Property Clinic: ‘Can I sell my apartment if it has no management company?’

No management company makes it tricky to sell and affects maintenance of building

I own a rental property in a small, gated community. I received bills for management fees in the first couple of years, then I did not receive any more bills. Maintenance of the development is not of a good standard. Should I decide to sell, what are my obligations in regard to fees and can I reclaim tax retrospectively if fees are paid? Thank you.

I note your query with concern. Instinctively, the alarm bells would ring if you have not received any bills for management fees. My immediate reaction would be: is the company still active? Has it been struck off? Are there managing agents in place?

There may well be a simple reason – such as you changing your address. However, if that is not the case, then the first thing you should do is look up who you last paid your management charges to. The agents will be able to inform you of the status of the management company. If they are no longer dealing with it, then I recommend that you do a company search and find the last or current directors listed and ascertain from them the state of affairs as regards the management company.

You need to ensure that your management company has not been dissolved, because if it has, you cannot sell your property. Furthermore, the cost of reinstating a management company is expensive.


Sinking funds

You state that the maintenance of the development is not of a good standard. Well, if no or reduced fees are being paid this will reduce cash flow and as a consequence the development will not be adequately maintained. In a small development if one member is not contributing, it can have a detrimental effect on the finances of the management company.

Please note that, before one sells a property in a multi-unit development, a Multi-Unit Development Act form needs to be completed. This will indicate to the purchaser how well your management company is run. The management company’s balance sheet including sinking funds will affect how a purchaser views your asset as well as the overall appearance and condition of your development.

If you owe service charges, they have to be discharged at the date of sale to your management company and the purchasing solicitor will require an undertaking from your solicitor in this regard. Service charges once paid can be offset against rental income for tax purposes.

I would advise you also to contact an organisation called the Apartment Owners’ Network, which is a proactive organisation made up of individual apartment owners like yourself. It would be able to offer you additional advice and insights on the issues you have raised.

Kersten Mehl is a chartered residential agency surveyor and member of the Society of Chartered Surveyors Ireland,