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Irish Times Property Clinic 26th day of July 2014.


Publishing Date; Thursday the 26th day of July 2014.


Q. Is it legal to sell property when the annual management fee is unknown? How can I buy this property when I don’t know what the annual management fee is?


A. The service charge may be set without holding a meeting of the members as there are none at this time with the exception of the board of the OMC who would most likely be employees of the development company. This section in the legislation is designed to accommodate new developments where no units are sold and therefore no members exist to agree a service charge at a general meeting.

The OMC needs to simply proceed to set a service charge. It would be prudent to ensure that the service charge is as independent of the development company’s office as possible and adequately informed. Historically it was not uncommon for development companies to under quote the service charges so as to entice buyers. Many properties were sold with the fiction that it was a cheap development to live in.

The development company was achieving the price they were seeking and the OMC was left to manage with insufficient finances to cope with the needs of the development’s assets. It is was also common to under-price the initial service charge as the assumption was that the warranties and guarantees on all things new suggested that very little money was needed to fund maintenance of a development. If the service charge for a development is initially inadequately priced, you should expect the service charge to rise year on year so as to catch up.

I think it would be best to request an estimate for a three-year period or more. You will note that the members of the OMC will agree the service charge at a general meeting in year two. It would also be best to request a copy of a building investment fund programme for the development that indicates the finances needed for the Sinking Fund for a period of 20 years or more.


Paul Huberman sits on 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: 26/07/2014

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