Irish Times Property Clinic 9th day of November 2023.
Publishing Date; Thursday the 9th day of November 2023.
Q I live in a mixed housing and apartment development which commenced building in 2005 and completed in 2015. A management company managed the whole of the estate until February when the county council officially took in charge the areas surrounding the houses, clearly defined on a published map.
The normal processes of receiving a householders’ majority vote in favour of taking in charge, advertising in local papers and a vote at county council level took place and all parties were notified.
The management company have refused to engage with the newly formed residents’ association to discuss a freehold option for the house owners. They are insisting that the houses will always remain as part of the management company even when all fees owed have been paid. Is this due to the leasehold status?
A. This is a complex matter and without all the relevant information it’s difficult to provide a comprehensive answer. But I can offer some guidance. It is likely that each house owner is a member of the owners’ management company (OMC) and as such is bound by the covenants of the governing lease agreement, memorandum and articles of the company. Termination of this framework requires specific actions.
It is unclear why the OMC is holding this position without hearing from them but they will need to participate, as will all interested parties, to make this work. Reasonable and grounded dialogue, along with formal recorded correspondence through the appropriate channels, is of paramount importance in situations like this. Only calm minds will avoid the litigation that could occur in situations like this.
A lease governing the OMC would, among other things, include a reference to all the units within the development, whether it be the map showing the lands in the ownership of the OMC or the manner in which the budget is calculated.
In the event that each house has an apportionment of the annual budget, all other property owners will need to be consulted on the amended apportionment and agree to this to change in the lease.
An application to the relevant Circuit Court under section 24 of the Multi-Unit Developments Act 2011 would progress matters:
(5) Notwithstanding the generality of subsection (3), an order under that subsection may include an order:
(a) that the legal documentation relating to the owners’ management company be amended;
(f) determining the extent to which a part of the common areas of a multi-unit development forms part of the relevant parts of the common areas of the development;
(g) amending the covenants contained in an agreement (including a lease) between the developer, owners’ management company and the unit owners[.]
A deed of rectification will be required to amend the existing lease so that it correctly encapsulates the company and allows it to function adequately following the removal of the element of houses.
A chartered property and facility management surveyor would be able to give sound advice to members on how to navigate this process along with the other relevant professionals needed to progress the extrication.
Paul Huberman FSCSI FRICS is a chartered property and facilities manager, and a Fellow of the Society of Chartered Surveyors Ireland and the Royal Institute of Chartered Surveyors.
Author: Paul Huberman of H&H Property Management Consultants Ltd
Publish Date: 09/11/2023