They’ve been doing it in Europe for years.
But apartment living is a relatively recent phenomenon in Ireland.
The Multi Unit Developments Act, 2011 came into effect on 1st April, 2011 and applies to multi unit developments with shared facilities and services.
A multi unit development under the act has not less than 5 apartments and the Act applies to housing estates too which has an Ownership Management Company (OMC) taking responsibility for common areas.
The OMC (Owners’ Management Company)
The OMC is a company set up to own and be responsible for the common areas of the development once it is completed. It also looks after the estates services such as lighting, cutting green areas, landscaping, cleaning, waste management, and insurance. It would generally appoint a managing agent to carry out this work on a daily basis but would have statutory obligations to file returns with the companies registration office.
Each property owner is a member of the OMC and has one vote. Any member is eligieble to become a director of the OMC and a members’ meeting must be held every year to discuss the accounts, service charge for the coming year, and other matters which arise such as a sinking fund for repairs.
The managing agent is obliged to register and be licensed with the Property Services Regulatory Authority.
The Multi Unit Developments Act, 2011
The Act deals with 4 broad areas:
- The transfer of ownership of the common areas by the developer to the OMC by 30th September, 2011. The OMC must allow the developer access to finish the development, where applicable, and the developer must indemnify the OMC against any claims during completion of the development.
The OMC should have independent legal advice to ensure compliance with its statutory duties.
- The obligations placed on the developer for the completion of the development stage of the estate and the extinguishment of the developer’s beneficial interest. The developer makes a statutory declaration stating that his beneficial and legal interest has merged and transferred to the OMC.
The developer would also hand over documents such as technical documents, service test records, title deeds, specifications etc.
- The MUD Act, 2011 provides new mechanisms for the resolution of disputes and allows the OMC to represent the owners as a collective body in the Circuit Court. Prior to this property owners had to take action on an individual basis. Mediation is strongly encouraged as a dispute resolution mechanism.
If an OMC has been struck off the Companies Register an application for reinstatement can be brought within 6 years. It used to be only 1 year.
- The MUD Act, 2011 provides new regulations for service charges, sinking funds, governance and reporting and imposes greater, added responsibilities on the Board of Directors of the OMC. These responsibilities would include a greater obligation to consult with and report to the property owners.
The Act also include obligations in respect of repairs and maintenance and maintaining a sinking fund for the upkeep of the development eg the roofs of apartment blocks.
The MUD Act, 2011 provides that every property owner must pay service charges. The developer is responsible for service charges of unsold units.
Service charges can be pursued through the Courts as a straightforward debt collection task.
All multi unit developments must maintain a sinking fund for refurbishment, maintenance of a non-recurring nature, improvement.
Sinking fund monies must be kept separate from the service charge monies in a separate account to ensure that the money is only spent in appropriate ways, and not for ongoing maintenance.
Each property owner has one vote.
The OMC can draw up house rules for the development, provided they are fair and reasonable, and agreed by the owners.
Summary for buyers of apartments
The benefits of the MUD Act, 2011 for purchasers of apartments, therefore, include:
- Improved protection and dispute resolution
- Transfers control of the development from the developer to the OMC
- Equal voting rights
- Compulsory transfer of the common areas from the developer
- Reporting about service charges and sinking funds and how they are calculated
- A real say in the running of the development by the property owners.