Is it legal to sell property when the management fee is unknown?

Q I'm interested in two properties in Ireland. Both are part of a development area with annual management fees. I have made enquiries as to how much the management fees are but the agent has told me the annual management fee is not known and will only be known when the development area is finished. There is no confirmed completion date for the development area.

Is it legal to sell property when the annual management fee is unknown? How can I buy this property when I don’t know what the annual management fee is?

A I draw your attention to the Multi-Unit Developments Act 2011 (MUD Act 2011). Section 18, Sub Section 8(a) allows for the owners’ management company (OMC) to set the service charges prior to the completion of the first sale of a property in the development. It is not illegal to sell a property without a known service charge as the legislation is silent on this. The matter is wholly avoidable, however.

The service charge may be set without holding a meeting of the members as there are none at this time with the exception of the board of the OMC who would most likely be employees of the development company. This section in the legislation is designed to accommodate new developments where no units are sold and therefore no members exist to agree a service charge at a general meeting.

The OMC needs to simply proceed to set a service charge. It would be prudent to ensure that the service charge is as independent of the development company’s office as possible and adequately informed. Historically it was not uncommon for development companies to under quote the service charges so as to entice buyers. Many properties were sold with the fiction that it was a cheap development to live in.

The development company was achieving the price they were seeking and the OMC was left to manage with insufficient finances to cope with the needs of the development’s assets. It is was also common to under-price the initial service charge as the assumption was that the warranties and guarantees on all things new suggested that very little money was needed to fund maintenance of a development. If the service charge for a development is initially inadequately priced, you should expect the service charge to rise year on year so as to catch up.

I think it would be best to request an estimate for a three-year period or more. You will note that the members of the OMC will agree the service charge at a general meeting in year two. It would also be best to request a copy of a building investment fund programme for the development that indicates the finances needed for the Sinking Fund for a period of 20 years or more.

Paul Huberman sits on the Property and Facilities Management Professional Group of the Society of Chartered Surveyors Ireland scsi.ie

Q Some of our neighbours are having problems with blocked sewage pipes and we're wondering what could be causing this and how best to sort it out. Just to give you some background. Our new detached house was built on a corner site here in Cork city six years ago while a new detached house was built on the corner site at the other end of our short row about two years ago.

Our house connects directly to the public sewerage network. The people in the new house and several of the semi detached houses beside them have suffered blockages on a number of occasions over the last couple of years. The new couple have taken a lead in sorting this problem and have paid a private company to unblock the pipes.

However, on the last occasion they asked everyone in the row for a contribution to the bill. We appreciate they have a problem and shouldn't have to shoulder all the expense themselves but isn't this an issue for the houses affected directly to sort out?

It's not a huge sum but if we contribute this time it sets a precedent for the future and is it not an issue for the houses affected to sort among themselves? One neighbour told me there were no issues until the new house was connected. We or our immediate neighbours haven't had any issues. How do you think we should proceed?

A The first thing to establish is whether or not the development has been taken in charge by the local authority. If it has, they will be responsible for dealing with the sewers and they will determine the cause or source of the blockage and deal appropriately with it. If the development is not taken in charge by the local authority, there should be a management company in place to deal with the common areas and services although this is not always the case. Sometimes, the developer retains ownership of the common areas and services. This can be problematic, particularly if the development has not been completed or if the company is no longer in business.

An unfortunate characteristic of sewer blockages is that they soon become everyone’s problem. Early intervention is best and, if the blockages are frequent, proper investigation with a camera by the drain cleaning company is advisable. This will show if the drain was blocked or restricted by the most recent construction works or where the problem is coming from. Using a fibre-optic camera means you will not need to dig trenches to see what’s going on. Baby wipes and other similar materials do not degrade and form a remarkably strong rope-like material that will block any sewer, particularly if grease, disposable razors and other inappropriate items go down the drains.

Solving communal problems like this can bring neighbours closer together and may encourage the forming of a residents’ association to deal with future problems. The alternative approach involves the digging of metaphorical rather than actual trenches and is best avoided.

Simon Stokes is a surveyor and chair of the Residential Agency Professional Group of the Society of Chartered Surveyors Ireland scsi.ie

Q We plan to upgrade an apartment that requires electric heating, originally put in almost 20 years ago. What are the best energy efficient and economical options available these days for heating homes and heating water when your only option is with electricity? Are there more efficient water cylinders available now that can heat water economically? We would like to avoid the "fear" of having the emersion on for too long or at the wrong time.

A You first need to be absolutely sure that the electrical option is the only realistic option to you, as it is not uncommon for apartment owners to convert to other sources such as gas, depending of course on the availability of gas in the area. The situation is perhaps more complicated as you are dealing with an apartment and thus in order to get alternative fuel source supplies to the apartment, you are reliant on the cooperation and agreement from the management company as this involves routing the services through the common areas.

So on the presumption that you are restricted to electricity, then your options are to look at the efficiency and means of reducing costs where possible. The main area to concentrate on is the type of heating appliance and the efficiency of the particular appliance. Consideration will have to be given as to whether you intend to use storage or direct heating and this to some extent will be dependent on your own specific needs as to when heating is required.

There are a whole range of heat emitter types with varying degrees of efficiency. The problem is that the more efficient heaters tend to be a little bit more expensive to buy but the initial investment is worth it in the long run. There is far too much information on this to go into it in any meaningful way here, however I would refer you to Glen Dimplex’s website as they have considerable information on this which would help you in selecting the most efficient type of heater and they also identify steps that can be followed to minimise your running costs.

As regards heating the water, the most efficient way is to use solar panels, however again as this is an apartment this option will not be open to you and you are “stuck” with the electrical emersion. The issue to concentrate on here is to ensure that any water that is heated is retained and this can be done by ensuring that your cylinder is well insulated. You should also review the amount of water being heated and it is better to use the sink switch rather than the bath switch when only small volumes of hot water are required. Controls for electrical emersions have greatly advanced in recent times and choosing a control system which will give greater accuracy of an emersion will reduce any unnecessary overheating of water.

Val O'Brien is a surveyor and sits on the Building Surveying Professional Group on the Society of Chartered Surveyors Ireland scsi.ie Send your queries to propertyquestions@irishtimes.com or to Property Clinic, The Irish Times, 24-28 Tara Street, Dublin 2. This column is a readers' service. Advice given is general and individual advice should always be sought