Am I a member of a management company and if so why?
When you buy an apartment or when you buy a house in many developments and receive your Membership Certificate you legally become a member of the property Management Company. The Membership or Share Certificate is a key legal document which confirms that you as the owner of a unit are, under the terms of your purchase agreement, a member of the Management Company. Apartments must have management companies, and many modern housing developments do have management companies to manage the common areas in lieu of the local authority, or until the local authority takes over the roads and common areas itself . In apartment blocks the management company is responsible for the halls, stairwells, and landings and in estates, is usually responsible for the green areas, and sometimes the roads. The Management Company must be in order if a sale of a property is to go through smoothly.
As a corporate body, the Management Company owns the freehold of the common areas of the development. The Company, on behalf of the owners, is the legal owner of these areas, and the owners share collective responsibility for them. Membership of the Management Company should allow you to have a say in how the common areas are managed, and you should be invited to an AGM each year to vote on key issues and budgets etc. It is common, although not essential for managing agents to be appointed.
The use of a company structure means that members have certain rights under company law, in particular the Companies Acts. In general then, all company members are entitled to:
- Adequate notification of the company's general meetings
- Timely information about the company’s operations and finances
- Participate and vote in the annual general meeting (AGM)
- Minutes of general meetings of the company and resolutions
- Various registers kept by the company, including the register of members and the register of directors and secretaries and their interests
- Periodic financial statements, directors’ reports and auditors’ reports about the company's financial affairs
- Members of management companies can vote to change managing agents or shop around for better rates.
Members of the management company are entitled to information from the company to corroborate the level at which the rate is being set. The company should provide you with as much information as possible on how last year's budget was spent, and how it has calculated the charge for the forthcoming year.
With the advent of the Multi Unit Development Act 2011, the creation and establishment of Management Companies for Multi Unit Developments is now a legal requirement. This offers increased protection for property owners. By 1 October 2011, developers who have not already done so must transfer the common areas and the reversion in multiunit developments such as apartments or townhouses to the management company. In future, the common areas and reversion in new developments must be transferred before the units are sold. Furthermore, the transfer of the common areas does not relieve developers from their duty to ensure completion of the development and developers are now obliged to pay service charges in respect of unsold units.
Management companies can now be restored to the register of companies without the need to apply to the High Court-up to six years after being struck off the Register of Companies.
For more advice relating to buying, selling, and owning property and further information on your rights and obligations as a member of a Management Company, feel free to contact McInerney Solicitors for friendly expert advice on all areas relating to buying and owning your property.