Managment Company Fee

Hi,

Looking for some advice regarding a management company fee. We moved into our house in March 2007. About a week after Christmas, we received a letter from the management company requesting the fee of €250.00 for 2007 and a further €250.00 for 2008. I wrote back explaning that we had not moved in until March of 2007 and asking in this instance what the fee was? They wrote back to say that the fee was €250.00 regardless. Would this be the norm?

I find it odd that the management company did not request the fee for 2007 until 2008, yet they expect the fee for 2008 up front in the beginning of January. I want to suggest setting up a standing order for say €100 a month for 5 months to pay it, but I am unsure if this would be common practice or not.

Finally, I did ask for a breakdown of the figures that this amount includes and I was given accounts for 2005 & 2006. I notice that the income in 2005 (not accurate figures but just to give the gist) 5052 and the expenses were 5052, while in 2006 the income was 7832 and the expenses were 7832. Am I wrong in being suspicous that their expenses always equal their income and they are making no profit?

Would appreciate any input.

funnymunny said:

Hi,

Looking for some advice regarding a management company fee. We moved into our house in March 2007. About a week after Christmas, we received a letter from the management company requesting the fee of €250.00 for 2007 and a further €250.00 for 2008. I wrote back explaning that we had not moved in until March of 2007 and asking in this instance what the fee was? They wrote back to say that the fee was €250.00 regardless. Would this be the norm?

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What did your solicitor advise regarding management fee liability for 2007 even though you would only take occupancy mid year? I'm not sure what, if anything, is the norm but would not be surprised if at least some management company lease agreements require payment of the full annual amount even for an initial partial year of occupancy.

I find it odd that the management company did not request the fee for 2007 until 2008, yet they expect the fee for 2008 up front in the beginning of January.

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I think management fees are usually payable in advance. Ours certainly are other than if you pay in arrears by quarterly DD. Can't remember what happened for the partial year of occupancy when we bought (new) but the solicitor definitely explained the ins and outs to us so there were no surprises.

I want to suggest setting up a standing order for say €100 a month for 5 months to pay it, but I am unsure if this would be common practice or not.

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Depends on your management company lease agreement and fee payment policies.

Finally, I did ask for a breakdown of the figures that this amount includes and I was given accounts for 2005 & 2006. I notice that the income in 2005 (not accurate figures but just to give the gist) 5052 and the expenses were 5052, while in 2006 the income was 7832 and the expenses were 7832. Am I wrong in being suspicous that their expenses always equal their income and they are making no profit?

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Are you a member/shareholder of the management company or is control being retained by, say, the developer? If the former then you can see the accounts, detailed budgets, attend general meetings, vote, run for election to the board of directors etc.

Did you buy the house as new or 2nd hand? If not new then the previous owner would be responsible for the portion of the fees before you moved in.

Income and expenditure accounts should always balance. You should have some sort of a "sinking fund" in any managed development, to allow for expenses down the line such as exterior paintingor gate replacement or things like that. Any surplus in the budget should go into that at the end of the year.

The fees are always payable in advance, how would the management company be able to pay for anything otherwise?

as shesells said the "profit" goes into the sinking fund.

I am on the residents committee in our estate and the management company are refunding people this year where they paid for the full year on the closing of their pruchase but may only have been in the property for part of the financial year.

shesells said:

Did you buy the house as new or 2nd hand? If not new then the previous owner would be responsible for the portion of the fees before you moved in.

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Good point - I was assuming first occupant of a new build above.

Stifster said:

The fees are always payable in advance, how would the management company be able to pay for anything otherwise?

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As I said out management company allows payment in arrears by quarterly DD. I presume advanced payments by those who choose not to DD and the sinking fund are used to fund day to day operations if necessary?

ClubMan said:

As I said out management company allows payment in arrears by quarterly DD. I presume advanced payments by those who choose not to DD and the sinking fund are used to fund day to day operations if necessary?

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Interesting, they shouldn't be using the sinking fund for day to day transactions unless absolutely necessary but perhaps the advance payments are sufficient. Is there any penalty for paying in arrears?

Ok, thanks for all your input. Will ask if I can set up dd then. I justed wanted to check things I was unsure of but you have answered fully and comprehensively. The one thing I am still not entirely happy about is having to pay the full fee for the full year of 2007. To answer your question, we bought the house new. But I am wondering why one would be expected to pay for services rendered before you owned the property, obviously I wasn't expected to pay for the electricity that the builder had used in the house prior to our moving in, I am working on the same premise.

One final quick question, would the management company be responsible for installing rubbish bins? There are none at all in the estate and the litter louts are out in force. I am sick of picking up other peoples rubbish on a daily basis.

Stifster said:

Interesting, they shouldn't be using the sinking fund for day to day transactions unless absolutely necessary but perhaps the advance payments are sufficient.

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That may be it. I must check.

Is there any penalty for paying in arrears?

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I don't think so which struck me as odd. I don't bother with it though and just pay in full in advance to get it out of the way...

funnymunny said:

Ok, thanks for all your input. Will ask if I can set up dd then. I justed wanted to check things I was unsure of but you have answered fully and comprehensively. The one thing I am still not entirely happy about is having to pay the full fee for the full year of 2007. To answer your question, we bought the house new. But I am wondering why one would be expected to pay for services rendered before you owned the property, obviously I wasn't expected to pay for the electricity that the builder had used in the house prior to our moving in, I am working on the same premise.

