Originally Published March 10 2009
The continued downturn in the housing market puts existing apartment owners at risk because of a lack of regulation and legislation. Owners who have purchased apartments where apartments remain unsold will face mounting problems because of a lack of funds. Refuse will not be collected, electricity bills for lifts and lighting will go unpaid and insurance cover will lapse, putting their mortgages at risk. In the worst cases, management companies will go bankrupt meaning that those services can never be restored and sales of apartments are blocked.
The situation is caused by a lack of legislation surrounding management companies allowing developers to exploit owners who have no comeback. Owners contribute to a common fund but if there are unsold apartments, no-one is contributing for them and the fund falls short of the amount needed each year. Initially, routine services are cut, making owners feel they’re not getting the services they paid for and more reluctant to pay in future. The service charge is increased to make up the difference, penalising owners for developers greed and often putting it out of reach of some owners who face prosecution for non-payment. The situation gets worse each year until eventually essential services are cut.
If the company goes bankrupt, the owners’ only option is to make a petition to the high court to have it re-instated. This requires a fund of several thousand euro to be set up and collected by the owners, solicitor and barrister to be hired, accounts be audited and filed and fines paid to the CRO.
Several prominent estates have already been affected including one development where refuse collection was briefly suspended and other services with curtailed. Legislation has been drafted to prevent this happening in future but, since its introduction by the Law Reform Commission in June 2008, nothing has happened.
Notice for editors:
Apartment Owners Network (AON) was formed in 2007 after a public meeting of apartment owners called by Dublin City Council. The network provides a resource for apartment owners where they can share information, advice and support. It also assists in the development and promotion of best practice models in apartment living for Ireland.