Priory Hall and the April Fool’s Day Legal Coincidences!
Date: October 22nd, 2011 | Filed under: Blog | Tags: " Apartment Management Company Law", " Owners Management Company", "Coalport", "Muds", "Multi unit Developments Act 2011", "omc", "Priory Hall Apartment Complex in Donaghamede", "Sinking Fund", "the schedule 3 documentation", Priory HallOpen letter to Mr Thomas McFeely, Re the Priory Hall Apartment Complex in Donaghamede, Dublin 13
Dear Mr. McFeely,
Do you remember me, I bought a two bedroomed apartment from you back in 2006 for nearly €300,000.
I’ve just been offered a job in New Zealand and I’ve asked the local estate agent to sell my apartment and he wasn’t very upbeat about the prospects of finding a buyer until you can sort out all the fire safety issues but I with glad to hear that you think you can have all this sorted by the end of November, it certainly won’t help my prospects of selling my apartment on the basis that you probably won’t be able to make the whole complex totally fire safety compliant until maybe the end of February 2012 and when we all move back in again at the end of November I hear that we will have a 24-hour Fire Warden resident on the premises!
I’ve asked my solicitor to handle all the legalities when I find a buyer. However, Katherine tells me that Priory Hall is not MUDs Compliant?
My solicitor gave me a copy of the Multi Unit Developments Act 2011, she is a very direct woman and she told me very clearly that what I got for my €300,000 was effectively a right to pass through the common areas, breath the air in my apartment and most of what I thought I “owned” appears to be what is known as the “common areas” and she told me that these common areas are owned by the management company, Priory Hall Donaghamede Management Limited of which you and your brother Noel are the directors and I think all of the residents are the members.
My solicitor told me that you as a director were required to send me the audited accounts every year 21 days before the annual general meeting but I don’t recall ever receiving these from you and I just find it hard to take on board that what I thought I “owned” appears to vest with this management company that is controlled by you and Noel and is late with its accounts and returns to the CRO and is at risk of being struck off the register in future.
So she is saying what I thought I “own”, I don’t fully appear to “own”. She says it’s like in limbo! She says it will be okay in time if your solicitors do up all the legalities and move the “common areas” over to our OMC. Have they started on this paperwork yet because what I read from this new apartment management company law is that most builders, developers and their advisers had to be aware of this two or three years ago and must’ve known that it was coming down the line and would need to put the paperwork in order? Seems like we have all these wonderful laws but nobody is enforcing them?
She thinks Coalport have been put in receivership or was in receivership? Are you in receivership? Are you liable to go into liquidation? Do you know if you’re going to be able to come out of this on the right side? What if all the residents get together and sue Coalport for some class-action for all the stress, anxiety, trouble, inconvenience and the garden sink for all that happened was over the last few weeks?
My solicitor told me that if the Company is struck off the register, that the company will have no legal existence and the “common areas” will vest with the State in the name of the Minister for Finance, Mr Michael Noonan! I thought our situation was quite messy and complex would it now seems to be taken on a life of its own and I’m getting more confused as time goes by.
Great if you can assure me that you are working on these accounts and that you will have them audited and sent to all the members for their consideration as soon as possible as otherwise my solicitor has advised me that I may need to bring what’s known as a Section 371 Application under the Companies Acts 1963 to 2009 in the High Court to compel you as a director to comply with your statutory obligations under company law.
However, I’m aware that you have a lot on your plate these days having already been brought before the High Court by Dublin City Council when they sought an evacuation order on the premises last Friday and I’m still shellshocked from this whole episode and right now I don’t fancy being the one to have to bring another formal application before the High Court to make you do something you should already have handled.
Speaking with my fellow neighbours and residents in the Regency Hotel the other night nobody seemed to be aware of Section 1 of the MUDs that seems to very clearly set out that all the exterior walls, foundations roofs, entrance halls, landings, lifts, staircases, access roads, footpath, systems, tanks, drains, pipes, wires central heating boilers and all other areas common areas are owned by “our” management company.
However, my solicitor tells me that in accordance with Section 5 of the Multi Unit Developments legislation you, as the developer, Coalport were required by 1st October to have arranged to transfer all these common areas from your company to “our” management company.
Did you know about Section 5?
I have to say I didn’t know about a lot of my solicitor told me last week but she told me that it started life from a Law Reform Commission Report carried out nearly 10 years ago and that this new apartment management company law has been going through the Seanad and the Dail for the last two years and was actually passed by the Dail last December 2010, President McAleese signed it into law on 24th January 2011 and my solicitor tells me that it was actually commenced into law on April Fools’ Day 2011!
