Holiday Homes v Private Interests and the MUD Act

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PeeBee

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I am writing on behalf of my partner who purchased her home in Killarney nearly seven years ago and now finds herself in a legal quagmire, a nightmare, through no fault of her own. I will do my best to briefly outline the problem in the hope that other readers of 'Askaboutmoney.ie' may be able to provide some guidance. The matter is complex but here, I hope, is the gist:
  • My partner purchased her home outright in 2010;
  • It is a detached house set on about half an acre lawn and her site is now delineated with post- and- rail fencing;.
  • Her home is located within a development of holiday homes but it is crucial to understand that her house NEVER WAS, IS NOT, and NEVER WILL BE A HOLIDAY HOME. Not alone is her home distinctly different in character to the 44 (including one pub and a house being 'used' to accommodate an employee of the Managing Agent) other properties comprising the 'village' it is not subject to any covenants relating to its use;
  • At time of purchase she was assured that she would get (inter alia) grass cutting, cable TV, bin collection, insurance etc. This she would get for about €300/400 pa. She paid €386 in 2012. She was never invited to attend AGMs and the OMC has gone from insisting that she was not a shareholder [indeed, the asked her to prove her shareholder status!] to now insisting that she is a shareholder!

  • SHE HAS NEVER RECEIVED ANY OF THESE SERVICES contracted for. NONE, despite repeated attempts to get the MANAGING AGENTS to address these matters they have literally ignored all verbal and written communications. Instead they have applied to the District Court for a debt judgment alleging non-payment of service charges! c€7,000. She has retained a solicitor who has entered an 'Appearance Notice'(?) and the claim will be repudiated. But the matter is more serious than that and this is where we/she so badly needs your help.
I have purposely highlighted the'Managing Agents' This is because this company [let's call them 'ABC Ltd' act as the Letting Agents for approximately 30 of the holiday homes and hold a permanent proxy vote for those units]. Interestingly, 'ABC Ltd. Does not hold a licence to act as property management company(!?). Despite this , 'ABC Ltd' is also the OWNERS'MANAGEMENT COMPANY (OMC) to the development, having manipulated the vote and the AGM by demanding the proxy of each holiday home under their control, thus defeating the letter and the spirit of the MUD Act.
  • To compound matters, ABC Ltd., run the OMC as 'ABC MANAGEMENT Ltd' and conflate the accounts and other financial records in order to line the pockets of the directors and oppress a small group of shareholders in the OMC [the non holiday homes]. Such scant financial records that my partner has managed to obtain via the CRO fail to show any contribution fro the Holiday Homes under the direct comtrol of 'ABC Ltd.' to the OMC! It would appear that the individual owners of the holidays homes are in receipt of an annual 'dividend' of about €1750 in return for a full maintenance of their investment properyties! Interestingly the full repairing agreement with 'ABC Ltd' also covers all utilities, TV, gardening, insurance and a 'waiver' of the OMC service charge!!! In return the individual owners sign over their OMC proxies to the managing agency which also acts as the OMC. !!! Conflicts of interest abound and their are serious matters of Taxation and Benefit in Kind. (?)

    It is useless to suggest that an EGM/AGM be used to oust a company that is acting in open defiance of the Companies Act, the MUD Act and the regulations governing the Management of Property. Their obligations under these laws have been brought to their attention as has their conflation of accounts with reckless disregard for the need to keep proper financial records. They are attempting to have a small number of private home owners pay for the maintenance and internal upkeep of the holiday homes that they control. In short, these two companies are acting fraudulently at worst and certainly with a reckless disregard for normal business practice and the law.

    The OMC [ABC Management Ltd] has been written to by registered post to their Registered Office, to their solicitors amd to their accountants requesting documentation per the MUD and Companies acts,to no avail. 'ABC Management Ltd.,' are so arrogent that they do not see fit to even acknowledge the requests. Thankfully, the An Post Tracking and Delivery makes their ignorance all the more egregious. It may also give you a flavour of these so called OMC people to note that they call all meetings at a venue more than 100 Kms from the 'village' in question.

