Apartment Owner Rights & Obligations Overview
Apartment Owners, developer and Owners’ Management Companies (OMC) have clearly set rights and obligations which have been established by the Multi-Unit Developments (MUD) Act in 2011.
Apartment ownership and living has been made better and easier as a result of this legislation. Among the key improvements are fair and equal voting rights, access to how service charges are calculated and information on where OMC money is being spent. Owners can now influence how their developments are run even in terms of the house rules. Developers can be pursued in the courts to hand over control and transfer the common areas if they have not already done so.
The MUD Act also provides protection and dispute resolution for future apartment purchasers. In existing developments it transfers the control and power from the developer to the OMC and to the apartment owners and provides new remedial measures to resolve disputes which may be ongoing.
This page will provide you with the key information you need to understand OMCs, owner voting rights, service charges, house rules and more.
The Essential Elements of Apartment Ownership: OMCs, Voting Rights, Service Charges & More
What is the Ownersʼ Management Company (OMC) and what does it do?
The OMC is an integral part of multi-unit living. It is a legal structure; a company established by the developer, to own and be responsible for the maintenance and management of the development once itʼs completed.
All the non-privately owned areas are known as common areas, e.g. the structures, building façades, roofs, hallways, stairwells, car parks together with the various machinery and plant within the buildings including the pedestrian and vehicular gates, lifts, fire safety systems, intercoms etc. are maintained and managed by the OMC. The common areas vary in every development but the lease should outline them.
The OMC also administers and delivers all the estate services such as waste management, lighting, landscaping, cleaning and fire safety programmes. It also looks after procuring adequate insurance, together with the finance, accounting, corporate and statutory compliance and day to day communications. The OMC usually engages a managing agent to undertake many of these activities on its behalf.
Who is a member of the OMC?
Each unit owner upon closing their sale becomes a member of the OMC and is assigned one vote of equal value to one unit. This is a legal right and the vote may be used when the OMC is making important decisions relating to the running of the development.
Who is a director of the OMC?
Any member (owner) is entitled to become a Director of their OMC.
The Board of Directors is required to have a more active involvement in the decision making and strategic management of the development. The Board of Directors has a responsibility to the members and must now, under the MUD Act hold a members meeting once per year to discuss the management activities through the publication of an annual report. Twenty one days advance notice of the meeting must be advised and the annual report must be circulated at least ten days prior to the meeting.
What is a Managing Agent?
The Board of Directors will usually engage a Managing Agent to carry out the corporate and statutory administration, issue and collect service charges, oversees estate services, maintenance and repairs
through the appointment of contractors. The Managing Agent should be professional and licensed with the Property Services Regulatory Authority. Click here to find an expert.
What are my voting rights as an owner?
One Equal Vote Per Unit
Equal voting rights are now enshrined within the Act. The Act requires that one vote of equal value will be given to each unit. This is a change from situations where ʻgolden votesʼ or ʻweighted subscriber votesʼ allowed particular parties to hold unfair influence over the running of the development. Under the MUD Act owners in multi-unit developments will have fair and equal voting rights.
Voting & Service Charges
In addition to the financial statements the Directors, as mandated by the Act, must also have the annual service charge budget approved by the members at a general meeting. The service charge budget details provided to the owners must include all details and categories of expenditure. The budget can be amended by at least 60% of the members attending and in order to be disapproved must be voted against by at least 75% of the members attending. If disapproved, the existing charges (prior year) shall remain in place until the adoption of a new service charge.
The MUD Act mandates that the service charges levied must not be used to discharge expenses on matters which were or are the responsibility of the developer, unless such expenditure is approved in writing by 75% of the members
What expenses should be part of a service charge?
The Multi-Unit Developments (MUD) Act stipulates that every member must pay service charges. Furthermore under the Act, a developer is deemed to be an owner of a unit, the sale of which has not yet been completed, (i.e. unsold) from when the first sale of a unit is closed. The effect of this is to make the developer responsible for the service charges due in respect of such unsold units. This relieves owners from having to make up a shortfall in funding resulting from unsold units. The Act further clarifies that the service charge may be recoverable as a simple contract debt before the ordinary courts thus removing obstacles and long delay to recovery.
The obligatory expenditure breakdown listed below must be presented to members for consideration at an Annual Meeting.
Service Charge Budget (obligatory expenditure breakdown) should include:
- Insurance
- General maintenance
- Repairs
- Waste management
- Cleaning
- Gardening & landscaping
- Concierge/security services
- Legal services & accounts preparation
- Other expenditure anticipated in connection with maintenance/repair and management
What is a sinking fund & how much is it?
What is a sinking fund and what is it for?
All multi-unit developments must establish a sinking fund for specific purposes including refurbishment, improvement or maintenance of a non-recurring nature. In simple terms this is essentially a savings fund.
As with service charges, all owners, and developers in the case of unsold units, are obliged to contribute to the sinking fund.
Its function is to ensure adequate funds are available and an extra levy is not required, when expensive refurbishment works arise in a given year. It does this by predicting the future needs of the building, calculating the total monies likely to be required and charging out a small contribution annually. This arrangement avoids dilapidation by ensuring the works are funded and can be done on a timely basis.
How much is the sinking fund?
The MUD Act states that the sum of the sinking fund is to be €200 per annum or such sum agreed at a general meeting of the owners thus allowing for the varying needs of developments of differing sizes and specifications.
The Sinking Fund monies must be held in a separate bank account to the service charge fund to ensure that the sinking fund it is not spent inappropriately. For existing developments which do not currently have a sinking fund, the Act mandates that one must be established by September 2012.
