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A property management company typically owns and controls common areas in a property development e.g. gardens, car parks, entrances, corridors and stairways and arranges for the provision of common services to the apartment owners such as insurance, waste disposal, security and building maintenance.  These companies are usually set up by the developers as a requirement of planning permission, and therefore the property management companies continue under the control of the developer rather than the residents. Problems that arise with property management companies include poor maintenance provided, leading to disrepair and depreciation in the asset value.  Some residents are unaware that annual property management fees would be required when buying their new homes.

Problems also arise with the failure of management companies to call general meetings of the apartment owners/members, to enable decisions to be made regarding the maintenance and general upkeep of the building and the failure of management companies to account to apartment owners for company expenditure of the monies collected by way of service charges for the upkeep of the development.

You should undertake a very careful legal and accounting due diligence prior to buying. You should get confirmation that all residents are legally obliged to contribute, that it is not voluntary and confirm that residents may not sell their property without discharging any liability they may have to the property management company.  It would also be advisable to inspect other properties being maintained by the company to get an idea of their standard.  Neglect by management companies of their annual return filing obligations can give rise to the company being dissolved.  The assets of a dissolved or struck-off company becomes the property of the Minister of the Environment, leading to the problem of the apartment owners being unable to sell their property.

Companies are required to file an annual return with the Companies Registration Office within 28 days of their annual return date.  This can be check on-line at www.cro.ie.  Accounts may also be downloaded from the same for a fee of approximately €2.50. 

Louise Carey is an Accountant/Tax Consultant based at 32 The Square, Listowel, Co Kerry, tel: 068 21109, email:lc@taxconsultant.ie, www.taxconsultant.ie