New laws set clearer rules for apartment management companies – but managing agents are still not regulated, writes PAT IGOE

EXPECT the figures from Census 2011, when they become available, to confirm what most of us suspect – that apartment living has taken a serious hold in modern Ireland. The most-quoted figure of 500,000 people now living in apartments may even be an under-estimate.

Many apartment owners are now increasingly worried about the management of their developments and the financing of necessary services, such as grass-cutting and essential repairs. It is for this reason that the new statutory protections in place since April 1st for apartment owners and dwellers are already being carefully watched for results.

It is widely agreed that the Multi-Unit Developments Act 2011 will help the increasingly troubled apartment residential sector. Only weeks into the new legislation, its beneficial effects are already being noticed.

But it is a case of only two cheers. Despite the broad reach of the new law, managing agents, who may be engaged by the management companies to operate the day-to-day running of apartment complexes, are still unregistered and unregulated. This is widely recognized as a major exposure, even if it is one that is due to be soon closed.

If an annual service charge of €500 per apartment is taken as an average figure (and some apartment complexes go as high as €2,500 per year), the annual sums passing from apartment owners to managing agents is clearly in excess of €50 million. It is a case of so far, so honest.

“The new law is already helping because it sets clearer standards for apartment developments and give apartment owners control over their own developments,” according to Aisling Keenan of AK Property Services. Paul Mooney of the Irish Property and Facilities Management Association (IPFMA) agrees. He says that “the door is more open than ever for people to take control of their own apartment complexes”.

There has been a significant increase reported in the past few weeks since April 1st in enquiries from apartment owners about what they and their management companies must do to comply with the new law. They are being told: they must set-up meaningful sinking funds, with separate bank accounts, to pay for necessary improvements or maintenance; house rules will have full legal enforcement in the Circuit Court; any new budgetary proposals will not proceed if 75 per cent of votes at the compulsory annual general meeting are against them; and that there is a new mechanism for resolving disputes including the use of mediation.

But it is the dispute procedures in the new law, including access to the Circuit Court, that is already getting a lot of attention. Sadly, this is because of unprecedented difficulties in collecting the annual service charges from apartment owners. It is now a “massive problem”, according to one agent.

Non-payment of the annual charge is leading to problems with providing services, such as cutting grass and maintaining accounts. Earlier this year managing agent CBRE was reported to have threatened to withdraw its services from an apartment complex in Sandyford, Co Dublin because of unpaid management charges by apartment owners. This case is by no means unique.

Since coming into operation on April 1st, the act has been closely examined, in particular section 24. It provides that the management company (which is owned by all apartment owners) and the individual apartment owners are entitled to apply to the Circuit Court for an order enforcing any rights. The court must be told whether mediation has been attempted.

The new law points to greater transparency, but also to greater regulation. The Law Society is expected to give solicitors tighter guidelines when acting for apartment buyers. The Institute of Chartered Accountants is likely to issue new and tighter audit rules to chartered accountants on monies passing through the accounts of managing agents.

Rubbish collection, repairing roofs, maintaining car parks, mowing lawns or paying insurance . . . these services must all be paid for or they will be discontinued. Realistic enforcement of the annual management charges payable by apartment owners is already being seen as the first real test of the new legislation.

* PAT IGOEis a solicitor in Blackrock, Co Dubln