Non-payment of service charges incurs an interest penalty until such time as they are paid. The service charge pertains to the property and the house/apartment cannot be sold without it being paid. Legal action is taken by the Management Company to recover debts.
In withholding service charges, services to the development can become affected and this in turn affects all owners.
I am a house owner – Why do I have to pay Service Charges?
In privately managed estates, house owners do have to pay a contribution to the budget of the development for services which are applicable to them namely: Public liability insurance, Refuse collection, Grounds maintenance, Building Investment Fund (Sinking Fund) provision and all Management Administration costs including the Agents Fees.
What does the Car Park Service Charge cover?
The car park charge is for the general maintenance and services provided specifically in the car park area. Such services might include access maintenance, lighting, cleaning, and insurance. Solicitors should provide buyers with sufficient detail when purchasing their property. Where further clarification is required, owners should contact their solicitors directly.
Service Charge Budgets
Who agrees the annual budget for my development?
The service charge budget is compiled each financial year by the Board of Directors of your Management Company in conjunction with advice from the Managing Agent who will have carefully assessed the service needs, contractor rates and best value available.
Who do I pay my service charges to?
Your service charge is paid to your Management Company and not to the Managing Agent.
Where are the funds for my service charges kept?
Best practice would indicate that Management Company funds should be held in individual, separate bank accounts in the name of each specific Management Company. All service charges should then be lodged directly to this account. Contractors and suppliers for the development can then be paid from these accounts. The Managing Agent administers each account on behalf of the relevant Management Company.
What is a Building Investment Fund (Sinking Fund)?
A Building Investment Fund (Sinking Fund) is a reserve created to build up sums which can be used to pay for large items of infrequent expenditure such as the refurbishment of a roof and for major items which arise regularly such as redecoration of the common area interiors. The sums required can be significant over a 20 to 30 year life cycle. The fund should be initiated from the very first year and then adjusted as necessary annually and collected to avoid, as the work arises, the costs having to be funded through a special levy or a one off lump sum.
Funds and expenditure headings are specific to the development and will differ accordingly. However in simple terms infrequent but essential refurbishment or replacement headings are
- Lifts (upgrades and/or replacements)
- Mechanical and electrical plant – lighting systems, pumps, fire alarm and safety systems, intercoms, security plant i.e. CCTV cameras
- Gates - motors and parts
- Roofs - major repairs to, or replacement of materials and parts
- Roads and car parks, footpaths/kerbs re-surfacing, repairs or replacement
- Replacement of windows (Management Company is often responsible for individual apartment windows)
- Repairs to building fabric i.e. re-pointing of brickwork
Whilst more regular refurbishment might include:
- Interior common areas - redecoration of walls, ceilings and woodwork (usually includes external side of apartment doors & door frames)
- Re-carpeting and re-tiling of floors
- Exterior repainting of walls surfaces, balconies, railings and woodwork
Why do we need a Building Investment Fund (Sinking Fund)?
Without a fund such as this, the costs to carry out major works in the development would not be planned for and as a result levies would be required at different times throughout the developments lifespan. These funds are like a pension fund for the development, ensuring that funds are available for major works when required.
What causes my service charge to be higher or lower than my neighbours?
There are many factors which can cause variances in the service charges from one building to another, such as:
- The ratio of lifts to the number of units
- The area of common areas to the number of units
- Size and quality of landscape areas
- The size of the apartment, number of bedrooms
- The number of units
- Mechanical and electrical additions such as generators, pumps, vehicular gates, intercom systems
- On site Janitor/Concierge staff
- Sinking fund easements – size of painted and carpeted areas
Board of Directors & Owners Committees
Who can be on the Board of Directors?
All members are eligible to become Directors (more often these are members who have served on the Owners Committee) and their appointment usually takes place at the Annual General Meeting of the Management Company upon handover from the Developer.
How can I join the Board of Directors?
Appointment to the Board usually takes place at the Management Company’s AGM, where members can be elected onto the board. The Memorandum and Articles of Association of the Management Company contain the rules regarding the rotation and election of directors for that company.
Who is the Owners Committee?
Whilst the developer remains in control of the Management Company (pre-handover), the Managing Agent assists owners interested in being involved in the running of the development by inviting them to form a committee. The role of this Committee is to act in a voluntary capacity on behalf of all members and in the best interest of the development as an entity. The Managing Agent liaises through meetings with the committee members to ensure the concerns and requirements of all members are considered and addressed as much as possible in the estate.
How can I join the Owners Committee?
All members of the management company are eligible to join the Owners Committee. Interested members should contact their Managing Agent for details on the next scheduled meeting and details of the committee.
House Rules
What are House Rules?
Apartment and House Leases clearly set out the House Rules which are general rules which the owners in the complex agree to be bound by to ensure harmonious living for all. It is in the interest of all owners to ensure that they or their tenants abide by these rules. These rules usually relate to areas such as noise nuisances, keeping of animals, items on balconies, erection of satellite dishes etc.
What role does the Managing Agent play in enforcing House Rules?
The Managing Agent has limited responsibility in the enforcement of House Rules.
The Agent should however have clear policies and procedures for handling house rule breaches, complaints of nuisance from neighbours and disputes between occupiers and these procedures and limitations should be made known to all the owners. The level of house rule compliance largely depends on the developments location and the quality of occupiers and the community’s own initiatives to resolve these issues.
