Owners’ management companies
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. It is important that you understand how OMCs work.
The OMC is established for three reasons:
- To manage and maintain common areas in a multi-unit development
- To be the legal owner of the common areas on behalf of the owners of the units
- To be the legal owner of the beneficial or reversionary interest of each unit. This means that the OMC owns a share in each unit
Since the Multi-Unit Development Act 2011, all new developments must have an OMC in place before the first unit is sold. In the case of developments completed before the Act, developers are legally obliged to establish an OMC.
OMCs must operate according to the rules of company law that apply to any other commercial company, even though they do not trade for profit. If you are a member of an OMC, it is very important that you understand the importance of ensuring your OMC obeys company law, including:
- filing returns with the Companies Registration Office (CRO)
- holding AGMs
- trading solvently and
- keeping proper sets of accounts
If an OMC is not managed properly and is struck off the Register of Companies by the CRO, it can be very difficult to sell units until the Company is restored to the register. Section 30 of the Multi-Unit Development Act 2011 sets out special provisions for restoring an OMC to the register, but it is extremely important for members of the company to make sure the company is not struck off.
You should not withhold your management fees if you are not happy with the way your OMC is being run. Not paying management fees can lead to financial difficulties for an OMC, which could lead to problems with the Companies Registration Office.
Membership of an OMC
When you buy a property in a multi-unit development, you legally become a member of the OMC. This happens automatically and means that you have legal rights and obligations.
When you buy your property, your solicitor will get a copy of your membership or share certificate. This is an important legal document which confirms that you, as the owner of a unit, are a member of the OMC.
As a member of the OMC, you have a say in how the common areas are managed. If you are elected to become Director of the OMC, then you will become involved in the running of the company, but as an ordinary member of the company, your involvement will be minimal.
What does the Company “own”?
The OMC is the legal owner of the common areas on behalf of the owners of the units.
The OMC is also a party to all sales of units in a development because it “owns” a share in each property. The OMC cannot legally prevent the sale or purchase of a unit, but it can take action against you if you don’t pay your management fees.
Your rights as a member
Members have certain rights under company law, in particular the Companies Acts. All company members are entitled to:
- Adequate notice of the company’s general meetings
- Timely information about the company’s operations and finances
- Participate and vote in the annual general meeting (AGM). Section 15 of the Multi-Unit Development Act 2011 states that there is one vote for each unit, regardless of the number of owners of that unit. An OMC can seek a court order to change this vote distribution, but only where it is considered essential to protect an economic interest or necessary in the interest of fairness and justice.
You are also entitled to inspect and get copies of:
- The company’s Memorandum and Articles of Association. These are important documents which every company must have. They set out how the company will be run, and what rights members have. The Memorandum and Articles of Association must be open to inspection to every member of the company free of charge. They must also be submitted to the Companies Registration Office where the public may view them.
- Minutes of general meetings of the company and resolutions
- Various registers kept by the company, including the register of members and the register of directors and secretaries and their interests
- Periodic financial statements, directors’ reports and auditors’ reports about the company’s financial affairs
The company must hold an AGM at least once a year and all members must be invited to attend. The company must also file an annual return with the Companies Registration Office that must contain certain information about the company and its financial activities.
As a member, you are also entitled to express an interest in becoming a Director of your OMC or to vote for someone else to become a Director. If you have concerns about how your OMC is operating, you can consider becoming directly involved as a Director of the OMC. It is important to know that Directors of OMCs must follow the same rules and obligations as Directors in any other type of company. You can get information on being a Company Director from the Office of the Director of Corporate Enforcement.
As a member of an OMC, you have certain obligations, including:
Your solicitor will talk you through your contract before you sign it and explain the specific obligations you are signing up to.