Should the financial statements presented by our Owners Management Company include a figure for legal services?

Should the financial statements presented by our Owners Management Company include a figure for legal services?

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Question

In the financial statements presented to the owners, before our AGM, by the owners’ management company (OMC) there is no figure for legal services. Is this normal?

Our OMC is supposed to be implementing the MUD Act, and so on, on our behalf, which presumably requires legal advice.

Answer

The Multi Unit Developments Act 2011 can be divided into three main sections:

  1. To ensure the transfer of the reversionary interest or ownership of the common areas of a multi-unit development to the owners’ management company.
  2. Regulation for the operation of owners’ management companies to include service charge budget approval, sinking funds, house rules, voting rights at general meetings and other items.
  3. Dispute resolution processes between owners’ management companies and their members.

For many owners’ management companies the implementation of the Multi Unit Developments Act 2011 will mean that they will have to present service charge budgets to apartment owners before charging them out, agree a sinking fund scheme, approve house rules and other operational matters which may not require legal advice once the directors understand the requirements of the act.

Many property service providers with the relevant license should be able to advise in relation to such compliance issues and the Society of Chartered Surveyors Ireland has produced a simple guide for apartment owners, about the Multi Unit Development act, which is available on scsi.ie/mudguide1.

In relation to the conveyance of the freehold of the common areas and dispute resolution, legal advice would be required and would attract the relevant cost and, if anticipated, should be budgeted for in the service charge budget.

Many owners’ management companies can operate normally without the need for legal advice and fees, however, as a legal entity, limited company and property owner with responsibilities to its members and lessees, it should retain a solicitor for matters arising in order to minimise risk to the owners’ management company and its officers.

Paul Mooney is a chartered surveyor and member of the Property & Facilities Management Professional Group of the SCSI.

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