Role of developers

Developers and Owners’ Management Companies

Developers are responsible for establishing an Owners’ Management Company (OMC) and since 1 April 2011, units may not be sold before this is done. The developer is generally the initial controlling member of the OMC and decides on services to be provided and how much owners will be charged for them.

Even if there is an OMC, until more than half of all units are sold, the developer will still generally control decision-making on:

  • The common services that will be provided.
  • Who will provide them (the developer may appoint a managing agent to act on their behalf).
  • What the management fees will be.

While owners become members of the OMC, developers and/or their nominees will usually continue to control the OMC until the majority of units are completed or sold, as they will have the majority of votes when deciding on any proposals from the OMC.

The Multi-Unit Developments Act 2011 sets out strict trigger points for the transfer of decision-making on the issues outlined above to the OMC. If you are not satisfied that these requirements are being complied with, you should check the Act. If your developer is in breach of the obligations under the Act, you are entitled to initiate legal action to force them to comply with the Act.

If you buy a unit in a development that is not completed you may have limited input into how the development is managed until all the units are sold and before the development is completed. Even so, developers should provide half-yearly updates on the activities and financial status of the OMC.

Transfer of common areas

If you live in an older multi-unit development, the Multi-Unit Developments Act 2011 states that within six months of the enactment of the legislation, common areas must have been transferred to the OMC, regardless of when the development was built.  As the legislation was enacted on 1 April 2011, this meant that the common areas should have been transferred to the OMC by 30 September 2011.  However, this can prove to be difficult in developments where the developer is no longer trading or is in extreme financial difficulty. In these cases, there may be no-one on the developer’s side to start the process of transferring the common areas to the OMC.

If you own a unit in a multi-unit development in these circumstances, you could find it difficult to sell your property, as a potential buyer’s solicitor will check whether the common areas have been transferred. You should first consult the Multi-Unit Developments Act 2011 sections 3, 4 and 5 to identify the circumstances applicable to your situation and the requirement applicable to the developer in your case. If your developer is unwilling to comply with the requirements, they are in breach of the legislation and you are entitled to take legal action to force the transfer.

Under the Multi-Unit Developments Act 2011, all common areas in new developments must be vested in an OMC before the first unit is sold. Vesting means that legal ownership and control of the common areas passes from the developer to the OMC.

 

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