How to take control of a badly run Management Company?

[lantus]

We have been run by the developer acting as directors with a management agent brought in as the directors have no interest in the estate. The managment agent upped and left over a year ago and left the estate to rack and ruin and we the residents want to ake over.

We have several issues though.

Firstly the managment agent kept all the financial records and we believe (know) that they fiddled the accounts. None of the budgets approved at AGM's match submitted records (by huge sums) or amounts paid to sub contractors (which were by comparison very small leaving a huge amount of money unaccounted for.) They have no obligation to keep or provide any records so we are up the creek in that regard. What if there is a load of debt in the company? (There is no accounts submission made for this year with CRO and we are at rsk of been stricken off early next year.)

How do you take over the managment company via an EGM in reality. I've read all the guidance but how do you change CRO records or become named on the company bank account with no previous director being involved?

What happens to the poor residents who have to deal with any angry debtors who believe they are owed money from the company without us having any financial records to back up o support such a claim? Thi point alone is holding back people who had previsouly been keen to become directors. They dont want to be associated or responsible for large sums of debt they had nothing to do with.

does anyone else have any experience of this?

thank you in advance.

 

[ClubMan]

How do you take over the managment company via an EGM in reality.

Presumably you get new blood proposed, seconded and elected to the board and take over as directors of the company? Bear in mind that becoming a director of a company (even a property management company) involves certain risks and responsibilities that not everybody will want to take on. Especially if the company may be in a precarious position.

Don't know if there's anything of use here?

[broken link removed]
http://www.consumerconnect.ie/eng/Hot_Topics/Our-booklets/NCA-Management-companies.pdf

 

[onq]

You may find this relevant

The Society of Chartered Surveyors Ireland is reminding owners of apartments in multi-unit developments that Friday (September 30th) is the deadline for developers to transfer the management of common areas in existing developments to the Owners’ Management Company.

The significance of the change is that apartment owners who previously may not have had any role in the management of the common areas of their complexes will now be entitled to assume control of them.

The new measures are part of the Multi-Unit Developments (MUD) Act 2011, which was enacted on 1st April 2011, and is a new legislative framework for multi-unit developments (apartment complexes and private housing estates) which did not previously exist.

The Society of Chartered Surveyors Ireland believes the provisions of the Act provides a number of solutions and processes for the management of issues which have been challenging apartment owners for more than a decade, including the completion of developments, ownership of common areas and dispute resolution.

You need to take legal advice in this matter because it sounds as though the development may be in breach of its planning permission re the management issue, which may be conditioned in the planning permission.
Given that the developers agents apparently abandoned the development, there may be a role for the local authority to play in enforcing compliance with the condition.



ONQ.

All advice on AAM is remote from the situation and cannot be relied upon as a defence or support - in and of itself - should legal action be taken.
Competent legal and building professionals should be asked to advise in Real Life with rights to inspect and issue reports on the matter at hand.

 

[DianeC401]

Lantus, I am sorry to hear of your predicament - sounds awful! I can't offer you advice on the EGM/company cheque book/legal aspect etc (although I'm sure some other posters on here can) but I hope the following is of some help to you.

I would advise you to check out the Apartment Owners Network for advice and information. [broken link removed] If you are Dublin based it may be worthwhile attending one of their meetings.

It sounds like a group of residents have already met to start trying to sort the whole sorry mess out so you have already made great strides here.

As ONQ mentions you should consider getting yourself a good solicitor who is proficient in company law and perhaps has some experience dealing with situations like this. Although this will be more outlay, they can help you pick your way through the legal minefield. Are any owners solicitors who might be willing to help? If it transpires that there are issues of fraud and malpractice do deal with you will probably need to consider legal proceedings anyway.

Trying to source a new management agent should also be another priority. They can act as a buffer in dealing with suppliers looking for money. If you can write to suppliers explaining your situation and assuring them you are doing everything in your power to get the management company back into good order they may well be more understanding. At least this way there is light at the end of the tunnel for them - a properly run company has a better chance of being able to honour debts.

