Wisdom of purchasing apartment where management company insolvent

Kerry Gooner

Registered User
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Wondering whether to pursue an opportunity of acquiring an apartment at a reasonable price in a decent location, however it transpires that the management company have no sinking fund and have net assets of -10K.
Concerned that should a lift need repair or worse, how long would it take to be completed.
Have been told by resident that the management company's accounts have been in defecit for several years now.
 
That would worry me.

I wonder how the deficit arose?

Normally if there are late payments of management fees these are still classed as debtors, so would not reduce net assets.

Do you have access to the full accounts?
 
A management company that is insolvent is probably not properly taking care of day to day activities properly and has not even considered periodic maintenance. The value of your asset is likely to reduced as the surroundings deteriorate. Major remediation may require an exceptional fee to be charged in a future year. The management company may be struck off eventually if they can not pay for audits or where liquidation is requested by a creditor.

There is a huge risk buying in to this situation. Having said that you may find that they reasons that they are in this situation are changing. It may be because a developer owned a lot of units and these are being sold by a liquidator.

If you can identify that the future owners will pay their fees and resolve the current issues, it might be a great opportunity to get a discount.
 
Very little wisdom to buying such a property.

Badly formed and insolvent management companies are the scurge of the
property market in Ireland today.

Unless you're getting it very cheap and you're planning to role up your sleeves yourself to get it sorted out, I would leave well enough alone.

Try and make some enquiries locally about the "story" behind the management company. It may be just something that needs to be sorted out by someone with basic leadership skills or you may be entering a war zone betwen developers and residents or possibly a major dispute between residents. Yuk, you really need to have an appetite for it.
 
That would worry me.

I wonder how the deficit arose?

Normally if there are late payments of management fees these are still classed as debtors, so would not reduce net assets.

Do you have access to the full accounts?
Afraid not, It is a reasonably small development and all routine work seems to be carried out fine, just worried in case the unexpected were to happen.
 
You really need to see the accounts if you want to appraise the problem. They should be lodged in the Companies Office, and there are websites where you can get summary information free of charge, and copies of the accounts for a trivially-small fee.

What you need first is to get the correct name of the management company (not the managing agent).
 
With Dr Debt on this one, unless it is a steal , start running the other way.
Little management problems have a bad habit of escalating .
 
Afraid not, It is a reasonably small development and all routine work seems to be carried out fine, just worried in case the unexpected were to happen.

That may indicate that the builder still has a heavy exposure, they would have an incentive to keep up appearances in the hope of offloading the apartments more readily but they would not be hanging around once those apartments are sold.

Am with the other posters on this. Download the accounts (all years) from the . Talk to some of the residents. Find out why. And unless you are happy to take on the burden and sort it out yourself, walk away.
 
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