THE MULTI UNIT DEVELOPMENTS ACT 2011
The Multi Unit Developments Act 2011 became law on 1 April 2011. The Act seeks to address problems relating to the ownership and management of the common areas of both existing and new multi-unit developments, the completion of such developments and issues surrounding service charges applicable to same. The Act also seeks to provide improved mechanisms for facilitating the better management of the bodies (usually management companies) responsible for the management of such common areas.
A multi unit development comprises a development of not less than 5 residential units with shared amenities, facilities and services which said units may include a childcare facility. Certain provisions of the Act also have applicability to developments containing greater than 2 and less than 5 residential units. In the case of mixed use developments (i.e. a mixture of residential and commercial units the Act also has applicability where common facilities are shared and imposes an obligation for fair apportionment of service charges and voting rights in this instance.
In the case of NEW multi unit developments where no units have as yet been sold from 1 April 2011 no sale of any unit shall take place unless –
- the body responsible for the management of the common areas, by virtue of the Act now to be known as an ‘owners management company’, or OMC, has been established at the developer’s cost;
the common areas have been transferred to the OMC;
there is compliance to date with the Fire Safety Certificate(s) issued as certified by a suitably qualified person;
there is a Contract in writing between the developer and the OMC setting out the completion requirements and obligations to include provisions re release of monies/service charges collected and dispute resolution.
In the case of EXISTING multi unit developments where units have been sold but the development is not complete and common areas have not yet been transferred, the Act imposes an obligation on the developer to arrange for the transfer of the common areas to the OMC within 6 months from 1 April 2011 (i.e. by 30 September 2011).
In the case of EXISTING multi unit developments where units have been sold and the development is substantially completed (not less than 80% of all units sold in the development) and common areas have not yet been transferred, the Act imposes an obligation on the developer to arrange for the transfer of the common areas to the OMC within 6 months from 1 April 2011 (i.e. by 30 September 2011).
The obligation to complete the development remains with the developer notwithstanding the transfer of the common areas and those obligations include all obligations on foot of planning permissions and building regulations. The consequences of the transfer of the common areas include -
- the developer retains the right to pass and repass over the common areas to facilitate the completion of the development;
- the developer shall indemnify the OMC against all claims made against the OMC in respect of the developer’s acts/omissions;
- the developer shall have all risks insurance re his use/occupation of the development;
- the developer shall take all reasonable steps to minimise inconvenience to unit owners;
- the developer shall ensure that access over the common areas is maintained at all reasonable times and maintained in a clean and safe fashion;
- the OMC/unit owners shall not obstruct the developer in exercising his rights or discharging his obligations.
On the transfer of ownership of a residential unit howsoever arising membership in the OMC (including all rights and obligations of such membership) transfers automatically without the requirement for any separate act or approval of the Directors of the OMC and the structure of the OMC shall provide for one vote per residential unit in the development where each vote has an equal value (thus doing away with the potential to provide for ‘weighted’ voting). Directors of the OMC cannot hold office for longer than 3 years (thus doing away with the potential to appoint ‘life’ Directors). The Act also regulates the mechanisms for OMC annual meetings and reports.
The Act contains quite extensive provisions relating to the annual service charge, how same may be calculated and how same must be approved by the members of the OMC and provides an obligation on the OMC to set up a sinking fund within 3 years from first transfer of a unit in the development or within 18 months of 1 April 2011, which ever is the later. The Act also allows for the setting up of ‘house rules’ by an OMC which is properly set up will then be binding on the owners, occupiers and tenants of the units within the development.
A pretty extensive disputes resolution mechanism is provided for in the Act with the Circuit Court being the venue to deal with same. The Circuit Court is given a wide variety of powers in hearing such disputes and can make orders including orders –
- amending legal documentation relating to OMC;
- dealing with voting rights and consultation rights where such rights affect one structure only;
- replacing several OMCs with a single OMC;
- creating additional OMC(s);
- apportioning service charges and expenditure;
- apportioning common areas;
- amending title covenants;
- dealing with financial matters;
- transferring control of an OMC to unit holders where developer or unit holders are at fault or delaying;
- determining the structure of an OMC in mixed developments;
- directing a developer to complete a development;
- directing dissident unit holders.
An OMC, a unit holder or holders, members of an OMC, a Trustee under a will settlement, a developer or any other person the court may admit may apply to court for redress under the disputes resolution mechanism provided for in the Act and the Court may allow for mediation where it deems same appropriate.
It is also worth noting the following miscellaneous provisions provided for within the Act–
- in the event of an OMC being struck off the Companies Register the Act allows an application to restore same to be brought to the Registrar of Companies within 6 years from the date of striking off, subject to the stipulated provisions to be complied with in the Act;
- the Act imposes an obligation on the developer of a multi unit development to hand over a substantial list of various documents (set out in Schedule 3 to the Act) to the OMC where a development is complete;
- the Act prohibits an OMC from entering into contractual commitments for the provisions of services etc which are for longer than 3 years.
This report is not intended to be conclusive and offers an overview, or flavour, of the main provisions of the Act only. Specific advices should be sought in individual cases