Make sure you have talked to all the owners you can and can utilise people's knowledge and skills. Especially when you are in your current state - penniless and in a mess - having an accountant, a solicitor, a good adminstrator/project manager on the team can help enormously.

Unfortunately being a Director of a Management Company with such problems is a difficult and onerous job to have to take on but owners need to realise that putting their heads in the sand and dodging responsibility will get them nowhere. A bit of team effort now could pay off hugely in the long term. The Management Company should take out Directors and Officers liability insurance which will help protect individuals and is money well worth spending (I think an average yearly premium for this should be around €700).

Finally, you can get through this. I am in a development which went from being hugely in debt with a judgement hanging over us to now being solvent and well run. It does take a couple of years of hard work and then ongoing vigilence, but you will see results. And the MUD legislation should help. But there are no short cuts - you can't pay someone else to do it. Unless the Owners take charge, roll their sleeves up and start sorting out the mess you won't get anywhere. Good luck!

 

[merloo]

Hi DianeC401,
I just joined Askaboutmoney and am not quite sure how things work. I would like to correspond with someone who has experience of getting a management company back on its feet. Our situation is quite similar to lantus above. Can I email you?
merloo

 

[Leo]

Hi DianeC401,
I just joined Askaboutmoney and am not quite sure how things work. I would like to correspond with someone who has experience of getting a management company back on its feet. Our situation is quite similar to lantus above. Can I email you?
merloo

Hi Merloo, welcome to AAM.

We discourage such conversations via email or PM. The purpose of AAM is to discuss these issues in public so that others may benefit. There are many others in your situation, discussing this publicly you will get input from many people, and not just one person.
Leo

 

[merloo]

Hi Leo,
That's fair enough, thank you.
Ok, my first question is, is it necessary to keep a management company going? It is my understanding that we will not be able to sell our houses if there is not a functioning management company? Is this correct? Or is it only if we are in debt to said management company that we cannot sell?

Is it ok to append to this thread or would it be better to open a new one?
merloo

 

[capnhand]

Hi

If the management company has been struck off the register of companies you definately cannot sell the house as the freehold is usually held by the management company which grants it to the owner as a long lease. So the purchaser cannot get good title to the seller.

If you have not paid the managemet fees then you may also have problems selling the house.

Regards

capnhand

 

[merloo]

Thank you for your reply capnhand.

I have just been reading my contract documents, and it seems to me that our Service Charge is due to the developer, the Lessor, (which can be collected via an agent) rather than the Management Company, until such time as the common areas etc. have been transferred to the Management Company, which according to the contract was to be when all the houses were sold. In our case, the estate is not complete (there are foundations for several terraces and one or two buildings had reached first floor level when work ceased about 3 years ago) so all the houses will not be sold for the forseeable future.
According to the MUD Act 2011 the developer must transfer the common areas to the Mgt Company within 6 months of the Act (date already past). Is this the case, regardless of whether the estate is complete or not? In that case, if we do not elect representatives of the owner occupiers onto the board of directors of the Mgt Company, (at the moment the only directors are the developer himself and one of his project managers), is it possible that the transfer could happen without our knowledge? As you can imagine, there is a lot of work outstanding, and if this were to become the responsibility of the management company it would be a huge financial burden on the owners.
Any help with understanding this situation would be greatly appreciated.
merloo

 

[DianeC401]

Merloo, from my understanding of the bill, the management company are responsible for common areas but the management company will not be responsible for the unfinished buildings. That still lies with the builder.

I am not sure whether you would necessarily have been informed if transfer has taken place. I have some knowledge of the workings of OMC's but it doesn't extend that far I'm afraid.

I can only repeat the advice and information I gave to Lantus above - with the addition that if you haven't already made contact with your developer and other residents, that you should do so asap. Start asking some questions directly to your developer and think about engaging a solicitor.