My solicitor is very knowledgeable about these matters and she also told me that we have a double whammy in that “our” apartment management company is also regulated by 15 different companies acts that are nearly 50 years old, 1963 to 2009 and she told me that the Principal Act of 1963 was also commenced into law on April Fools’ Day 1964! I don’t know how she knows all this technical stuff which she also told me that the previous act, the Companies Act 1908 was likewise commenced into law on April Fools’ Day 1909!
I find all these coincidences about April Fools’ Day as being rather worrying and I’m now concerned at all the apparent failures to comply with this Multi Unit Developments legislation and it looks like it might delay my sale if I can find a buyer because my solicitor has gone through a big long list of documentation that is required to be handed over under what’s known as the Schedule 3 documentation. Also the management company is now calling an OMC, an owners management company and I don’t feel like I’m really part of this or have ever been involved?
When I read all the Schedule 3 documentation and what my solicitor told me are what is known as the new Requisitions on Title from the Law Society I asked her if this was another April Fools Joke that she was playing on me because this is just part of what she will need from you before my “Sale” can take place and you might give me some comfort to let me know that you have all this handled and that your solicitors are in the process of arranging to hand over all the Schedule 3 documentation which I set out here for your information:
SCHEDULE 3
Documentation to be handed over pursuant to Section 31(2)
1. Confirmation that the development has been completed—
(a) in accordance with all relevant planning permissions under the Planning and Development Acts 2000 to 2009, (other than in relation to a condition of such permission relating to the making of financial contribution,
(b) in accordance with the Building Control Acts 1990 and 2007.
2. Certificates confirming that any financial contributions required by virtue of a condition in a relevant planning permission under the Planning and Development Acts 2000 to 2009 or pursuant to any other statutory enactment have been paid.
3. Any safety file required by or under any enactment to be maintained by the developer.
4. Professionally prepared drawings of the development together with the latest revisions of the drawings of the structure or structures prepared by the design team.
5. Professionally prepared drawings showing the services relating to the development, as built.
6. Operational and maintenance manuals relating to plant and equipment in the development.
7. Documentation relating to warranties and guarantees as respects plant and equipment in the development.
8. Maintenance contracts and contracts for the provision of services relating to the development.
9. Test records relating to drainage, water pipe work and heating pipe work.
10. Schedule of plant, equipment and fire protection systems specifying the expected useful life of such plant, equipment and systems.
11. Title documents relating to the development including, as respects the common areas and the reversion, the original stamped deeds (including the declaration made pursuant to section 11 or 12).
12. Stamped and registered counterpart leases or other deeds relating to each unit in the development or relevant part of the development.
13. Documentation relating to the owners’ management company including such documents and records as the company is required by law to maintain together with financial and management accounts and records relating to service charges as respects the development,
except where such documentation has already been furnished to the owners’ management company or is already in the possession of the owners’ management company.
Further, my solicitor has also given me another list that will require all these boxes to be ticked before she can satisfy “My New Purchaser” of my apartment whenever he or she can be found and I’m finding all this rather overwhelming and I really need to hear back from you that you have all this handled and in particular with regard to the Sinking Fund and that you have been collecting the service charges and will be able to hand over all the stamped and registered counterpart leases, other deeds for each unit in the development and most importantly that we will get the Safety File and all the professionally prepared drawings.
This is what Katherine told me you need to hand over in addition to the Schedule 3 documentation and I am typing it out here for you:
Units in a Multi-Unit Development in which a residential unit was sold prior to 1st April 2011
1. Furnish evidence by way of Companies Office search that the Owners Management Company (“the OMC”) is registered in the Companies Office.
2. Confirm if the OMC has received any notice threatening a strike off or liquidation. If any such notice has been served please furnish details.
3. Furnish certified copy Certificate of Incorporation and Memorandum and Articles of Association of the OMC.
4. Furnish either:
(a) Copy Folio and map showing the OMC as registered owner of the common areas and of the reversions in the residential units or
(b) Copy Deed of Assurance of the common areas and of the reversions in the residential units to the OMC.
5. If the development stage has ended provide a copy of the statutory declaration required under Section 11 of the MUD Act.
6. Has any request been made under Section 12 of the MUD Act? If so, please furnish details and a copy of the Statutory Declaration required.
7. If the development stage of the Multi Unit Development has ended, provide written confirmation from the OMC that the documentation specified in Schedule 3 of the MUD Act has been furnished to it.
All units in a Multi-Unit Development
1. (a) If no contract for the sale of a residential unit in the Multi Unit Development was entered into prior to the 24th January 2011, confirm that the voting rights of the members and the name of the OMC are in compliance with Section 14 of the MUD Act.
