Does everyone really have the power of veto in our apartment block?

Does everyone really have the power of veto in our apartment block?

  • Property Clinic
  • Apartments
  • Owners' Management Companies

Question

We are a small seven-apartment complex. We have been informed by the builders solicitor that each and every householder has a power of veto over any decision concerning the common areas, for example if we wanted the outside windows painted, one member could object and the work could not proceed. The builder has transferred the property over to the management company. This seems a little strange to me. Perhaps you could advise me of the legality of this stupid rule. Six out of the seven residents want to change it but the seventh is using his veto to stop any change.

Answer

The Owners Management Company (OMC) estate documentation; Articles of Association, Head Lease etc is compiled at the discretion and direction of the builder/developer and his or her legal team at the outset of construction. The owners generally have limited scope to alter, correct or create new rights or arrangements when control of the OMC is passed to them. As these documents are legal contracts, the first thing you should do is have your solicitor review them to verify the existence and implications of the “veto clause”. The OMC is the vehicle by which owners have control over the common areas and through which they manage the estate collectively. The existence of any one owner’s power to veto the reasonable decisions of the majority means that in the case of your OMC it may not always operate in the best interests of good estate management. If the option to veto exists but is contained in the Articles of Association of the OMC rather than in the lease documentation, this can be amended at a general meeting of the owners by a special resolution. Such an amendment requires approval by 75 per cent of owners present or by proxy. Alternatively, if the option to veto exists within the Head Lease you can, under the Multi-Unit Developments (MUD) Act 2011, make an application to the Circuit Court seeking an order for an amendment to the Lease. The MUD Act essentially provides a new framework for dealing with the resolution of disputes such as might occur in your case if one owner exercised the power to veto the decision of the majority to, for example, carry out essential maintenance. The Act also strongly advocates the use of mediation in the first instance and the Court may direct the parties to engage in mediation as an alternative dispute-resolution procedure. This remedy may be useful to you, particularly in terms of time and cost.

Siobhan O’Dwyer is a Chartered Surveyor and chair of the Property & Facilities Management Professional Group of the Society of Chartered Surveyors Ireland.

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