Builder/Developer Obligation for Management Fees

Hi,

We moved into a house over two years ago. The estate is run by a management company. All residents who bought property had to pay the management fee up for the first year. We received the accounts for the first year recently and we are operating at a loss of several thousand after year one. There was no major work carried out by the management agent that would have lead to a loss. But the developer has only made a contribution of over €2,500 in the 1st year. even though the value of the fees for the unsold units was over €15,000. Not all new owner paid a full fee in the first year as they moved in at different stages during during the year. And only paid a proportion of the fee depending on when they moved in. The remainder of the fee was allocated towards the following years fee. There is another shortfall due to this of nearly €13,000 in the first year.

Has the developer/builder any legal obligation to pay the fee for unsold units?

Has the developer/builder and legal obligation to pay the remaining proportion of the fee for the first year. e.g if they fee for the year was €1,000 and the new owner only moved in after 6 months and paid €500 towards the first year. Does the builder pay the other €500

Thanks
RE

The Buider/Developer is liable for the Service Charges of all unsold units in the Development.

The Management Agent of the development should do an apportion account at the Financial Year End of the Managment Company. This Apportion account should be given to the Builder/Developer and should be reflected in the Financial Accounts at Year End. In this Apportion Account all unsold units plus Units which were sold during the Financial year, the developer is liable for the portion of Service Charges when the Unit remained vacant.

Are you sure about that? I've never heard of any builder pay more than a contribution towards the service charges for unsold units and I've heard of lots of apartment blocks that were left in the lurch because of it.

Yes I am sure.

I work for the Accounts Department of a Management Agent. This is the procedure that we apply to all developments which are partly finished.

Have you ever received the full amount due from a developer?

Thanks for that Dark Knight.

I will get on to the management agent regarding this.

If the builder/developer refuses to pay this outstanding money. What are the options for the members of the management company. Given that the builder/developer is still the director of the management company?

RE

In the past we have received the full amount. Currently with it is alot more difficult to receive the monies due. However it remains an outstanding liability on the Financial Accounts of the Company.

It is a difficult process to take legal action against a buider who is a director of the Management Company. You will need to seek legal advice on the options to take regarding this matter.

My management agent sought legal advise on this and we have been advised that there is no legal obligation on the builder to pay service charges for the unsold apartments. As the builder owns the land he can effectively do what he wants with it.

My understanding is that generally builders do usually pay something towards the fees but they are not obliged to and the builder cannot be forced to if they decide not to pay.