Proposals to reform apartment management

DEVELOPERS SHOULD have to incorporate an owners’ management company (OMC) for new apartment developments of more than five units…

DEVELOPERS SHOULD have to incorporate an owners’ management company (OMC) for new apartment developments of more than five units, according to the Law Reform Commission.

They should transfer legal title of the development to the OMC before any sale is completed.

In existing apartment developments, legislation should provide for all developments having a scheme in place for service charges, specified financial information should be provided to apartment owners and mutual agreements must be made between developers, unit owners and the OMCs.

These are among the 67 recommendations of a Law Reform Commission report to be launched this evening by Minister for the Environment John Gormley.


The report arises from a number of problems that have emerged with how some apartment complexes are managed.

These include a widespread lack of transparency about the roles of those involved in such developments, including developers, owners of apartments and property managing agents.

The report points out that developers sometimes retain effective control of apartment owners’ management companies, even when virtually all the apartments have been sold.

Property managing agents have too much administrative control over some OMCs, and agms of these companies are often arranged at short notice and in inconvenient locations.

Increasing service charges are often not properly explained, which can lead to them not being paid by some owners, and the complexes become run down as a result. There are no long-term building funds in some complexes, while others are not taken in charge by local authorities. In addition, there are often no clear arrangements for rescuing apartment complexes in trouble.

The Law Reform Commission is recommending a Multi-Unit Developments Bill to meet these problems, and the report includes a draft of such a Bill.

The recommendations fall into two categories: regulations that should apply to new complexes, and measures that would apply to existing developments. The commission acknowledges that not all its recommendations can be applied retrospectively to existing developments.

In new developments of more than five units, the legislation would provide that the developer would have to incorporate an OMC, transferring legal title to it and registering the title with the Land Registry or Property Registration Authority before any apartment sale was completed. Complexes of less than five units could be managed on a co-ownership basis. Each apartment buyer would have one vote in the OMC. Where common areas were not completed, the OMC would hold 5 per cent of the purchase money for each apartment in trust for the developer until they were certified as completed.

In relation to existing developments, the commission recommends that the legislation should contain similar provisions concerning the holding of agms, schemes for service charges and the provision of specified financial information to apartment owners.