Management Companies; a brief overview- In recent years in Northern Ireland it has become more common for people to buy property and to live in residential developments, such as apartment complexes or housing developments. One of the main features of these developments is that there is common areas belonging the development but not to any specific property owner.
These common areas are owned, managed and controlled by a management company. This article outlines the features of this type of arrangement of which people buying or selling property in such developments should be aware. It is important to note that when dealing with apartments similar but not identical considerations apply.
Why is a management company needed?
Planning permission for modern residential developments requires that a certain proportion of the area is kept as green space. This is usually referred to as “amenity land”. No government body will have responsibility to look after these areas and it is therefore up to the developer to put an arrangement in place to do so.
What is a Management Company?
When finalising a development the developer will create a management company which is a separate body. Every property buyer in the development will be given a share in the management company so that it will be owned by those house owners collectively and they will control it.
For practical purposes the Management Company usually appoints an agent to deal with the work which needs done and the administration of the company, such as issue of accounts and making annual company returns.
The cost of carrying out the work of the management company including instructing contractors, administrative expenses, and the charges of the managing agent are collectively paid by the owners of properties in the development. Depending on the arrangements made, the cost may be payable annually, every 6 months, every 3 months or monthly.
An annual meeting of the management company should be held. Owners of properties in the development are entitled to attend this, to vote on matters requiring decision, to comment on how well or otherwise the management company is carrying out its functions and to raise matters of concern or make suggestions on what should be done.
What does the management company do?
The Management Company has a number of functions, but its main function is to maintain common areas within the development. This will usually be one or more green space areas within the development but sometimes will also include private roads, footpaths or passageways in the development, i.e. those which are not maintained by the Roads Service.
Maintenance will usually involve grass cutting, looking after trees and shrubs, maintenance of any pathways within common areas, and the repair and resurfacing of roads and footpaths if that is relevant. It will also make sure that insurance is in place for the common areas.
What should I look out for as a buyer or seller?
An intending seller of a property should keep copies of annual accounts and minutes of annual meetings, which should be given to them by the managing agent, as well as statements of account showing a record of the annual service charge requested and paid. A purchaser and his solicitor will need to see these in relation to any sale. A share certificate in the name of the owner will also have to be produced although this is normally with the title deeds to the property.
How can we help you?
In acting for a seller we advise what documentation is required to be obtained and produced and, where this is not immediately to hand, liaise with the managing agent to obtain it.
In acting for a purchaser we will check documentation received and ensure all documentation is obtained. We will transfer the relevant share certificate for the property
Unfortunately it is sometimes the case that a management company is not operating correctly or at all in which case we will advise as to how problems can be resolved. The role of the management company may seem straightforward but it is important that it is properly carried out to avoid difficulties on sale or purchase of an individual property or any other legal issues.
If you believe your management company is not functioning correctly or has been struck off the companies register then you may wish to seek advice.
Should you require any information in relation to the issues raised in this article or if you have any queries relating to buying or selling property visit our residential property department or contact reception on 02890 213770.