Management company code is too late, says Edel Morgan.
BUILDERS AND their not always transparent methods of running management companies in new homes developments have been a constant theme of the e-mails I've received from frustrated home-owners in recent years.
The Irish Home Builder's Association's (IHBA) new code of practice for developers relates to the interim management and sale of multi-unit developments and is quite stringent and exacting in its requirements of them - but comes too late for thousands of home-owners in this country currently dealing with management company fall-out.
The code comes into effect from May 15th but can't be applied retrospectively to existing developments, according to a spokesperson for the IHBA who says "it's virtually impossible to apply it to an existing management company because it is a legal entity". The code is apparently powerless to reprimand developers who are currently refusing to hand over developments to residents which leaves many estates in limbo until legislation is enacted.
The IHBA spokesperson was keen to emphasise that the code was all about "moving forward" not looking back - which is cold comfort for past home-buyers.
Under the new code, when a new scheme is being marketed, potential buyers must be informed that a management company is being put in place and of "the principal entitlements and obligations membership bestows".
Developers will no longer be able to pluck an arbitrary service charge figure out of the air but must get a "suitably qualified" professional to draw up a budget documenting recommended sinking fund contribution levels.
As well as setting out a timeframe to hand over the development to owners, they have to keep residents updated of progress every quarter. As long as the developer is a director of the management company, they must file returns to the CRO (Companies Registration Office), keep a record of competitive quotes sought in respect of service contracts and the managing agent they appoint has to keep the lines of communication open with unit-owners.
They must provide owners with statements of income and affairs and expenditure of a capital nature from the sinking fund.
The voting structure of the management company can no longer be weighted in favour of a developer retaining controlling majority after the management company is transferred to owners. There will also be a dispute resolution procedures between unit owners and developers.
The penalty for those who transgress? Fines or expulsion from the IHBA followed by public humiliation in the form of a press notice. Any fines will be based on the size of the turnover of the company. For those who can't visualise many of the big league developers shaking in their boots, the IHBA spokesperson assured me that membership is like a "badge of honour" and few would like to be publicly expelled or cut off from the support services it provides, like industrial relations, business development advice and free training for staff. Worst of all, they would no longer be allowed to fly the IHBA flag outside their developments.
