I am finally sale-agreed on the apartment I want to buy in Galway. However, I don’t have much information on the property management company, other than the annual management fees.
Is it the responsibility of myself or my solicitor to seek information on the management company, such as: who is the agent, who is on the board of directors, how much is in the sinking fund, are the accounts in order, and so on. If it is my solicitor, should they notify me of any red flags? I am afraid I will miss something if it is explained in legal/technical jargon, and regret it later.
I’m worried, as the estate agent told me that recently all the owners contributed extra money to install a gate to the complex; I assumed that is what the sinking fund was for. I’m not sure if that is normal practice or if I should be concerned.
When you are buying your apartment, you will have appointed a solicitor to represent you. Your solicitor will carry out many functions, including completing searches on the background of the property in question.
These searches include the requisition on title. For an apartment, this requisition is more commonly known as the “MUD Act inquiries”. These inquiries comprise about 28 questions set out to provide information on all of the matters that you have raised in your query and more. You should request a copy of the MUD Act replies from your solicitor so that you can read through them in advance of completing the purchase. When you have read through this document, you will probably find that you have additional queries of your own. You can then set out your additional queries to your solicitor so that they can obtain the additional information and ensure that you are fully informed.
You should be wary of a casual conversation with an estate agent about financial transactions in the OMC
In most cases, all information about the operations of the owners’ management company (OMC) should be furnished to you. However, on occasions where there are ongoing and unresolved matters, the OMC may not be in a position to furnish information before you complete your purchase. In this case it will only be after you become a member of the management company as an owner that you will obtain further information on such matters.
There are some background searches that you can carry out yourself, independent of the work of your solicitor. The property management company that oversees the management of your property will probably be registered at the Companies Registration Office (CRO), and you can perform a background search of this company checking its compliance by logging on to the CRO website. For a small fee you can obtain information on who the directors of the company are, how many directors there are, if the company is up to date with filings and compliance, and you can also obtain a copy of its latest accounts.
You should be wary of a casual conversation with an estate agent about financial transactions in the OMC. Casual commentary on specific financial details of an OMC is likely to be inaccurate and unqualified. For example, it is normal practice in an OMC that owners may decide to carry out improvement works such as installing a gate. When they do this, they will make the necessary arrangements for funding. The funding for this may come from the sinking fund but it is the owners’ sinking fund contributions that will pay for such projects. It is normal practice that owners will have to pay into the sinking fund in order for such projects to be carried out.
The amount of sinking fund contributions required by owners is directly related to the amount of works the OMC decides to carry out, and it follows that the more works that get carried out, the more benefit all owners will receive in the value of their properties. In this regard, this is not something for you to be worried about but it could be a positive aspect of buying an apartment in this development where the OMC is making improvements and adding value to all properties.
Aisling Keenan is a property managing agent and consultant and an associate member of the Society of Chartered Surveyors Ireland
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