FREQUENTLY ASKED QUESTIONS
A management company is a company established to own and look after the common areas of a development. Management companies are responsible for the maintenance of communal areas and shared services within Multi Unit Developments (MUDs), such as apartment blocks or housing estates.
The owner of each property in a development is a member of the management company (OMC – Owner’s Management Company). They have the power to elect a board of directors and vote in a budget and at AGMs.
The management company is legally obliged to oversee maintenance work and the management of common area services in MUDs. Many developers and management companies employ professional firms such as Just Property Ltd, known as managing agents, to provide maintenance and other services. The managing agent and the management company are two very different entities. The managing agent acts on behalf of the management company.
As the Board of Directors act in a voluntary capacity it often makes practical sense to delegate day to day management functions to an agent. The agent should also have expertise in the area of statutory and regulatory requirements for the management company.
A service charge is the annual cost of maintenance and upkeep of the common areas of an apartment complex. All expenses in relation to grounds, hallways, lobby’s, corridors lifts, car parks, etc. The annual cost is agreed at an annual budget meeting and apportioned out between members of the management company.
Service charges are not an optional payment if they are part of the terms and conditions of your contract to buy the unit. Once you conclude the contract, you have an ongoing legal obligation to pay these charges, usually on an annual basis. So make sure your solicitor explains these obligations. Not paying may leave you open to legal action, and any outstanding debts can be tied to your property.
When you bought your property you signed a document which entered you into a legal agreement with the management company, to be bound by the rules of the management company. The management company can charge interest on overdue accounts as per the terms of the head lease. If the situation continues, the management company will pass the outstanding service charge to a solicitor, who specialises in debt collection. The solicitor will obtain a judgement in court on behalf of the management company. This judgment will be recorded against the property.
This is a building investment fund for capital expenditure. A proportion of the annual Service Charge is put aside for the replacement of major common area items i.e. roof, lift replacement, carpets, tarmac, painting and new plants or trees.
The management company insurance policy (known as the “Block Policy”) usually covers, inter alia, the external structure of an apartment block, the common areas, damage caused by burst water pipe, subsidence, vandalism, etc.