The Need for Reform

Owners’ Management Companies

Owners’ Management Companies (OMCs) are companies whose members are all of the owners in an apartment/duplex complex and have been in Ireland since the early 1970s.

Many of the roles that are traditionally undertaken by local authorities – like road and footpath maintenance, upkeep of grass verges and management of traffic and parking – are the responsibility of OMCs – which are governed by boards of volunteer directors.

OMCs’ responsibilities also include:

  • Taking out of insurance for the structure of the buildings;

  • Repair and maintenance of areas such as lifts and roofs and refurbishment planning;

  • Responsibility for many aspects of health and safety within the development – including security – as well as for dealing with anti-social behaviour and its impact on the quality of life of residents;

  • Looking after sanitation and waste management;

  • Undertaking normal company administration and governance such as keeping accounts, getting them audited and making annual returns;

  • Hiring and overseeing management agents, where the OMC is externally managed;

  • Separation of ‘managing agent’ role – one of choice from the statutorily required OMC Company Secretary function as recommended by the Office of the Director for Corporate Enforcement (now the Corporate Enforcement Authority), to ensure arms-length governance, accountability and oversight.

MUD Act

The MUD Act 2011 governs the management of the country's apartment and duplex complexes. It also controls the activities of OMCs and represents the first time that a legal framework was put in place for regulating the sector.

The Act deals with issues such as:

  • Powers, roles and responsibilities of OMCs, their boards, their directors, members and managing agents;

  • Service charges for the day-today maintenance and upkeep of apartment and duplex developments;

  • Sinking funds which are for long-term maintenance of such developments.

Serious Challenges

When the MUD Act was enacted in 2011, it represented an encouraging first step in trying to regulate the growing apartment/duplex sector. With the benefit of experience since the passage of the Act, it’s clear that the legislation needs to be reviewed and this is a matter of priority, given the billions of public monies that are going to be provided to the sector to address construction defects.

A range of different challenges and issues have been identified in the sector.

Sinking Funds

  • Sinking Funds are contingency funds set aside for long-term maintenance and refurbishment works such as lift replacement. Most OMCs are not increasing their annual sinking fund contributions as their developments get older – which means that they have insufficient funds in place to carry out roof repairs, boiler and lift replacements in a timely manner;

  • Six out of every seven OMCs have not undertaken a study to establish how much should be in their sinking funds in the medium-term;

  • This situation is made worse by the fact that most OMCs cannot borrow from any third-party source, even when faced with a requirement for important health and safety upgrades.

Discharge of Corporate/Apartment Owner Responsibilities

  • Poor corporate governance in many OMCs, with reports of some directors – a minority – benefitting financially from their board membership;

  • Some builder-developers putting supporters or linked people onto boards to protect their interests;

  • Volunteer boards with little or no expertise – and no training provided – in building maintenance, corporate governance and finance and, as a result, many boards are struggling to properly manage their developments;

  • Lack of a central repository of information on OMCs, making it nigh on impossible for the State to identify all apartment developments and OMCs, communicate with them and ensure that they are carrying out their legal responsibilities (UK Government has identified this as a major challenge as they have tried to identify all developments with flammable external cladding after the Grenfell tragedy);

  • Lack of clarity about what data and information OMCs should provide to their apartment owners;

  • No clear recourse path -- apart from the courts -- for owners who have disputes with their OMC and for OMCs who have issues with residents;

  • Lack of a central repository for information or support in relation to environmental upgrades of MUDs such as installing photovoltaic (solar) panels, retrofitting and charging points for electric vehicles;

  • Need for an external driver (via regulations and/or a central agency) to ensure the transfer of common areas from developers/receivers to OMCs.

Service Charges, Insurance and Maintenance

  • Significant arrears in collecting annual service charges, which directly affects maintenance and the provision of key services like security and caretaking.

  • Some OMCs are teetering on the verge of insolvency, which would leave those living in the developments affected without essential services;

  • Sub-standard day-to-day maintenance of many common areas.