Buying And Living in a Multi-Unit Development Property in Ireland

2. Buying A Unit

Continued

2.5 The building agreement contract

The building agreement contract is used in addition to the contract for the sale of property where the purchase involves the construction of a new residential property.

A standard building agreement contract drafted by the Law Society of Ireland and the Construction Industry Federation is often used.

The building agreement essentially refers to the bricks and mortar of the property and outlines both the buyer and sellers rights and responsibilities.

For example, the building agreement specifies the financial terms and the payment milestones, i.e. how, when, for how much and in what manner the unit will be built and paid for.

It will also define the extent of the builders' obligations to the buyer in terms of how the unit is built. In the building agreement, the buyer is referred to as the Employer and the seller as the Contractor.

This contractual documentation, and in the case of an apartment, the lease, will set out the terms and conditions under which you agree to purchase the property.

These rights and responsibilities become legally binding when you sign the contract and it is essential that you are aware of what exactly they mean.

As well as relating to your individual unit, the contract will also set out your part ownership of the common areas, setting out the rights and

responsibilities that this ownership confers upon you.

In general, where the developer owns the land and builds the units for sale, both the contract for the sale of property and the building agreement will be interrelated and will provide for the fact that the developer will convey title (ownership of the property) to the purchaser upon completion of the unit by granting him a lease.

2.6 The lease contract

The lease contract is a legal document which each purchaser signs when buying property in a multiunit development.

The lease will set out the legal responsibilities and obligations of owners, the developer and the management company.

The management company is included in the terms of the lease to enable it to undertake ownership and management of the common areas when conveyed by the developer.

Under the terms of the lease, the management company agrees to provide the services required to maintain and manage the development and owners agree to pay an annual service charge to the management company to pay for those services.

As regards owners, it will generally outline what they must do in relation to maintaining their unit, such as keeping it in a state of good repair, not creating a nuisance and paying the service charge.

The lease will set out what the service charge is and how it has been apportioned to you. Apportionment of service charges is explained in section 3.3.

The lease will also require the owner to obey any rules and regulations as may be set down by the management company from time to time in the form of house rules. House rules are explained in section 5.

It is essential that you ask your solicitor to explain the terms and conditions of the lease document to you and that you fully understand what is expected of you as a unit owner and what you can expect of the developer and the management company.

If you do not understand any words or the meaning of a term is unclear, always ask your solicitor for clarification.

You should request a copy of the lease document for future reference from your solicitor when you complete the purchase.

2.7 Requisitions on Title

As part of your solicitors' conveyancing work they should raise what are known as Requisitions on Title.

Requisitions on Title are a checklist of standard questions relating to the sale of a property drafted by the Law Society of Ireland.

The questions are mainly general but in part specific to the property and are asked to ensure that everything is in order with the property you are buying. The seller's solicitor should answer all of these questions before any final closing arrangements are made.

In relation to management companies, a number of specific Requisitions on Title are outlined below for information.

Read some sample Requisitions on Title relating to management companies.

2.8 Memorandum and Articles of Association

Your solicitor should also request the Memorandum and Articles of Association of the management company.

These are the company law documents used to define the aim of the company and the way it will be structured and run.

The Memorandum and Articles of Association are very important as they set out how the management company will be governed and what rights owners will have in terms of having a say in how it is run.

Of particular importance is the fact that the Articles set out who the directors of the company are (i.e. who is responsible for running the company) and what voting rights you, as a member will have.

A more comprehensive explanation of the importance of the Memorandum and Articles of Association is set out in section 9.6.

2.9 Membership of the management company

Depending on the legal structure of the management company, a Membership/Share Certificate will be issued by the company to each member/shareholder. The Membership or Share Certificate is a legal document that confirms that you, as the owner of a unit, are under the terms of your purchase agreement a member of the management company.

This will be one of the key legal documents handed over to you when the purchase of the unit has been completed.

It is important you ensure that you receive this document from your solicitor who should obtain it on your behalf. When you become a member your contact details must be taken for the register of members.

This register sets out information such as your name, address and the date on which you became a member.

The register of members is important as it is used to notify members of meetings of the management company and also to identify all persons who must pay service charges.

The register is generally kept at the management company's registered office and it must be open to inspection to every member free of charge.

The register of members must also be submitted to the Companies Registration Office where the public may view it. More information on the register of members is set out in section 9.7.

2.10 What rights do you have as a member?

The use of a company structure means that company members have certain rights by way of the provisions of company law, in particular the Companies Acts.

Under company law, members are entitled to:

A copy of the Memorandum and Articles of Association of the company;
To inspect and obtain copies of the minutes of general meetings of the company and resolutions;
To inspect and obtain copies of the various registers kept by the company, including the register of members and the register of directors and secretaries and their interests;
To obtain a copy of the periodic financial statements, directors' reports and auditors' report relating to the financial affairs of the company;
Participate and vote in the company's annual general meeting (AGM).

A more in-depth explanation of the rights members of management companies have is set out in sections 9-14.

Contents