I cannot pay back all my management fees

October 2012

Question

I am a landlord of an under-performing apartment and I am currently in arrears with the management fees, going back approximately five years. At the moment, I am paying above the equivalent amount due per month and paying approximately €30 off the arrears.

The management company have become quite hostile in their approach and have withdrawn some services, metre-reading, etc.

They have also asked me who is in the apartment and threatened to withdraw access to the car park space. Are they entitled to do that?

Could you clarify two points?

  1. Where do I stand in relation to access to my own property as I am paying the current service charge? Yes I am in arrears but I am unable to pay them back at present and I’m trying to pay back a portion.

  2. Does the management company have the power to dictate where my monies go — to pay off the arrears, or, as I stated to them, towards current management fees?

Answer

Clearly you must be in a very difficult situation and, like many, you have probably been adversely affected by the property crash. That said, as a member of the management company and unit owner, you have an obligation to pay your service charge to ensure the running of the development. It would appear that your fellow unit owners have been subsidising your portion of the service charge for the past five years, which is unfair.

Owners’ Management Companies (OMCs) for apartment blocks are not-for-profit companies that depend on 100 per cent of service-charge income from unit owners to cover their day-to-day expenses, ongoing and unforeseen repairs and maintenance, and to provide for future capital expenditure — all of which protects the property of the apartment owners.

While your situation is difficult, you will also need to consider the fact that there may have been expenditure incurred by the OMC in attempts to recover the service charges, towards which other unit owners will have had to contribute. You mention that you are paying at a rate of € 30 per month against the arrears which will take a number of years to clear.

Have you made this year’s service charge payment?

You should also be aware that a judgment could have been put against your unit, meaning that when your property is sold, any built-up costs will be paid to the OMC from the proceeds of the sale.

Whether access to a car parking space can be withdrawn or restricted can depend on your title. Many leases detail that the obligations of the OMC to the apartment owners are only enforceable if service charges are paid up to date, so you should check this.

Have you discussed your situation with the managing agent? I think your first step should be to meet them and explain the situation to see if you can come to an agreement. I recommend you negotiate a reasonable payment plan with your OMC directors where you agree payments against your service charge account in order to bring down the full debt within a reasonable period of time and once you comply with the terms of the payment plan that the OMC agree not to sanction you or withdraw services. An agreement will save you money in the long term as the OMC will be entitled to their legal costs, and interest, if they are successful in pursuing the debt.

Paul Mooney is a member of the property and facilities management professional group of the Society of Chartered Surveyors Ireland.