How do Owners Management Company's work?
In a multi-unit development, the Owners’ Management Company legally owns the common areas of the development and is responsible for their upkeep. When someone buys a property in a complex with an Owners Management Company they are buying a share of that company.
The Owners’ Management Company is set up for the following reasons:
- To manage and maintain the common areas in a multi-unit development;
- To be the legal owner of the common areas on behalf of the owners of all of the units;
- To be the legal owner of the beneficial or reversionary interest of each unit. This means that the Owners’ Management Company owns a share in each unit.
Since the Multi-Unit Developments Act 2011, all new developments must have an Owners’ Management Company in place before the first unit is sold. In the case of developments completed before the Act, developers are legally obliged to establish an Owners’ Management Company.
Owners’ Management Company's are set up and operate according to the same rules of company law that apply to any other commercial company, even though they are not for profit.
Owners’ Management Company's must obey company law, including:
- trading solvently;
- keeping proper set of accounts;
- holding Annual General Meetings (AGM's)
- filing returns with the Companies Registration Office(CRO)
Mis-managed Owners Management Company's can be struck of the CRO's Register of Companies. This can make it very difficult to sell units in the development until the Owners Management Company is put back on the register. It is extremely important that member ensure that their Owners Management Company is not struck off.
Sometime members can be frustrated at the way in which their Owners Management Company is being run and will withhold payment of their management fee/service charge. This can lead to financial difficulties for the Owners Management Company which in turn can result in a deterioration in estate services and potential problems with the CRO.
The Lease that Owners Management Company Members sign when they purchase their unit obliges each member to pay their management fee/service charge. This is governed by Section 18 of the Multi-Unit Developments Act 2011.
Who Owns the Management Company?
When a property in a Multi-Unit Development is sold the owner becomes a legal member of the Owners Management Company. This happens as part of the sales process of the property and bestows legal rights and obligations on the member. Each members has a right to say how the common parts of the development are managed, decisions on this are presented to members for a vote at the Annual General Meeting. Members can be elected as Directors of the Owners Management Company and can then be involved in the running of the company.
What does the Owners Management Company “own”?
The Owners Management Company owns the freehold reversion of the entire development, this means the Owners Management Company owns the common areas of the development on behalf of the owners of the units. It also means the Owners Management Company owns a share of each individual property in the development.
Your rights as a member of your Owners Management Company
The Companies Act 2014 sets out the legislation for your Owners Management Company.
As a member of the company you are entitled to:
- Adequate notice, generally 21days at a minimum, of the company’s general meetings;
- Information about how the company operates and its finances;
- A vote at the AGM, each unit in the development is entitled to one vote, regardless of the number of owners of that unit (Section 15 of the Multi-Unit Developments Act 2011). This vote distribution can be changed through a court order but only where it is considered essential to protect an economic interest or necessary in the interest of fairness.
Member are entitled to inspect and and get copies of the following documents:
- Minutes of all General Meetings of the company and any resolutions made;
- A Register of Members and company officers (directors & secretaries);
- The company’s Memorandum and Articles of Association, also known as the company’s Constitution. These important documents set out how the company is run, and what rights members have. Every company must have these documents and they must be available at no cost to each member. These documents are also available to the general public via Companies Registration Office (CRO);
- Periodic sets of accounts and financial statements, directors’ and auditors'' reports. These are also available to the public via the CRO.
Obligations of Owners Management Company members
Members are obliged under their lease:
- to pay management fees/service charges
- To pay sinking fund contributions
- To be bound by house rules
Each Owners Management Company must hold an AGM every year and all members must be invited to attend. The company must also file an annual return with the Companies Registration Office that must contain certain information about the company and its financial activities.
When you purchase a unit with an Owners Management Company your solicitor should explain the leasehold contract and its obligations to you before you sign it.
Officers of the Owners Management Company
Every Owners Management Company should have a Secretary and Directors.
The Secretary, at the registered office of the company, is the primary contact point for company correspondence. Any queries in relation to the company registers/company documents should be directed to the Secretary. Should a satisfactory response not be forthcoming the matter should be taken up with the directors in writing to the registered office or at the AGM. Click here to access the CRO's leaflet on "The Company Secretary."
Each member is entitled to vote in the election of the Directors of their management company, each member is also entitled to express an interest in being a Director themselves. If you are not happy with the way in which your management company is being run you can consider becoming directly involved as a director.
It should be borne in mind that Directors of Owners Management Company's are bound by the same rules and responsibilities as directors in any other type of company. Click here to access the CRO'S leaflet on "Company Directors."
Should you require any further information on Owners Management Companies please don't hesitate to get in touch email@example.com