Agent mismangement of OMC funds

B

Baltimore

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Hi, we are a mixed complex of house/apartments. We are due to have our AGM on Thursday 30th April. We were given notice on the 8th April. In that email we were accrued a deficit on c€36k through overruns in expenditure for Y/E 2024 and 2025 (we were never advised of this last year). They are suggesting that each unit absorbs this cost split equally ie the houses pay x and all the apartments pay y (regardless of the square footage). They also state its not financially viable to carry a deficit. Our sinking fund is depleted.

My main question is can the OMC hold the Agent responsible for this overspend and make a case against them?
We have new owners recently and they are not happy wiht this suggestion, what are their rights?
What steps sure we ensure should be put in place in order to stop this reoccuring.

Any advice/assistance would be greatly appreciated due to the urgency of this query.
 
Baltimore said:
My main question is can the OMC hold the Agent responsible for this overspend and make a case against them?
We have new owners recently and they are not happy wiht this suggestion, what are their rights?
What steps sure we ensure should be put in place in order to stop this reoccuring.
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Doesn't the management company, via the directors, have some oversight/control of day to day expenditure by the management agent? Or at least expenditure over and above that planned for in the annual budget? I would have thought that this would be standard practice rather than letting the agent just spend what they like over the year?
 
@ClubMan, they requested information to be provided to them, but was never presented, when questioned about it, always excuses, they were also given figures on that day, no mention of invoices received but not paid. They were left in the dark about the over spends
 
Expenditures are normally agreed by the omc. A budget is normally established by the omc. The accounts are signed off by the omc. Regular meetings are normally held between the omc and the agent. It seems to go over 2 years, were accounts not approved in 2025 for 2024.
Is the OMC functioning properly?
 
The Directors hire the agent to work on behalf of the OMC. They have a "fiduciary duty" to act in the best interest of the owners of the OMC and should have oversight of the OMC spend. Question the OMC directors at the AGM as to how the overspend happened? What is the debtors position? If the Directors are owners then they are unpaid volunteers, so bear this in mind. If you are unhappy with the current board, yourself and other owners may have to step up and become directors yourselves. You would then be in a position to review the Agent's contract and change them if necessary.
 
Baltimore said:
My main question is can the OMC hold the Agent responsible for this overspend and make a case against them?
We have new owners recently and they are not happy wiht this suggestion, what are their rights?
What steps sure we ensure should be put in place in order to stop this reoccuring.
Click to expand...
a) i doubt it unless there is some negligence that you can prove
b) no more than an owner who has sold cant look for their contribuition to the sinking fund back because planned expenditure didnt happen in their tenure can a new owner wash their hands of a deficit that exists now and that needs to be settled.
c) proper oversight by the directors , they should be reviewing expenditure quarterly and approving all outgoings especially where its unbudgeted.

Key qn, are these overspends day to day costs or capital costs that were to be covered by the sinking fund and it was insufficient to cover them?

Either your management fee is too low, the sinking fund contribution is too low, or your costs arent being managed and you are being ripped off.
 
The agent will often draft the budget but the Directors should have input into it and owners will then vote to approve it or not. I am an OMC Director and our agent sends us a draft budget prior to the AGM We discuss alternative options before agreeing what budget we will present at the AGM.
 
Baltimore said:
We have new owners recently and they are not happy wiht this suggestion, what are their rights?
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They should speak with the solicitor who handled the purchase; if these issues existed before the purchase, they should have been made aware. What is the nature of the deficit? In our MUD apartment, overruns can only be billed against the apartments and is based on size. This is explicitly written into the leases if its an estate overrun its divided by the number of units, again written into the leases and deeds.
 
Baltimore said:
They are day to day costs, under bugeting expenses.
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I missed this in my reply. You are entitled to know the nature of these in our development of over 500 units. This would be an overrun of over 20% on the estate charges, not something that day-to-day costs would explain.
 
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