(b) If any such contract was entered into prior to the 24th January 2011, confirm that the voting rights of members comply with Section 15 of the MUD Act.
2. Confirm:
(a) That one OMC is or will be responsible for the management of the external and/or internal common areas of the entire Multi-Unit Development and all the services relating thereto.
(b) That the only shareholders/members in the OMC are the unit owners.
(c) How the service charge is apportioned between the unit owners?
(d) There has been no breach of Section 16 of the MUD Act.
3. Who is presently managing the Multi-Unit Development?
4. If a firm of managing agents has been engaged state:
(a) The name of the firm.
(b) The terms of their engagement including (in particular) the amount of their charges.
(c) Whether they are employed by the Developer or the OMC.
5. Furnish the name of the solicitor or firm of solicitors representing the OMC.
6. (a) Are there house rules of the OMC other than as set out in the Memorandum and Articles of Association or in the Lease.
(b) If so furnish details of these rules and confirm that they were made in accordance with Section 23 (4) of the MUD Act.
7. (a) Has the OMC put a sinking fund into effect in accordance with Section 19 of the MUD Act?
(b) If so what is the present level of the fund and where and in whose name is it held?
(c) What is the amount of contribution required under Section 19 (5) of the MUD Act?
8. (a) What is the amount of the service charge currently payable?
(b) Furnish details of the scheme in respect of annual service charges as required under Section 18 (1) of the MUD Act.
(c) Furnish a copy of the estimate for the current service charge year as required under Section 18 of the MUD Act.
(d) Confirm the estimate was considered and approved as required under Section 18(2) of the MUD Act.
(e) Furnish a copy of the last annual report as required under Section 17 of the MUD Act and confirm that all requirements in relation to the annual meeting have been complied with by the OMC.
(f) Furnish now the accounts of the OMC for the previous financial year.
9. Is the Vendor or the OMC aware of any possible claim against the funds of the OMC?
10. Is the Vendor or the OMC aware of any proposal by the OMC to carry out any repair work or incur other expenditure which would substantially affect the service charge payable at present?
11. Has any application to Court been made or is pending or has been threatened by any person under Section 24 of the MUD Act in relation to the OMC or the Multi-Unit Development? If so please furnish full details.
12. Has the OMC entered into any contracts which would contravene Section 32 of the MUD Act?
13. Furnish a certified copy of the current block insurance policy together with evidence that it is in force together with a letter of interest noting the Purchaser’s and (if applicable) the mortgagee’s name(s).
14. Hand over on closing;
(a) Share Certificate in or membership certificate of the OMC in the name of the Vendor.
(b) Receipt for latest payment of the service charge.
All the other residents seem to think that I should become the new Company Secretary and that seems to mean that I will be kind of responsible to guide all the other residents, members and directors through this incredible maze of legislation, rules and regulations.Who in their right mind would want to take on this job , however , if somebody doesn’t come forward and “volunteer ” then this sad saga will just continue on and on until somebody takes this completely in charge and writesout a roadmap going forward as to where we are going and when we can start ticking off these boxes that we have slowly but surely achieved what MUDs sets out in this relatively short but very technical 34 sections of new Apartment Management Company Law !
Then about five or six of the other residents will need to go forward as directors of the management company Priory Hall Donaghamede Management Limited in place of you and your brother Noel and that we better start reading up on the existing company law that seems way over the top for what is in reality a glorified Residents Association but Katherine says that we are what’s known as a company limited by guarantee and she said that under company law we are regarded as a public company and that we are similar to Irish Resolution Bank Corporation Plc, AIB plc or any one of the 1700 other public companies in that we have to file the full statutory accounts in the companies registration office.
Our little management company cannot claim audit exemption. 160,000 other private companies don’t need all the red tape and bureaucracy as does our little management company in that if their turnover is below €8.8 million now they don’t need an auditor and they just claim audit exemption, we can’t avail of this and we appear to have a huge amount of rules and regulations governing our humble “Residents Association”.
Katherine then handed me three big books and she said that this is Pillar A of the new Companies Bill that will go before the Oireachtas next year and will completely change company law in that all the 15 companies acts that she gave me will go in the bin over the next few years and we will get a complete set of new rules and regulations. I put these three books on the weighing scales and they weighed nearly 5 kg and Katherine said that they were copied double sided and on particularly light paper to keep the weight down. She said that this is the first half of the new legislation for apartment management companies and then gave me the bad news that the second half of what’s known as Pillar B has yet to be published next year and will specifically will deal with our OMC, Owners Management Company.