    I know there is a lot in the above. I have tried to keep it to the salient points and will readily give clarifications as required. The companies alluded to above are clearly in breach of the law. They have raised 'fraudulent' invoices, conflated accounts, failed to give information as required and continue to act against the Members' interests, have no transparancy in their conflicts of interest ..

    Is an application to the Circuit Court the only remedy towards having these so called OMC removed and the directors (2) common to both 'ABC Management Ltd' and 'ABC Ltd. Struck off?

    All constructive observations will be welcomed. Thank you.

 
I personally lodged a formal complaint to the Property Services Regulatory Authority about the unlicensed "Management Agent" more than 2 years ago and have regularly asked the PSRA for a status report. They say that I am not entitled to know what has become of my complaint.
 
Thanks 'OMC Fix'. Did you give your name to the PSRA when you made the complaint?
 
Yes. Absolutely, what good is an anonymous complaint?

I have also brought my complaint to the attention of two successive Ministers for Justice, Tanaiste and TDs. All have been very polite but have referred me back to the PSRA where I have written to the previous CEO and several Senior Staff.

Investigative Reporters particularly those in RTE have done more for Justice in this Country than all of the Regulators put together. For example, NCT, Nursing Homes, Garda complaints, Child Care facilities, Charity management and many more. Do you know anyone in RTE ? Do you know Paul Williams the crime Reporter ?

Have you considered a complaint to Garda Fraud Squad or Revenue, ODCE, CRO who all have roles in policing corporate malfeasance ?
 
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That is a very long post.

There is a lot in this.

So there is an estate with 44 houses with an Owner Management Company. Of the 44 houses 30 are potentially leased under a long lease to a "Holiday Cottage Letting Company". This was a scheme whereby investors leases their property under long lease to a separate company which ran a business of letting the houses and paid an annual rent to the owners.

The "Holiday Cottage Letting Company" in turn dominates the OMC as it has an interest in 30 of the 44 properties.

I'm not sure that the HCL requires a PSRA licence to act as a holiday cottage company.

If the directors of the OMC are not paid by the OMC then the OMC could be considered to be self managed, as the common directors are representing the interests of the HCL.

So I'm not sure if your issue is with the PSRA at all.

Is the OMC a company limited by guarantee? If so it should have had audited accounts prepared up to a couple of years ago.

Is the OMC a company limited by shares there should be 44.

The original purchase documentation should mention the OMC. The solicitors should have advised on the implications when the property was purchased.

What has the solicitor defending the current claim for fees against you said about membership of the OMC?

As for the comment about the dividend to the members.

Are you suggesting that all the members pay their fees into the OMC and then some members receive a dividend from the OMC while others don't?

If you feel that the directors of the OMC have failed to keep proper books of account or to have the accounts audited when required to do so the Office of the Director of Corporate Enforcement is the place for your complaint.
 
Thank you to 'OMC Fix' and 'Joe_90' for the speedy replies and comments.

Firstly to 'OMC FIX' on the matter of PSRA and complaints.

Yes, I 'phoned them and was 'advised' that an anonymous complaint was preferable to a 'signed' one! Strange I thought, but a polite gentleman in that office re-assured me that such complaints would be fully investigated. He went on to state that the policy of that Office is not to give progress reports! However, the same gentleman told me that the Company/ies in question do [ subject to the facts being established] need a LICENCE as they are permitting short and long term lettings. They also act as the OMC for the 'village' which, if I understood the PSRA, placed similar obligations on them to obtain a Licence.

I am disappointed to learn that your efforts in a similar situation came to nought but very much appreciate your willingness to share your experiences. Thank you in advance.

Secondly, let me address 'Joe_90'.

Thank you for your thoughtful and inciteful reply.

The “holiday cottage letting company'” I've called it the 'ABC Limited' does, as you say, “DOMINATE” the OMC through an in-built and permanent majority. Therefore, they cannot and will not act in the interests of the Home Owners. There are two directors of the 'ABC Ltd'.

