Management Fees and Customer Service

[Kluck]

Hi there,

2 months ago I received my service charges for 08 from our existing Management agency. I live in a 1 bed apartment in Dublin 1. The fee was for a cool €3,055 but there was a discount of 15% available for payment in full before 1st may. The invoice is dated 15th Apr.
The total budget for 2008 (including Management fees of €6,352) was for €53,136. There are 20 apartments in this block. A simple division calculation and one gets €2,656 which equates to the figure you get if you take off the 15% discount.
The invoice included a list of itmes and costs thereof.
I had a few queries on some of the items which I emailed to the Management agency. First email sent 1st May, I have send subsequent emails since and have had no response. I have aslo contacted the agency numerous times and managed to get the director on the phone about 3 weeks ago. He answered some of my questions on the phone but neither of us has my list of questions in front of us at the time so I requested that he respond to my email which he agreed to do so. I am still awaiting a response.

I have a few questions that I would like to get peoples opinion on:
Is this fee resaonable? We do have elec gates but there are no lifts in the building.
Should owners of 1 beds pay the same as owners of 2/3 beds?
I have still not paid my Management fee as I do not want to dish out 2,656 without having my queries answered. Am I within my rights to hold off until I receive an answer.
If I do not receive an answer what you advise as a next step?

Many thanks,

 

[so-crates]

Hi Kluck,

Is this fee resaonable? We do have elec gates but there are no lifts in the building.

You have seen the budget for 2008, this should determine the charge per unit - is there anything on the list that you disagree with or do not receive? The fee is only reasonable or unreasonable in relation to the budget, each development is unique in terms of potential upkeep costs so comparisons with other developments need to be undertaken very carefully.

Should owners of 1 beds pay the same as owners of 2/3 beds?

Some developments differentiate between larger and smaller apartments but not all. It is dependent on the arrangements in place what the approach is. The difference would not necessarily be that significant though as many amenities that may be covered by the management fees are independent of the size of the residence (e.g. gates, grounds maintenance, common area cleaning, waste disposal etc.). Really only the building insurance element might vary with unit size.

I have still not paid my Management fee as I do not want to dish out 2,656 without having my queries answered. Am I within my rights to hold off until I receive an answer.

I would say no, you aren't really entitled to withhold your management fees pending an answer. This comes up time and again. You are withholding your fees from yourself. The management agent acts on your behalf as a member of the management company. It is not an imposition from outside. You, as part of the management company, have engaged the management agent to oversee the day to day upkeep of your block, that is what you pay them for. If you withhold your fees the management company suffers NOT the management agent.

Another thing to note, chances are at this stage (17th June, 6 weeks after your fees were due) you do not qualify for the discount so you owe €3055 not €2656. The budget is probably based on a worst case scenario of no-one paying on time. Additional moneys probably go into the sinking fund which is necessary for long-term capital expenditure (such as repainting, etc). Also block insurance is usually a little cheaper if you pay it as a single lump sum rather than by installment over the year, which they could only do if the received enough full fees rather than fees paid by installment or not paid at all.
Why did you leave it until the very last minute to query all this? You had two weeks to ask some questions but you chose the day the money was due?

I would suggest that you set up a standing order to pay your fees out on a monthly basis over the year as this would lessen the impact on your pocket of a hefty sum of money.

If I do not receive an answer what you advise as a next step?

I would suggest writing it as a letter to your management agent and requesting a written response from them (keep a copy of your letter for reference). I would also advise that you attend the AGM of your management company, that is the best forum to raise queries like this not by e-mail on the day the fees are due.

 

[aaa1]

Holy God, that's expensive for a one-bed. Most apartments blocks charge different prices for one beds, two beds etc. Is your block old? To put it in context, I pay around €2,500 for a two bed near the city centre. The block is about 12 years old so there's a €500 capital improvement levy on that and it will go back to €2,000 next year. We get a full breakdown of the costs each year - how much for the gardening, insurance, lift maintenance, bins etc. You're entitled by law to a breakdown of costs. Any chance you could call to the management company's offices and ask for the breakdown?

