On 2 March, 2011 the Minister for Justice and Law Reform, Brendan Smith, T.D., signed a Commencement Order for the Multi-Unit Developments Act 2011. The Order sets the 1st day of April as the date on which the Act comes fully into operation.
The Multi-Unit Developments Act 2011 seeks to address problems relating to the ownership and management of the common areas of both existing and new multi-unit developments, and to facilitate the fair and effective management of bodies responsible for the management of such areas.
It is hoped that this act will attempt to fix some of the problems that have befallen Property Management Companies where the developer of the estate is either
1) refusing to resign as a director,
2) refusing to transfer the common areas into the property management company,
3) has allowed the company to be struck off the register of companies and thus incur late filing fees.
5) refusing to recognise the right of the residents to become members of the property management company
For the first time, we now have legislation that provides a statutory framework for the operation and governance of multi-unit developments. Duties and obligations of developers have been clearly defined. The rights and obligations and members have been established and a framework for dispute resolution is provided for in the Act.
The Act defines a multi-unit development (“MUD”) as a development being land on which there stands erected a building or buildings comprising a unit or units and that as respects such units it is intended that amenities, facilities and services are to be shared.
The main provisions of the act include:
- Requirement to establish an Owner Management Company (“OMC”) for all Multi-Unit Developments (“MUD”) at the expense of the developer.
- The Act requires that the common areas be transferred to the owners’ management company prior to sale of the first residential unit. In existing developments in which a residential unit has already been sold but the common areas have not been transferred by the developer to the owners’ management company, the transfer must be made within 6 months, i.e. before 30 September 2011.
- New Regulations for Mixed Use Multi-Unit Developments
- Automatic membership of the OMC as regards voting rights in owners’ management companies, the general rule for residential developments is that one vote attaches to each residential unit. In mixed-use developments, other voting arrangements may apply as long as they are fair and equitable.
- Requirement to hold annual meetings and prepare annual reports to members – The format of these annual reports are defined in the Act
- Establishment of a scheme of annual service charges & expenditure categories
- Establishment of a sinking fund within 18 months of enactment of the Act (i.e. by 1st October 2012)
- Dispute resolution, mediation & rehabilitation of multi-unit development
- Restoration of struck off OMC’s to Register of Companies within 6 years of strike off
Timeframe to comply
The Act gives a short time frame for developers and their advisors to comply with the new provisions under the Act. These include
1) 6 months to transfer the common areas into the OMC
2)18 months to establish a sinking fund and as soon as practicable establish a scheme for annual service charges.
For existing developments the key dates are:
- 1st October 2011 – Common Areas must be transferred
- 1st October 2012 – Sinking Fund must be established