Buying And Living in a Multi-Unit Development Property in Ireland
1. Multi-Unit Development Unit Property
1.1 Introduction
The term "multi-unit development" is used in this Guide to describe a form of residential accommodation in which individual property "units" share a range of facilities, known as common areas. Common areas may include:
- Entrance doors/lobby areas;
- Car parking;
- Stairwells/lifts;
- Garden or recreational areas.
Unit owners may also share and/or access certain services on a communal basis, for example:
- Waste disposal;
- Security services;
- Cleaning and maintenance contracts.
A multi-unit development may be one of a variety of dwelling types such as a house, an apartment or duplex.
In a traditional standalone house, the facilities and services or areas such as those referred to above are maintained by the individual property owner, or where applicable, the local authority.
In a multi-unit development, they are owned and maintained by the unit owners on a communal basis.
This is because all owners share, use and own the common areas, for example halls, gardens and parking with other units.
Unit owners pay an annual fee known as a service charge to pay for the maintenance of these common areas and other shared services such as cleaning and waste disposal. Service charges are explained in greater detail in Section 3.
When you purchase a unit in a multi-unit development, you purchase both your individual property and a share of the ownership of the common areas.
You therefore enjoy two legal interests: one, as the owner of your individual unit and second, as a part owner of the common areas.
At the outset, if you are considering buying a new unit always ask your solicitor if the planning permission for the unit you are buying requires that a management company be set up.
If the unit you are buying is in an established development, ask the estate agent if a management company is in place.
1.2 Management companies
It is most common in Ireland for multi-unit development ownership to be structured in the form of a company, usually called a management company.
A company is a form of business organisation which is a separate legal entity and distinct from the people who run it.
While there is no legal obligation to set up a management company, management companies are generally formed to manage multi-unit developments because they can be an efficient means of management and the rules of company law (which they must adhere to) offer an effective structure in terms of administration and ownership.
The management company is established for two key purposes:
- To be the legal owner of the unit and common area leaseholds;
- To manage and maintain the common areas.
In new developments the developer generally establishes the management company at the outset, often before the first unit is sold. (In this Guide the term developer is used to refer to persons or companies who build, own and sell multi-unit developments).
As units are sold, each purchaser becomes a member of the management company on completion of their purchase transaction and receipt of certificate of membership. For example, if 50 apartments are sold, there will be 50 members of the management company.
Typically, when the developer completes the development and transfers his ownership of the unit and common areas, the unit owners through management company become the legal owner of the common areas and responsible for their maintenance.
The management company is ultimately intended to be the owners' company and act on their behalf. This means that you and your fellow owners should eventually be responsible for the upkeep not just of your own units, but all the common areas too.
The value of your property and your quality of life are affected by how well the common areas are managed.
All owners in a development should take part in their management company. This will help to make sure it is well run and works well to protect the value of your investment.
Although the company is owned and ultimately controlled by its members, they do not personally need to be involved in the administration of the company's day-to day affairs.
For example the members do not have to put their names to contracts entered into by the company. Companies appoint directors to do this work.
When the management company is first established, the developer or some of their staff, associates or solicitor may fill these roles. Typically, when the developer has finished the development and transferred ownership of the common areas to the management company, these directors resign.
At this point, owners as members of the management company volunteer to fill the role of directors of the management company. The role of company directors is explored in section 10.
1.3 Managing agents
Depending on the size of the development and the skills and time required to provide the services needed to maintain the common areas in a satisfactory condition, a management company may decide to employ a 'managing agent' to manage and maintain the common areas on its behalf.
Managing agents are firms who are contracted to administer, coordinate and provide management services such as the repair, maintenance, and insurance of the common areas on behalf of management companies.
Managing agents and management companies are two very different entities.
The management company employs the managing agent firm and ultimately the agent is accountable to the management company for its actions. The role of managing agents is explored in section 6.