Time for owners to have a say

TalkingProperty:Apartment living has brought with it certain legal issues, writes Pat Igoe

Next Thursday, the public will have a say. High-rise apartment blocks, unfairly high service charges or indeed misleadingly low service charges, and the performance of some apartments' management companies will be just some of the topics to be aired at a public forum to be held in Dublin on January 25th.

The city is all so different from even 10 years ago. The skyline is changing radically. Take a look around. High-density accommodation, not in two-up, two-down terraced houses but in high-rise apartment blocks, is forging new and European-style lifestyles. The problem for buyers is that the law has fallen behind. Seriously behind.

A glance at the property pages of The Irish Times points to the future. The new Ireland is shedding both its insistence on front and back gardens and our resistance to high-rise living.

A significant change in lifestyle is unfolding. A drive around many of Dublin's suburbs, take Dundrum as an example, or Stepaside, tells a lot. Perhaps, at last, the commute is becoming too long. Or financial reality dictates. And, where Dublin leads, other cities tend to follow.

A few examples: Dublin City Council has granted Hickey & Company permission for a scheme mainly comprising 139 apartments and a public plaza overhanging the Liffey.

Albany Homes is seeking permission to build 217 apartments near Swords, Co Dublin. In Stillorgan, Esmonde Motors has applied to build 141 apartments and an aparthotel plus crèche, restaurant, pub and shops.

Behind the glossy brochures, with pictures of golf-courses, yachts and blue skies, problems can, and do, lurk for apartment-buyers. Living in close proximity to your neighbours requires definite sets of rules and understandings. They require complex legal conditions and covenants. And still buyers remain exposed.

In the rush to put apartments on the market, some builders put their solicitors under such pressure that there is not time to change unregistered titles to Land Registry titles, which would give buyers a State guarantee and make the titles to their apartments less error-prone.

In those situations, titles to apartment blocks can be horrendous. A one-bed apartment can then bring with it a massive booklet of title going back centuries and countless related documents to be read and understood and any shortcomings rectified and explained to the buyer. At its mildest, there is room for error.

Even so, it is mention of the management companies that brings the glazed-eyes. Yet, they are essential to the whole process. Management companies, and their agents, who actually do the work, and their annual service charges, which can be quite onerous, are a reality. Be very familiar with the details before you buy.

In the first nine months of last year, apartments consisted of more than 57 per cent of all domestic properties built in the Dublin area, compared to 53 per cent in 2005, 42 per cent in 2004, down to 25.5 per cent in 1992. A record number of about a half million people in Ireland now live in apartment blocks.

The Law Reform Commission's consultation paper on 'multi-unit developments', from which these figures are extracted, summarises very well the legal situation of apartment-owners: 'He or she has two ownership interests', the report notes. "One is the leasehold interest in the unit which has been purchased and the other is the interest in the property vested in the management company." The latter is ownership of the common areas and, second, of the freehold title, both of which should vest in the management company after the last apartment has been sold. Delays in this, from the developers, and the reasons for the delays, are among the issues that can cause serious problems for apartment buyers when they try to sell or re-mortgage. Last month's excellent Law Reform Commission report noted that there is urgent need for reform legislation. "The... law has not kept pace with the sudden ubiquity of residential multi-unit residential developments... as a result, there is scope for mismanagement and abuse".

Among the serious issues that apartment buyers need to be aware of are lack of proper regulation of the management companies, of which the apartment owners are actually the shareholders; proper completion of apartment developments; and the responsibilities of the local authorities towards apartment owners.

Lack of clarity in the accounts of management companies is another critical issue requiring reform. Just how are the figures arrived at; what is the sum for the sinking fund if the lifts break down? Is there a sinking fund in the first place? And what are the responsibilities of the local authority?

Some management companies have been struck off the Companies Register. In these situations, the common areas in the apartment complexes, where they have vested in the management companies, will immediately vest in the Minister for Finance. A legal shambles follows. Re-instatement can be expensive and may involve an application to the High Court.

The forum will be chaired by John Bowman, and will include Tanaiste and Minister for Justice, Michael McDowell; Law Reform Commissioner, Patricia Rickard-Clarke, and Paul Appleby, Director of Corporate Enforcement. It will be at the Law Society in Dublin 7. Booking is required.

Pat Igoe is a solicitor in Blackrock, Co Dublin.