See my comment to 'OMC Fix' above regarding the Licencing issue and the 'ABC Ltd' [The 'HCL' as you refer to it and 'ABC Management Ltd' [who are also the OMC!!!] 'OMC FIX' went to some lengths and it looks like my partner will have to travel the same road.

The two directors of the 'holiday homes letting company' , 'ABC Management Ltd' are the same two directors of the OMC , 'ABC Ltd' and it is noteworthy the OMC 'board' comprises only two directors. In short, these persons contol the OMC and run it in the interests of the HCL as you call it! Their accounts, such as they are, are an exercise in obfuscation and their so called AGMs & EGMs [held, if at all!] more than 100 Kms from Killarney!, Minutes, Arts and Memos, Shareholders Register, Bank a/cs including Sinking Fund, Invoices etc are an exercise in conflation and are NOT AVAILABLE on request to bonafide shareholders. I wonder why?. The Directors of the OMC do draw fees from the so called OMC entity under various headings, including 'management' fees, expenses etc. In short, 'Joe_90', this OMC is not a self- managed company. It is a 'pocket' company masquerading as an OMC and openly flouting the law and prejudicing the rights and interests of a group of shareholders. Yes, as you say, they solely represent the interests of the holiday homes and of course their personal financial interests! The common directors act with ignorance and apparent impunity.

For clarification, the so called OMC is a company limited by shares. My partner is fully aware of her rights and obligations under the purchase as she is to the two way nature of a contract. She is equally aware of the 'services' she was to receive!

You are correct about what I refer to as 'a dividend' to a group of 'holiday home' investors but it issues from the ABC Ltd [your HCL] direct to the individual investor.

I am not saying that all Members pay into the OMC! Patently they do not! There is no transparency but such matters will be thrashed out in the Courts.

Finally, your comment about the ODCE is noted and again let me thank you for your thoughts and time.
 
You state that the OMC hold 30 proxy votes, they can use these to esablish a quorom for meetings but not for voting, owners should provide proxies to other owners whose interests are aligned, the idea of the OMC voting is ridiculous as an example they can vote in whatever charges and their own fees as they like, ah no I don't think so, arrogant for sure but wrong so challenge the validity of that.
 
PEE BEE, the word "conflate" had me rushing to google and I found that it basically means smoke and mirrors. As my chosen pen name OMC FIX might suggest, I have some experience in the MUD(dy) field, however it was an Investor who, was advised to avail of various tax shelters by "Professionals".

My life experience has been as business owner and Director of several Limited Liability Companies, all of which reported to Revenue and CRO and were run conscientiously to comply with legislation. As my pen name might suggest, a fellow Investor and I were so shocked and appalled by the mud-management of OMC, sometimes by well intentioned but inexperienced volunteer Directors and sometimes by people who treated the OMC as if it was "their" Company and felt they could do as they bloody well liked. One such Director has changed Solicitors (more than once) and "Auditor" when awkward questions were asked

My advice, PEE BEE is to attack o as many fronts as possible, as "storming Norman" said when asked if they were attaching on various fronts, he said "all of them".

The legal route is vital because your Partner cannot sell her property until all service charges have been paid and must be able to show that the OMC is fit for purpose with AGM, budgets, transparent cost sharing of service charges. You mentioned various categories of Users so this development is "mixed use" and the MUD act dictates fairness and transparency.

If "conflate" means that there are more than one set of books, take that to the ODCE and CRO and Garda, and Accounting body that regulates the "Auditor".

But, the law is a slow process and if you want maximum impact and outcry, try to meet with the people in the Media, print media or RTE.

Don't waste time on Politicians, they will refer you to the Permanent Civil Service. That's been my experience.
 
