Mgmt company overcharging while doing no actual work. Solution?

[user1987]

I suspect the management company increased service charges disproportionally within last few years. For some owners the increase was ~20% for some like me - 40%. What can be done in this situation? The Mgmt company does virtually no work bar organizing the rubbish collection and paying essential outgoings, but they still keep raising the fees like 20%+ a year. People refusing to pay are put on arrears, what's the legality of it? This does sound like an outrage. A typical AGM attracts the attention of 2-3 loyal people which is how they get their decisions approved. The whole situation is very annoying.

 

[Premos]

I suspect the management company increased service charges disproportionally within last few years. For some owners the increase was ~20% for some like me - 40%. What can be done in this situation? The Mgmt company does virtually no work bar organizing the rubbish collection and paying essential outgoings, but they still keep raising the fees like 20%+ a year. People refusing to pay are put on arrears, what's the legality of it? This does sound like an outrage. A typical AGM attracts the attention of 2-3 loyal people which is how they get their decisions approved. The whole situation is very annoying.

First of all, you are part of the management company. Have you been to the AGM?
Have you looked at the accounts or the budget? Most expenditures have increased a lot in the past few years from insurance to bin collection. If the charges have increased a lot recently, how high are they, were they kept low for a long time, are there big expenses planned? If you are refusing to pay, how do you think the development can be managed? Is a budget approved during the AGM (should be)? If the budget is approved in the AGM and you don't pay, you are in arrears. How would you describe that situation otherwise? I have an apartment in a development. Costs have risen a lot just to manage the bare minimum. Insurance increased by 50% with the increase in building costs, and bin collections have become massive...

 

[peteb]

I think you think the management company is a company that offer some kind of service! It doesn't. It's made up of all you owners of apartments!! They arent taking an increase to pay themselves an ever increasing wage. It's likely the employ a managing agent. But like Premos said if you went to the AGM and saw the accounts you'd know what their outgoings and incomings were. So start there before declaring the whole situation as annoying.

 

[Threadser]

What can be done in this situation?

What can be done in this situation is that you become an active member of the management company which comprises all the owners in your development. If you are unhappy with the work of the managing agent then you can consider putting the contract out to tender. I am an owner director of an OMC where I live. Costs (insurance, ground and lift maintenance, repairs, bin collection etc) have risen in the past few years and we have had no choice but to pass on this to owners (including ourselves). As others have said, make it a priority to attend the next AGM and query the accounts if you think expenditure has been excessive. If you are unhappy ,then volunteer to be a director and you and your fellow owner directors will be in charge of decisions made.

 

[user1987]

that's fair enough I'm not objecting increases. I'm objecting unfair increases of 40% while others known to me owners got only 20-25% increase. Is there supposed to be a memorandum outlining one for all increase rate following the AGM?

Also how legal is it to charge arrears? Surely OMCs aren't banking institutions also there's was an open argument in relation to the charges which hasn't been addressed.

 

[mf1]

The mechanism for setting/increasing the service charge and calculation of interest on arrears should be in the Lease signed when the property was first acquired.

mf

 

[Dermot]

The OMC that I deal with give a good discount for fees paid on time and discount not available afterwards which I consider fair

 

[Premos]

The OMC that I deal with give a good discount for fees paid on time and discount not available afterwards which I consider fair

That's a great idea. Some of the owners have decided to pay the following year. It's an issue for financial management

 

[money_man]

that's fair enough I'm not objecting increases. I'm objecting unfair increases of 40% while others known to me owners got only 20-25% increase. Is there supposed to be a memorandum outlining one for all increase rate following the AGM?

Also how legal is it to charge arrears? Surely OMCs aren't banking institutions also there's was an open argument in relation to the charges which hasn't been addressed.

How charges are set and distributed will be in the documents for the management company. The budget will be agreed at the AGM, if there is only 3 people going and the spending is appropriate it wouldn't take much for a few people to get involved at the AGM and their concerns be taken onboard.

What is the open argument about the fees? Was the budget approved at the AGM?

 

[Equality]

We had similar issues with non payment of community fees by an apartment owner in an OMC.

It meant the remaining owners who were paying their community fees had to make up the shortfall in funds for the OMC company to function, which was very frustrating. This went on for a number of years and the amounts involved became considerable.

The OMC wrote to the owner and requested the outstanding funds be paid but they ignored the communication and the community fees continued to grow. The OMC employed a solicitor who also wrote to the owner.

Eventually, the apt was put up for sale and it was at this stage that the OMC was reimbursed all of the outstanding community fees.

I agree that all owners, who are members of the OMC, should attend the AGM and help the directors. Imagine how frustrated they are trying to run the OMC with owners not contributing their fair share.

 

[Sue Ellen]

I'm objecting unfair increases of 40% while others known to me owners got only 20-25% increase

But is it a case of comparing apples and oranges? What are your management fees as compared to friends?

As others here have said the bottom line is if you think things are not right then you need to step up to the mark and do something about it.

 

[elcato]

I'm objecting unfair increases of 40% while others known to me owners got only 20-25% increase.

Can you clarify who the people 'known to you' are ? Are the owners in the same development ? Or are they friends who are apartment owners elsewhere ? Unless it's the former as Sue stated it's not relevant. My MC charges more for larger apartments as they generally will cost more wear & tear, greater waste etc with more people being in them.

 

[Threadser]

The apportioning of fees is set out in the head lease. In the case of our OMC, this is done based on size of apartment. It is legal for management companies to charge interest on arrears once this is approved by other owners at the AGM. Basic services have to be paid for, and timely payment of management fees is necessary in order to do this.

 

[Nutso]

When I lived in an apartment with a managment company, the fees were apportioned based on the square footage of the apartment. Could this be the reason you are paying higher fees, is your unit bigger than the others?