Property management fees: the hidden cost of buying a home
July 17, 2018
If you are trading up or down or buying your first home it is important, before you buy, to find out if you’ll need to pay property management fees. There may also be ‘house rules’ in your new development so get to know these too before you sign contracts.
What is an Owners’ Management Company?
If you buy a property in a multi-unit development, an Owners’ Management Company (OMC) legally owns the common areas and is responsible for their upkeep. You legally become a member of the OMC once you buy in the development. As a member of the OMC, you have a say in how the common areas are managed and you have certain responsibilities, including paying management fees and following house rules.
What am I paying for?
Depending on your development, your management fees may pay for:
- Block insurance, in the case of an apartment block
- Repair and maintenance of common areas, car parks, footpaths, roads
- Cleaning common areas, windows, carpets/mats, gutters and drains
- Electricity costs in common areas
- Lift repairs and inspections
- Security – internal locks and doors, intercoms, external doors and gates
- Safety – smoke alarms, fire extinguishers, health and safety inspections
- Refuse collection and recycling
How much will I pay?
Fees vary and are usually higher for apartments, in some instances in excess of €2000 a year, where they include costs such as insurance, lift maintenance and repairs and electricity and lighting for common areas.
How do I know I am getting value for money?
You have the right to get a copy of the current year’s budget from the OMC. You also have the right to get a copy of the last set of audited accounts, which should set out how the OMC is spending the money it gathers from owners.
In relation to charges for the next financial year, these will be based on a budget which has to be agreed at a general meeting of members. You will have the opportunity to attend this meeting, to ask questions, to propose changes and to vote on the draft budget. If you wish to get more involved in managing your development, you could also consider putting yourself forward to be a Director of your OMC.
What happens if I don’t pay?
When you buy your property, you will be required to sign a contract which legally commits you to paying management fees. If you do not pay, the OMC can take legal action against you. Any outstanding debts you have to the OMC can be tied to your property, which means for example, if you sell your property in the future, the OMC can get a court judgment for your debts to be deducted from the money you get once the sale has gone through.
If owners do not pay their fees, the OMC will also run short of money and in time it may not be able to provide even basic services such as paying buildings insurance or maintaining the lifts. This may have serious consequences for homeowners as it is a requirement in almost all mortgage agreements that there is appropriate buildings insurance is in place. If your OMC cannot pay the building’s insurance premium, you may be in breach of your mortgage contract.
Is there anything else I should know?
If you live in an apartment block, or another type of multi-unit development, there will usually be ‘house rules’ for the development. House rules usually include issues such as noise, whether you can keep pets, whether you can hang laundry from balconies or if you can install a satellite dish. When you buy your property and sign the contract, you are agreeing to follow these rules. Before you buy, you should talk to your solicitor about the terms and conditions of the house rules.
What if I am unhappy with the house rules?
Depending on the OMC’s articles of association, house rules may be changed by the Directors or by a vote at the company’s AGM. You should make any complaints about house rules in writing to the OMC and ask for it to be raised at the AGM.
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