Yes 'Palerider', I mentioned that they [the OMC] have failed to provide Articles and Memoranda and all other required documentation. They are/seem unimpressed by the legal niceties of the Companies Act and the MUD Act and do not respond to Recorded Post addressed to their Registered Office [same office as their Letting Company]. These registered letters and normal requests were copied to their various firms of Solicitors and also copied to their/'our' OMC Auditors! Not alone did they all fail to comply with the requests, they did not even have the common courtesy of acknowledging receipt of the recorded letters. As a matter of fact, they can/have repeatedly voted de facto their own fees and use the same firm of accountants for the Letting Company Ltd as they do for the OMC Ltd company! In the absence of the legal paperwork, Minutes etc it is a case of these '...boys' colluding and manipulating the law and the voting procedures. Am I correct in saying that it is only those present who can vote? Can the directors exercise the proxies in a vote? These questions can only be answered by reference to the Arts & Memos, Minutes etc(?).

Thanks
 
Are there still 30 homes available for holiday rentals ? Do you now if there are long leases between the Owners of those homes and the Owners of the holiday rental company ?

Who insures these holiday homes ? IF the Owners of the holiday rental company pay the insurance premiums do they have an "insurable interest" in the holiday homes ?

Have you spoken to the body / bodies that give accreditation to these holiday home providers (Tourist Board etc).

What about future bookings and deposits taken for future bookings ? IF there are not long leases in place between the holiday rental company and the Owners of the homes are these deposits secured by some third party ? If so, have you considered speaking to the entity securing these deposits, IF NOT, have you considered speaking to the Financial Regulator regarding unsecured deposits ?

IF there are long leases in place between the Owners of the holiday rental company and the Owners of the homes being rented, how can these properties be sold except with a "sitting Tenant"? Have any of these properties been sold recently ? Was it / were they sold with "vacant possession" ? IF SO, doesn't that suggest that there was no long lease in place on that / those property(ies) ?

To get back to the word "conflate" can you show that the OMC filed "dodgy" docs with the CRO ? Is that enough to interest Revenue and An Garda Siochana ?
 
Slowly, slowly catch 'e monkey!

Hi again 'OMC Fix'

You are way ahead of me in your knowledge of dodgy OMCs. You have given me much food for thought, thank you. Am I correct in saying that an OMC must make the insurance arrangements known, in writing, to all shareholders in the OMC? IMHO, the question of an insurable interest can only be teased out on a 'discovery order' for ALL documents, including bank statements and Minutes of Meetings. A forensic examination of ALL documentation with the threat of possible criminal sanction action against the directors in their personal names and, both 'mirror' companies will probably be necessary to dislodge these charlatans.
 
More heat than light here guys.

All companies are run in the interests of the majority of shareholders.

The position of a minority shareholder is always vulnerable. I understand that the purchaser probably didn't look at it as acquiring a shareholding day one, more buying a property, but the reality is that the management will, indeed must run the company in the interests of the majority.

If you are contractually obliged to pay the management fees, then you should pay them. This is especially true if the case ever goes to court. If the judge asks "and have you paid your management fees ?", "No but..." is not a good answer. You would loose credibility in the eyes of the court.

If the management company is not providing the services they are charging for, then you would certainly have a case against them, but not if you don't pay your fees.

€386 management fee is by a way the lowest I have hears of. Doesn't sound like a rip off.
 
The management fee should read €1386. Apologies. The OMC does not issue valid invoices and invites the shareholder to make payments to the Holiday Letting Company! Furthermore, this OMC asks that payments be referenced to properties not owned by my partner! Go figure that one!?. There has never been a rejection of a Service Charge but only on production of valid paperwork, Yes, the action against these people will be a tough battle because of their nefarious dealings. If these people were acting in good faith they should have invoked the Mediation provisions of the MUD Act.

The contract is void/voidable/non-existant! You are probably aware of the criteria necessary for a valid contract? We believe it to be an 'empty' contract

The MUD ACT sets out the obligations on the OMC to provide information, to act with transparency in striking the annual charge and NOT TO OPPRESS a group of shareholders. We are also aware of the normal obligations on a Member.
 
Please don't confuse the OMC insuring the common areas of the development against "public liability risks" with the holiday rental business insuring bricks and mortar owned by private persons against the many and varied risks associated with valuable private properties.

