Law reform urged in management of apartment blocks

MAJOR changes for the ownership and maintenance of apartment complexes and other multi-unit developments have been recommended in a report by the Law Reform Commission due to be published later today.

Several legislative measures are being proposed for the operation of property management companies set up to maintain common areas in flats and apartments.

The commission’s Report on Multi-Unit Developments — which will formally be launched by Environment Minister John Gormley this evening — was commissioned to make recommendations on legislative and regulatory changes necessary to keep pace with the relatively new popularity of apartments and flats in Ireland.

It comes as the National Consumer Agency (NCA) yesterday launched guidelines to inform people of the responsibilities and entitlements associated with buying an apartment in a multi-unit development.

NCA chief executive Ann Fitzgerald said they were anxious to provide consumers with as much information as possible about the scope of the commitment they were taking on when buying a flat or apartment.

Ms Fitzgerald said it had become apparent that many developments were not operating smoothly with some management companies failing to comply with company law.

“Some multi-unit developments are falling into disrepair or accruing high levels of debt due to misadministration for the provision of shared services and facilities. In many instances, this is due to a simple lack of understanding on the part of all involved of their various duties and responsibilities as owners/residents,” she said.

The latest census figures indicate that around 300,000 people in the Republic live in flats or apartments.

The Law Reform Commission said there had been a growing awareness in recent years that significant difficulties were being encountered in the management and regulation of multi-unit developments with developers, property management agents, owners and tenants all uncertain about their responsibilities in the maintenance of such complexes.

The commission also noted that disputes regularly erupted over the size of annual service charges, sinking funds (otherwise known as building investment funds) and whether local authorities should take over charge of maintaining such estates.

The report contains a total of 67 recommendations but it also acknowledges some existing or planned legislative mechanisms will require additional reforms.

The commission said it did not believe it was necessary to create a new regulatory system for multi-unit development due to the existence of the recently-established Property Services Regulatory Authority.

However, it stressed that there was a need for all apartment owners to engage actively in the collective management of an estate or apartment complex.

Among the main recommendations are:

* Service charges and sinking funds should be mandatory for all multi-unit developments of 5 or more units.

* Developers must register an owners’ management company before any units are sold.

* 5% of proceeds from the sale of units should be held in trust by the management company until completion of building is certified.

* Property management agents be banned from having administrative control of management companies.

The Law Reform Commission said its recommendations were part of a set of strategies necessary to put in place a proper system for the regulation of multi-unit developments.

* More information on the responsibilities of apartment owners can be obtained on the NCA website at www.consumerconnect.ie


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