Apartments & Service Charges

Under the Act, the OMC now has the right to alter, amend or add to the House Rules of their development so long as any such changes are consistent, fair, and reasonable and have been circulated to and agreed at a general meeting of the owners.   Landlords are obliged to ensure that their tenants adhere to the house rules. Although the Act does not offer any sanctions for a breach of the house rules, it does allow for the recovery of the cost of remedying a breach of the rules.

The MUD Act provides new remedial mechanisms for dealing with disputes and allows the OMC, as a legal entity, to pursue recourse in the courts. Prior to this, the OMC seldom had the right to represent owners as a collective body, rather individuals had to take legal action in a personal capacity on behalf of the OMC and as such were exposed to all the associated risk and liability. The Act designates the Circuit Court as having exclusive jurisdiction and will encourage mediation as a means of dispute resolution in the first instance. Mediation is an important feature as it should prove beneficial to the consumer in terms of time and costs. Applications to the court may include seeking an order to enforce any right or obligation by the Act, to alter voting, to direct a rearrangement or apportioning of funds, to determine common area boundaries or physical characteristics or alterations to the structure, to amend covenants contained in the lease, to enable an OMC to deal with a debt or an issue in relation to the future management, and or to direct any owner or owners to cooperate with the decisions made by a majority of unit owners in a development. Under the Actʼs dispute resolution methods, where an OMC has been struck off, the limit for making an application for reinstatement has now been extended from one year to six years.

When did the MUD Act come into force and to whom is it applicable? The Act became law on 1st April 2011 and it applies to all multi-unit developments, i.e. developments with not less than five apartments with shared amenities, facilities and services. This includes private housing estates that have an OMC structure and mixed-use developments which are residential but have also some commercial elements such as shops or offices.   Why was the MUD Act created? The MUD Act was developed to address the absence of legislation and to accommodate the very unique challenges, rights and responsibilities that come with being an owner of a home in an apartment complex or private housing estate. It puts structured processes in place for important matters such as the transfer of the common areas from the developer to the OMC and for transparent and equitable apportionment of service charges, service costs and sinking funds. It also sets down new arrangements for the future, whilst providing remedial measures to address existing developments which have problems and it generally aims to facilitate fair and effective management for the long term.  

Pursuant to Schedule 3, Section 31(2) – The following list of estate documentation should be handed over by the developer to the OMC; • Confirmation that the development has been completed in compliance with statutory requirements • Certification confirming that any financial contributions for planning have been paid • Safety file • ʻAs builtʼ structural drawings • ʻAs builtʼ service drawings • Operational & Maintenance Manuals for plant & equipment • Warranties & guarantees with the benefit transferred to the OMC • Maintenance Contracts relating to the development • Test records for drainage, water pipe work and heating pipe work • Schedule of plant, equipment and fire protection systems specifying their expected useful life • Title documentation for common areas and reversion • Stamped & registered counterpart leases • Documentation and records relating to the OMC

The MUD Act requires developers to transfer ownership of the common areas to the Ownersʼ Management Company (OMC) within six months of the enactment of the Act, i.e. by midnight on 30th September 2011 and in future new development before any sales occur. Accordingly the common area ownership in all existing partially and substantially sold developments must now have been transferred. Where a development is unfinished this transfer does not relieve the developer of his obligations to complete. In terms of these arrangements, the developer retains the right to pass and re-pass over conveyed areas to enable the developmentʼs completion and must arrange insurance in respect of all risks regarding their use. The developer must indemnify the OMC against claims for any acts or omissions during the course of completing the development. The OMC must not hinder access to the developer for the purpose of completing the work or entering any adjoining land. The OMC will be obliged to join in the conveyances and transfers of units to future purchasers. In terms of these arrangements, the OMC is to have separate legal representation which must have all the necessary powers to perform any functions conferred on it by the Act and all rights and amenities necessary for reasonable use and occupancy. Apartment owners in existing partially and substantially completed multi-unit developments should arrange to obtain professional advice to ensure the interests of the OMC are adequately addressed in accordance with the legislation.