For example, if the private properties are mortgaged the Lender will insist that the property is insured and their (Lender's ) interest in the property are noted.

For example, I can't insure your motor car because I won't lose a cent if it is destroyed by flood, fire or accident... therefore I do not have an "insurable interest" in your motor car.

If you allow me to rent your home and to retain a portion of the rental income am I your Agent or what is the relationship between me and thee ?

If you allow me to rent your home and retain a portion of the rent provided I insure your home, do I have an "insurable interest" in your home ? How and Why would you think that ? If I pay the insurance premium on your home are you receiving a benefit in lieu of rent - a taxable benefit in kind ?

What if I also pay the water charges and ESB bill and decorating costs and maintenance costs and replacement costs of items that need to be replaced ? Are all of these expenses on your property effectively an un-declared and therefore un-taxed benefit-in-kind ?

Would I have, or acquire over a period of several years "an equity" in your property by virtue of the sums I had expended on your home ?

Now, let us consider that the sums I expend on your home are "wholly and necessarily incurred" in the course of me providing short-term holiday accommodation in your home ... would it not be reasonable to expect that I would claim those expenses before calculating the tax due on my business profit ?

What would a reasonable person expect me to do ?

Now, let us take this just one step further and suppose that my business is registered for VAT ... would you expect my business to claim the VAT on the sums expended on your home ?

Would this mean that your home is now in the "VAT net" and that you must pay VAT on the sale of your home when you decide (or more correctly are allowed) to exit the holiday rental scheme ?

Now, as you already know, your home is part of a Multi unit development and you are a member of the OMC and you must pay the service charges, can you simply shrug your shoulders and say "the guy renting my home must pay the service charges" ? The answer is of course not and, in any event, IF he (me in this example) has, is that not also a taxable benefit in kind?

Now, supposing the guy renting your home and the guy demanding the service charges are "one and the same" and suppose that (since he is in a rather unique position) he neither demands the service charges on your home nor pays the service charges on your home but instead attempts to recover most, if not all, of the total un-proven service charges from the Owners of the homes that do not support his holiday rental scheme ... does that sound reasonable to you ?

Now, finally, suppose that push-comes-to-shove and that the OMC (which may by this time be insolvent) demands that you and the Owners of the other 29 holiday homes must pay your shares of the service charges for the last several years to the OMC (to whom they were always due and are now long overdue) ... do you suppose that the holiday rental company would have put aside the funds to pay the sums demanded for 30 holiday homes which it has rented as your Agent ?

Too much supposition ? Only time will tell.
 
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Hi OMC FIX,

.... "the guy renting my home must pay the service charges" ?

In this context do you, in fact, mean 'the letting agent'?

The so-called accounts of the OMC make no reference to vested interests nor to the receipt of service charges from the holiday homes under the control of the Managing Agent who, as you have gathered acts also as a 'supposed' OMC !!!

Yes, in a nutshell, these people are financing the full repairing lettings [incl' a convenient net of service charges arrangement] by attempting to gouge the private homeowners with the use of 'smoke and mirror' accountancy and the complicity ...
 
WOW, that's almost incredible in this day and age. I respectfully suggest that you leave no stone unturned.

I believe that "the only thing necessary for the triumph of evil is for good men to do nothing" ? I applaud and admire you and your Partner for your efforts.

I saw that someone suggests that "all [OMC] companies are run in the interests of the majority of shareholders and the position of a minority shareholder is always vulnerable".

I agree, but respectfully suggest that it would be more correct to state "all OMC should be run in the interests of the majority and provided always that the majority act within the law(s) when acting in the interests of the majority". However, I believe that your posts suggests in fact that a very few act are acting as if they were the majority with the complicity or acquiescence of the majority.

As my pen name suggests, I have some expertise in the OMC field. I look forward to your updates and to helping in any way I can.
 
