Irish Times Property Clinic the 6th of February 2014
Thursday the 6th day of February 2014.
Q. I have had a 30 per cent increase in my service charge, mainly, it appears, to cover non-payment by other home owners. I was wondering is it legal to expect paying members to cover non-paying members? I believe it is not my responsibility to cover these costs and it is up to the management company, if needs be, to take legal action against non-payment.
A. An owners management company (OMC) and its members are bound to each other by a lease agreement which stipulates the terms of the relationship. Part of the members' contractual obligations is to pay a service charge to the OMC for services. Failure to do so is a breach of contract.
Section 18 (2) of the Multi-Unit Developments Act 2011 prescribes that a budget shall not be levied unless it has been considered by the voting members of the OMC. Should the budget include a provision for bad debtors and is agreed by the members at a general meeting then the issue is binding and will stand.
It is important for the OMC to facilitate members with payment plans if they are experiencing solvency issues which is subject to the lease agreement and members' approval. This is a rational practice drawn up in recognition of the continuing problems home owners and investors face.
There is a general consensus among all concerned in multi-unit development living that non-payment of service charges is a very real threat which is inadequately provisioned for under the current legal system. It is expensive to recover debts through the legal process and can take some time. Having said this, the OMC must pursue bad debtors legally when all other avenues fail to render payment.
The good management of a multi-unit development includes excellent communication with members, procuring service providers that give value for money and dealing with issues promptly. The reciprocation to this is for members to attend general meetings, participate and take ownership in the management of the estate and pay service charges. This collaboration is the cornerstone for a successful multi-unit development.
Paul Huberman is a member of the property and facilities management professional group of the Society of Chartered Surveyors Ireland, www.scsi.ie
Author: Paul Huberman of H&H Property Management Consultants Ltd
Publish Date: 06/02/2014