Irish Times Property Clinic 22nd day of May 2014
Publishing Date; Thursday the 22nd day of May 2014.
Q I own an apartment in a large block. I pay an annual fee and have never missed a payment. Many of the other owners in this development are in the same position. However, it has come to our attention that some owners have not been paying management fees and the management company has run up a considerable debt through not pursuing payments from these people. There are a number of repairs/refurbishments which need to be done to the building and some are quite urgent. We want to get rid of our current management company and hire a new one. How do we start this process? Is there a way to recoup money from non-paying owners?
A. The owners' management company (OMC) is a collective of members/property owners in the development. The managing agent is a commercial operation that facilitates the administration of the OMC and is a licensed property service provider regulated by the Property Services Regulatory Authority (PSRA).
The managing agent receives instructions from the board of directors of the OMC. The OMC is responsible for having a structure in place with its members so they are informed of the procedures for non-payment of service charges. The binding lease agreement sets out the relationship between the OMC and its members. If the common areas are transferred and the counterpart leases clearly identify the service charge due, the management agent will usually seek tenders on the open market for debt collection services on behalf of the OMC if they are not paid.
It is important to clarify that the recovery of a service charge debt is to be treated as a contract debt in a relevant court as prescribed by Section 22 of the Multi-Unit Developments Act 2011. It is therefore a matter for legally qualified practitioners to intervene in the recovery of service charge debts. A management agent would traditionally send out a reminder and perhaps a follow-up call only on behalf of the OMC.
The best way to source a reputable management agent is to ask for recommendations from existing property owners. Ensure the agent is licensed by referring to the PSRA website and reviewing its register of property service providers. Be cautious of agents seeking to heavily reduce your service charges. If a service charge is discounted beyond what is necessary, the consequences will be that multiples of what was originally required will need to be paid later. When the underfunded issues arise down the road, the agent will have gotten their fee and will be long gone.
Paul Huberman is a member of the property and facilities management professional group of the Society of Chartered Surveyors Ireland
Author: Paul Huberman of H&H Property Management Consultants Ltd
Publish Date: 22/05/2014