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'Cremeegg' makes the point that (sic) "all companies are run in the interests of the majority of shareholders." and without sounding facetious, s/he also employs the well-worn cliche about 'more heat than light' [nice pun :)]. Not wanting to argue with the axiomatic let me just say this:

All companies must be run in compliance with the MUD Act, The Companies Act and all Regulations governing the management of property. The Law has a 'Letter' and a 'Spirit' and does not permit the tyranny of the majority! There are, for instance, criminal sanctions for those who persistently ignore the legal requirements.

Yes, Cremeegg, majority rules but NOT A contrived majority. As 'OMC FIX' puts it ... "... provided always that the majority act within the law(s) when acting in the interests of the majority"
 
I used to be a director of an omc - a thankless task at the best of times! It was in Kerry too and one house in the development (9 houses) was excluded from the omc even though it was within the curtilage of the development.

If you go to the cro website you should be able to view many of the documents regarding accounts. Up until 2015 all omc accounts had to be audited. You will also be able to download mems and arts, details of directors etc.

But best website for you may be kerry co co planning site - their map is interactive and you should be able to call up all details regarding planning including the exact mapping of common lands owned by the omc.

Of all councils, kerry are the most meticulous and every bit of correspondence is scanned and uploaded. You will probably be able to see the transfer files from developer to omc with map detailing precisely what lands are included. In the omc I was in, the house excluded was clearly defined as being excluded from the omc.

Under strict omc regs, if you were a member you would have had to get a copy of accounts, had to get invoice and had to get details of agm. You can make a complaint to odce if there are issues that concern you.
 
Supposing that a coach full of people - let's call them "shareholders" - (in a hurry to go somewhere, a match or the Airport or the Train Station) shout at the coach Driver - let's call him the "Chairman" to drive through a red light at at junction and supposing that the coach Driver does so and is then involved in a very serious collision. The Garda and the Ambulance and the Fire trucks are then called and statements are taken from coach Driver and coach Passengers and witnesses and the Driver(s) of the other vehicles involved... Do you think it would help the coach Driver to say that he was following the instructions of the majority ? Do you think the majority (coach Passengers) will support the coach Driver's version of events ? Would it be any comfort to the injured and the relatives of the bereaved to learn that the coach Driver was "only following Shareholders' instructions" ?

Do you think that the PUB in the development described by PEE BEE could ignore the licensing laws, and if so would you expect them to get their licence renewed ?

Do you think that the OMC in the development described by PEE BEE could put up signs showing 120 kph speed limit within the built-up development ?

Do you think the OMC could unilaterally approve an allocation of gun licences and / or approve the shooting of all barking dogs or other domestic pets within the development ?

IF none of the above are acceptable, how could it be acceptable to ignore the MUD Act and Companies Acts and Property Services Regulations Act and others legislation ?

Do you think that ignorance of the law is an acceptable defence ? Strangely, some people do.
 
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Thank you 'peemac',

By the sound of it, you were a conscientious director of a legitimate OMC and that is laudable. However, If you read closely my postings you will see that here we are dealing with a horse of a very different colour! The CRO is of limited value when a forensic audit and access to the more important paperwork is necessary to prove the misdoings of a 'pocket' OMC. Besides, The MUD Act and the Companies Act set out expressly the duty of the companies to provide [at no real cost] all necessary documentation.

I'll also offer these extracts from the Companies Act for consideration:

Rights Under Section 205

Right To Information

Shareholders have the right to inspect and obtain copies of information and documentation pertaining to the company, including the company registers, minutes of general meetings, memorandum and articles of association, financial statements, and auditors’ reports. Shareholders are also entitled to sight of the balance sheets of any subsidiaries of the company.
..............................................................................................................................................................................................................................................................

A shareholder has a right under section 205 of the Companies Acts (as amended) to commence legal proceedings against the company where the affairs of the company are being conducted in a manner oppressive to any shareholder, or in disregard of any shareholders’ interests. Conduct is oppressive when it is burdensome, harsh and wrongful.



And from The MUD Act:

In addition, Sec. 17 and 18 of the Multi Unit Development Act, impose clear legal responsibilities on the directors of OMCs.

Finally, 'peemac', your comments regarding Kerry CoCo will perhaps prove to be of use and I thank you for the direction.
 
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