Irish Times Property Clinic 11th day of September 2014

 

Publishing Date; Thursday the 11th day of September 2014.

 

Q.For my sins I am the chairman of an owners’ management company. A number of owners have served on the committee over the years. We have prided ourselves on keeping up the appearance of the property, and have been active in dealing with any maintenance issues, either as they have arisen or on a planned basis. We have always endeavoured to keep our accounts up to date, and have a better-than-modest sinking fund available.

In recent times we commissioned an independent report to assess our planned future expenditure in order to help us decide on the calculation of an adequate management fee. We also had our fire alarm and protection systems evaluated with a view to rectifying any noncompliance that may have arisen since the block was completed. Twelve months ago we succeeded in convincing our fellow owners of the need to employ the services of a professional property-management company, as our agent to manage the day-to-day needs of the property, a huge improvement for us.

Our difficulty on the committee is that some of us would like to stand down now after our voluntary service, but there is no enthusiasm to replace us. Some owners served previously, some are too elderly to be involved, and most of the units are now owned as investment properties and are let out; their owners never really take any interest in the place.

Willing volunteers have now becomeunwilling. No one signed on for life, but it is starting to feel that way. A mass resignation from the board would cause a crisis as there is no one to replace us. I have in the past, only half in jest, suggested that the only way to get off the board is to sell up and move out, or die in office. What should I do?

Under the deeds we still need to have a properly constituted company and board in place to look after the interests of owners, but this arrangement dependson an adequate supply of engaged and interested individuals to make it work or it will die on its feet.

Is there some other scheme or arrangement that might be put in place to take over from an owners’ management company that few have any interest in keeping going? Would this be expensive if adopted? Would it be necessary to close down our presentcompany under any new scheme?

Any advice on how to extricate ourselves from this problem would be much appreciated, and I suspect would be of interest to others in a similar situation.

 

A. It is acceptable for a reputable agent to undertake the day-to-day management of a development without regular involvement of a board. The property managing agent, however, will require instructions from a director as and when matters arise that necessitates direction from the owners’ management company (OMC). Many OMCs in the State would prefer to have the county councils take over the running of the estate for reasons including cost and personal time, but this is not possible.

You might consider standing as a director during a phasing-in basis of new blood to the board to ensure a smooth transition. It would be prudent to prepare for the coming AGM with ample information to be distributed to the members and allow for suitable time to discuss the merits of having the members rotate through the office of director.

If all the members were unanimous in the position that no one wanted to become a director and had no interest in the running of the estate, you might consider approaching an asset management fund or REIT with the aim of selling the entire development and properties included with a long-term lease option for those who wish to remain onsite.

If the figures added up it could work; you say many of the property owners are absent landlords as it is. I would caution that this option would forgo control of the development for those who remained onsite renting the properties. The culture of the development would shift from a home to a business operation.

It is possible to arrange for an individual who is not a member of the company to sit as a director provided the OMCs’ articles of association permit it. You can expect to pay a considerable sum of money to such individuals for this service given the complexities and exposure they would be taking on. I draw your attention to theCompany Law Handbook on Residential Property Owners’ Management Companiesas published by the ODCE. Section 21 of this document provides guidance on the issue.

 

Paul Huberman is a chartered surveyor and sits on the Property & Facilities Management professional group committee of the SCSI. www.scsi.ie 

 

 

Author: Paul Huberman of H&H Property Management Consultants Ltd

Publish Date: 11/11/2014