Unfortunately people like yourselves have double home work in that if you are a Pillar B type company then you also need to know about Pillar A! I was planning on taking pillar a and B with me next weekend when I’m taking a few days off and I wasn’t planning on paying for a bag with Ryanair but Pillar A and Pillar B weighs in at nearly 10 kg and it uses up all my Ryanair Baggage Allowance! This doesn’t even include the Multiunit Developments Act 2011 or the Fire Services Act 1988 and 2003 or the new Requisitions on Title from the Law Society!
I just don’t know how I’m going to be able to convince all the other residents to put their name forward and become a company director of our OMC and take charge of all the legalities.
Life is really not much fun these days reading the new apartment management company law and I think I going to have a problem if I become a director of our OMC complying with Section 17 of the Multi Unit Developments Act 2011 as it says very clearly say that I as a director must prepare and furnish to each one of my fellow members and residents an Annual Report which complies with Section 19 and in particular includes a statement setting out, in general terms, the fire safety equipment installed in the development and the arrangements in place for the maintenance of this equipment!
It seems like becoming a director of your OMC might be like a full-time job for Priory Hall!
Are you aware of Section 17? Because right now you in your brother Noel are the directors and you will be required to comply with this section and maybe you might start preparing this paperwork and we can follow the lead from you?.
Section 17.— (1) An owners’ management company shall—
(a) prepare and furnish to each member an annual report which complies with subsection (2),
(b) hold a meeting at least once in each year for purposes which include the consideration of the annual report referred to in paragraph (a).
(2) An annual report of an owners’ management company shall include:
(a) a statement of income and expenditure relating to the period covered by the report;
(b) a statement of the assets and liabilities of the company;
(c) where the owners’ management company is required to establish and maintain a sinking fund, a statement of the funds standing to the credit of that fund;
(d) a statement of the amount of the annual service charge and the basis of such charge in respect of the period covered by the report;
(e) a statement of the projected or agreed annual service charge relating to the current period;
(f) a statement of any planned expenditure on the refurbishment, improvement or maintenance of a non-recurring nature which it is intended to carry out in the current period;
(g) a statement of the insured value of the multi-unit development, the amount of the premium charged, the name of the insurance company with which the policy of insurance is held and a summary of the principal risks covered;
(h) a statement setting out, in general terms, the fire safety equipment installed in the development and the arrangements
in place for the maintenance of such equipment; and
(i) a statement fully disclosing any contracts entered into or in force between the owners’ management company and a director or shadow director of the company or a person who is a connected person as respects that director or shadow director.
(3) At least 21 days notice of the meeting referred to in subsection (1)(b) shall be given to each member.
(4) A copy of the annual report referred to in subsection (1)(a) shall be furnished to each member at least 10 days before the meeting referred to in subsection (1)(b).
(5) The meeting referred to in subsection (1)(b) shall take place within reasonable proximity to the multi-unit development and at a reasonable time (unless otherwise agreed in writing by a 75 per cent majority vote of the members).
(6) The obligations of an owners’ management company under this section are in addition to any other obligation or duty of such company whether arising under an Act, statutory instrument, by rule of law or otherwise.
It doesn’t get any better when I read Section 18 that sets out how all the service charges have to be approved at the annual general meeting and I don’t remember being at any of these meetings where all this was discussed.
I’m really struggling with Section 19 that says that the OMC must establish a Sinking Fund next year and that the amount of the contribution from each member shall be €200 per annum or such greater amount as the members might agree. How am I going to be able to “Sell” this to my fellow residents and members when right now they are hard-pressed even paying their mortgages, the annual service charge and now Section 19 requires me as the company director of the OMC to hit them with another bill!
Great if you could come back to me within the next week to let me know that this is all handled as right now all this legal stuff is just too much for me and is way over my head but Katherine says I will not be able to sell until you make us MUDs compliant as she says no bank will give my purchaser the mortgage until all the boxes have been ticked and the new purchaser will want to know that he or she will have good title to my apartment.
Sorry if I have rambled on a bit too much, this is all very new to me and I thought when I bought my apartment in Priory Hall that I wouldn’t have to worry about such things like looking after the gardens and cutting the grass and keeping the place nice and tidy!
This is the first I’ve heard of all these new laws for apartment management companies. My solicitor tells me that the Department of Justice were responsible for introducing this new law for people like us and whilst I’m sure it all seems very logical and lays out a roadmap for the future, there appears to have been absolutely nothing spent on publicity or education for the 500,000 people or so that own, invest or a live in typical apartment complexes like Priory Hall.
However, overnight, life appears to have become very complicated if you live in what is now known as the multiunit development, a humble block of apartments and I’m really worried about how long it’s going to take to put our house in order?
I look forward to hearing from you next week?
Johnny M