 

[badbrian]

Hi there,
But there was a discount of 15% available for payment in full before 1st may. A simple division calculation and one gets €2,656 which equates to the figure you get if you take off the 15% discount.

This sounds like an adaption of "If Fees are not paid Interest will be charged". I would pay the lower amount (but only when satisifed about it) and if the balance is chased up, just remind them that you only got the original invoice in April, and couldn't get an answer to your queries until...

The invoice included a list of items and costs thereof.
Is this fee reasonable?

It sounds like the invoice included a budget which would have totalled of all charges that add to the 53k. It is for you to decide if it is reasonable. If you feel a particular line is too big ask for the detail behind it.

I requested that he respond to my email which he agreed to do so. I am still awaiting a response. I have still not paid my Management fee as I do not want to dish out 2,656 without having my queries answered. Am I within my rights to hold off until I receive an answer.

Personally I would not pay my fee until I had the answers as you lose all leverage.

Should owners of 1 beds pay the same as owners of 2/3 beds?

I find this concept interesting as I live in a small complex of same size apartments. However if I were you I would be inclined to think that you could argue you should not pay the same amount as bigger apartments depending on the particular expense. As so-crates mentions building insurance is one area. Another area I would think is refuse, as one would assume more people in bigger apts creating more waste and in my complex this is one of the bigger lines of expenditure. A lot of expense will be common area expenditure though as mentioned and will therefore be equally apportioned. But this is likely to be a lot of hassle for what might only be a small reduction in your charge. No harm in trying though.

Get involved. Get together with other owner occupiers. We had a useless agent. Constantly had to chase them to do anything. A few of us got together, fired them, got a new agent (for a lot less). Our complex is much better run, and everyone pays because everyone can now appreciate the work that is being done around the place. Also we have regular meetings and the costs are transparent.

 

[Yorrick]

There is no doubt that the whole area of apartment management provide a great opportunity for a rip off.
However before any group of residents/owners decide to take cahrge of the manageement themselves I'd advise them to read Robert Gogan, Barrister, excellent book Apartment living in Ireland. This will spell out every responsibility, all the pros and cons of the various forms of management.
I have been part of a management company managing our complex for nearly 15 years. To do the job correctly needs a dedicated committee. If you do go down that path I advise also that the members of the managemeent committee get some financial recognition for their work. In many cases investors are perfectly happy to let owner residents do the managing while they reap the profits.
Smaller complexes of lest than 50 apartments can be managed relatively easy once the right structures are put in place.
There is a need to apoint Directors who are to ensure that Company Law etc is complied with

 

[so-crates]

This sounds like an adaption of "If Fees are not paid Interest will be charged". I would pay the lower amount (but only when satisifed about it) and if the balance is chased up, just remind them that you only got the original invoice in April, and couldn't get an answer to your queries until...

It isn't stated as such, it is stated as a discount on full payment, so I suspect it is to give people an incentive not to pay by installment over the year.

Also while they didn't get an answer to their queries, they didn't ask in April when they received the bill, they asked two weeks later when the bill came due.

Personally I would not pay my fee until I had the answers as you lose all leverage.

This isn't leverage, the agent they are trying to ask the question of is not going to suffer by them withholding their fees. The apartment complex will suffer.

Another area I would think is refuse, as one would assume more people in bigger apts creating more waste and in my complex this is one of the bigger lines of expenditure.

I would have to take issue with this, refuse produced is relative to the occupancy rate, it is not relative to the size of the apartment; one person in a three bedroom apartment will not produce correspondingly more waste than one person in a one bedroom apartment.

Get involved. Get together with other owner occupiers. We had a useless agent. Constantly had to chase them to do anything. A few of us got together, fired them, got a new agent (for a lot less). Our complex is much better run, and everyone pays because everyone can now appreciate the work that is being done around the place. Also we have regular meetings and the costs are transparent.

I may be tarring the OP here, but I suspect that the first time they decided to get involved and start asking questions is when they were presented with a large bill. OP have you at least attended the last AGM? Certainly at my AGM that is where the budget is discussed, options regarding frequency of services etc is determined there.