Management company query

[Jacki]

I bought a property in a small estate and the owners of the land initially were the managment company. Two owners took over the responsibility of managing the estate(they not knowing the legal implications of being directors-submitting accounts and paying taxes). Now a few years on one of the directors wants to pull out of the job but cannot unless another owner takes her position.(very unlikely as at one of the meetings she made it out to be too much work).
The two directors want to employ a management company to look after the estate so they can wash their hands of the job they signed up to. Can this be done without a majority vote of the owners? The last few agm meetings their has been a very bad turnout, only 3-4 owners turned up as well as the two directors to the AGM so any decisions made would need the majority of owners to agree. There are approximately 70 houses in the estate.
Can we object to the introduction of the management company? A proposed budget for next year includes 10k for the management company as well as gardening costs,gutter cleaniing, insurance etc. It looks like we will be paying for a managment service yet the owners will still pay seperately for gardening and cleaning. Our service charge already covers the cost of the maintanence we are already receiving. Advice would be apreciated.

[portishead]

What sort of contract are the present managers on if any at all? Even with a contract in place there is usually a way for a management company to 'resign'

You mention the proposed management fee of €10k for manageing an estate of 70 properties. This does not seem unusual. I assume the current directors have been drawing a salary for their time?

Your options are to either employ a management company or arrange self management once again

You need to be aware that there may be other legal mechanisms in place to ensure that someone remains liable for freehold management

You may need to take legal advice on this

[Jacki]

The two owners signed the forms to be directors and take over the management of the estate but did not know what they were getting themselves into. Initially there was a management company set up and the builders were on the board. The builders solicitors were collecting the management fees but were not very good at maintaining the estate or collecting money.
The two owners took it apon themselves to take over the management of the estate but they do not take a wage for what they do. All the owners have the right to vote on any suggestions the directors put forward. There is very little they have to do apart from collecting the fees and few calls to service providers. They had engaged a new solicitor to collect fees.
Problem has been that some owners have not paid their yearly fee and AGM is poorly attended. I dont think they can enlist a management company without a majority vote of all the owners of the properties. Would this be correct.

[Jacki]

Forgot to mention that some of the owners have now sold their properties on and the management fees were not paid for the years they owned the properties. The management company have had difficulty trying to find the previous owners.
I was at one AGM and one owner has not paid for 3 properties over 8 years. he has attended the AGM but has refused to pay because he says that he will not pay for a service he is not getting. The agm have been a sham so many owners do not even bother to attend.

[alancahill]

"some of the owners have now sold their properties on and the management fees were not paid for the years they owned the properties"

Some pretty fundamental flaws in the structure there - it should be impossible for any sale to go beyond the sale agreed stage while there are outstanding debts on the property (specifically management fees). Whoever's running things there is utterly incompetent. All very well until it gets to the stage where his/her incompetency is costing others - which, in this case, it is.

If I had a property there I wouldn't pay the management fee either.

[Jacki]

I went to one AGM and there was a list of defaulters on the list and I was on it!!A few of us owners were accused of not paying the management charges.(4 landlords in total) All of us had paid but our names were put out there for all to see. WE had to prove that the amount was paid because the previous solicitors records were a shambles. Their records are all over the place so as you can imagine I dont want to take on the responsiblity of being a director. Yet the ones that have not or did not pay have got off lightly. What do you do in this situation. Bide your time and sell when the market picks up!!

[portishead]

I dont think they can enlist a management company without a majority vote of all the owners of the properties. Would this be correct.

Would make sense if all owners have to vote on an issue like this but once again depends what their contract (if any) states. Were the current directors elected by majority vote?

There is very little they have to do apart from collecting the fees and few calls to service providers

There is a bit more to it than this. when done properly it is demanding; this is why management companies charge the fees they do.

For the record one of the biggest problems that a management company has is collecting fees

The fact that the existing directors do not draw a salary would concern me. Where is the incentive to make any effort if there is no reward?

Alan raises a good point with outstanding fees but this raises another question; why have all sales gone through without solicitors picking up on this? I could understand a mistake being made on one sale but not all. Bad accounting? there are other possibilities.

It is obvious your development is in urgent need of proper management. I would suggest you do the following

1) Ask to see the accts the current directors hold. Get full picture of the financial picture. You have a right to see these
2) Consult a solicitor re your options. You need to understand what your leases allow in these circumstances.
3) Ultimately you need to get some proper management in place and a solicitor can advise on how to do this and how to sanction leaseholders who are in arrears.

As on previous post you can either bite the bullet and pay someone to take on management or put some form of self management in place that works.

[portishead]

Just a slight amendment to the above - I had forgotten that you are a development of houses so will not have a lease.

In the absence of a lease I am not sure where responsibilities and liabilities to common areas / estate management will be detailed

Possibly a freeholder covenant on the property deeds but may be a lot more loose than this. How do you as owners know what to pay? do you just pay on issue of invoice?

[Jacki]

At the beginning of the year a letter arrives stating the cost for the year. What has happened over the years when the builders were on the board a fee of 300 euros was sent.
Then a when the two owners became the new directors and the builders and their solicitors washed their hands of it there was an AGM and of the 86 houses 20 owners agreed to an increase of 150 to 450euros per year. Since that time we have had a number of AGMs and has there has never been a majority of owners and proxy forms are never returned. This is because a large number of the houses are rented out and with the history of bad management I think some owners are not bothered.
At each AGM the fees are mentioned and a decision is made on the cost of fees for the year..As there has not been enough members at the meeting the fees have not gone up.
On the freehold documents common areas and grounds are the responsiblity of management company/owners of the houses. As part of our fees we pay public liability insurance incase anyone has an accident on the common ground.
Now a business has moved into the area we have to pay a higher price for insurance. I dont understand why the money we pay goes towards the extra premium instead of invoicing the new business insurance costs. This way our share could go towards the upkeep of the estate instead of paying insurance.
At the last meeting the two directors got advise from a solicitor..he said if they walk away now they are personally liable to produce accounts unless they get someone else to take their place. IF they stand down then they have to be replaced because on the land documents it says that we as owners need to have a management company in place. (Dont know if this is right)