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They could apportion it but at the same time, it might have happened that, for example, the landscaping services that were paid for weren't actually provided until April. It is the easy option for the management co.

One final quick question, would the management company be responsible for installing rubbish bins? There are none at all in the estate and the litter louts are out in force. I am sick of picking up other peoples rubbish on a daily basis.

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Is it an apartment/housing or mixed development? I believe that it is now the law that new planning applications have to have bins where there are apartments but that is only within the last 2 years. Our mixed estate had no bins in the plans, the builders built bin sheds, then had to take them down because they were in breach. In the end the Man Co had to pay for bins to be installed.

You would need to check your lease.

Its bizarre isn't it that the planning departments would not insist on bins in all developments across the board? Our development is a rural one with no apartments, all 3 bed semi-d. I am sceptical, as per your example, say landscaping, that anyone would pay for a service up front, before the job was actually done. Although I accept a deposit may have to have been paid. I am going to pursue it once more, but if they stand firm I will pay the full amount for €250 (with bad grace!!).

Can I ask, what onus is on people to pay? I know that it is part of the contract that you sign when purchasing the house, but how is it enforceable after you have purchased the house? Legal action obviously, but is it worth legal costs for €250.00?

Not that I have any intention of not paying, it is in my best interest to pay it to ensure the upkeep of the estate and hopefully maintain the value of my property. I'm simply curious as there are 39 other houses in the estate, and I do know people who can't understand the concept.

funnymunny said:

Can I ask, what onus is on people to pay? I know that it is part of the contract that you sign when purchasing the house, but how is it enforceable after you have purchased the house? Legal action obviously, but is it worth legal costs for €250.00?

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Most management companies will make no allowance for bad debts due to householders not paying up. They will usually apply a hefty rate of interest on arrears so eventually the sum may become worth securing via legal routes. Or they may be able to engage a debt collection agency (not sure about this). Ultimately if you have not cleared all outstanding management fees and want to move/sell you will not be able to do so until you have regularised matters - discharging all outstanding management fees is a prerequisite for selling on in most or all cases.

there are 39 other houses in the estate, and I do know people who can't understand the concept.

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This never ceases to amaze me how some people can buy in a privately managed area, sign the management company lease and then express surprise and confusion about the whole thing!

Ah, that makes sense Clubman.

I am not so much confused as bewildered. I do know the importance of having a management company though or some sort of structure that looks after the common areas. The previous estate I lived in had an absoulutely wonderful residents committee (albeit a bit intrusive, painted my pier tops without asking for the 'May Procession'!) and it really showed in the estate. It was beautifully maintained with all residents being asked for a few bob (€25) to buy some extra flowers and everyone pitching in two or three days a year to gather litter. Pity I couldn't organise something like that for current estate...not the prettiest!

funnymunny said:

Ah, that makes sense Clubman.

I am not so much confused as bewildered. I do know the importance of having a management company though or some sort of structure that looks after the common areas. The previous estate I lived in had an absoulutely wonderful residents committee

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Residents committees and incorporated management companies are different kettles of fish altogether.

Pity I couldn't organise something like that for current estate...not the prettiest!

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You may still be able to form a residents committee to do this but you might need to clear any alterations to common areas with the management company.

Write to the management company and ask them to organise some landscaping, that is what you are paying for after all.

Oh I know there is a difference, I would be of the mind that a good residents committee is far better than a managment company, although I would imagine that a residents committee may have more trouble getting the money from people when it is based on good will.

I would not have the balls to form a residents committee I'm afraid. All that organising and knocking on doors, brings me out in a cold sweat thinking about it. I will just keep picking up the rubbish when I see it and hope I lead by example.

In our situation there is a gardener who does the main/basic maintenance of common areas. Some interested/motivated residents formed an ad-hoc committee who, with the clearance of the management company and some small donations towards plants/bulbs etc., took it upon themselves to do additional planting, litter collections, graffiti removal and other titivations of the area.

shesells said:

Did you buy the house as new or 2nd hand? If not new then the previous owner would be responsible for the portion of the fees before you moved in.

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If there are any outstanding debt owed to the Management Agents by previous owners, then the sale of a property can/should not go through.

Had a similar issue as the OP with our Management Agents. We moved into our place in late 2006 and paid a full years fee on closing. For the next 10 months of 2007 we were bombarded with demands for another years fee for 2007. Each time we replied back to them that we had paid a full years fee in December 2006, therefore could the remaining 11 months worth be used in 2007. They finally seen the light and billed us for 1 month for 2007 - which we paid.

Several posts in this thread confuse Management Company and Management Agent. A key to living in a managed development is knowing and understanding the difference.

In brief, the Management Agent is employed by the Management Company to administer the development, collect fees, organise repairs, gardening etc.

The Management Company is the legal entity of which all owners in the development are members and is essentially "the business" of your development.

I'm sure there are loads of threads on here with better explanations but these terms are so often thrown around incorrectly and this adds to confusion.

shesells said:

Several posts in this thread confuse Management Company and Management Agent. A key to living in a managed development is knowing and understanding the difference.

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I agree. A common problem.

ClubMan said:

I don't think so which struck me as odd. I don't bother with it though and just pay in full in advance to get it out of the way...

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Apropos of this specific point - I checked and there is no penalty for paying our management fees in arrears by quarterly DD rather than the other alternative of payment in full for the year in advance.