Question
I have a duplex apartment in a development of 12 units. There are no gardens or lifts. My management fees are now €1,800 a year. This is due to the fact that only three out of 12 units pay their fees and the management company has raised the cost per unit for the three units paying fees. I feel this is grossly unfair. Is there anything I can do about this?
Answer
The Multi-Unit Developments Act 2011 requires each owners’ management company to call a meeting of owners to consider an estimate of expenditure for the coming period before any service charge is levied on its member owners. Each owner should receive 14 or 21 days’ notice of the meeting and be made aware that one of the purposes of the meeting is to consider the service charge to be levied. This gives each owner the opportunity to attend the meeting and discuss the expected expenditure for the coming year and the level of service charge.
You describe a situation where 75 per cent of the owners are not paying service charges which is driving the cost to the paying owners upward. This position is unsustainable for the management company and it is unfair to the paying owners. Paying the increase in service charges presumably keeps essential services in place, in particular structural insurance, and this is the correct and prudent course of action in the short-term by the paying owners. Looking beyond this, you must explore your options and what actions have been taken to recover service charges from those owners who are not paying.
In the first instance, one should explore if there is any particular reason that these units are not paying other than non-participation. Attempts should be made to engage with them to see why they are not paying and explain the inequity and unreasonableness of their actions. In addition to this, full statements of service-charge arrears should be prepared, lease documentation and meeting notices and minutes should be gathered to assess that the charges have been properly levied, ascertaining the correct balance due and ensuring a strong case for recovery through the relevant court. Should the engagement with the non-participating owners come to nothing, the owners’ management company should pass the matter to their solicitor for immediate action.
As owners’ management companies are limited companies they are required to have a minimum of two directors. Presumably the other two paying owners are directors of the management company and they had to take the tough decision to recommend that service charges be increased to take account of the 75 per cent of owners defaulting within your estate.
In my opinion, the correct decision has been made in the short term to protect the property assets of the owners and the long-term solution lies in more owners becoming active in the owners’ management company in order to change the attitude of the remaining owners. Once this has been achieved, future service charges can be determined by the building’s and occupiers’ requirements rather than the unreasonable and inequitable withholding of service charges by your co-owners.
Paul Mooney is a member of the property and facilities management professional group of the Society of Chartered Surveyors Ireland