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The key question about Management Companies

It’s a week or so now when there were a number 0f calls to Joe Duffy about management company issues. You can find a lot of similar sentiments raised on the Management Company forum on AskAboutMoney.com – problems with with management companies and management agents. The National Consumer Agency have even provided a website that you can reference to find out more.

However, the key question with regards to all of this is:

Are you and your fellow residents in control of your management company – has it been handed over by the developer to the residents?

Yes, we are

If you are in control of your management company, then happy days – you have full control over what your management fees will be and who your management agent is and what they should be doing for you as residents. In fact, if you’re in charge of your management company, you could even decide that you don’t need management agents if you can get a strong enough group of people to carry out the agents tasks instead. You could simply change your management agents to another company if you’re not happy.

No, we’re not

Then tough! It’s most likely that you have no control at all. If the developer of your estate is still in charge of the estate, and therefore the management company, you’re most likely going to be outvoted at any management company AGMs. Like where I live, the developer maintains a block vote that will always outvote the wishes of the residents – even if every resident did show up to an AGM and voted together.
Even getting rid of the management agents in this scenario is likely to be impossible. Chances are, as in the case of where I’m living, the management agent and the developers that are in control of the management company are very closely tied together. One would never agree to the other being changed.

Holding back on management fee payments isn’t really an option either – your contract to purchase your home includes a clause that you’ll continue paying whatever management fee is charged.

So, what can you do?

If you’re in control of your management company, you can pretty much do what you like.

If you’re not, then you’re pretty much at the mercy of the developers and their management agent buddies.

2 comments On The key question about Management Companies

  • Can you clarify what you mean by the developer having a ‘block vote’? Is this because he has retained ownership of a big number of units for rental? I’ve heard of cases where the developer retains control of the management company until the last unit is sold, so he just has to keep one unit in such cases, but this wouldn’t involve a block vote.

  • @serialcomplainer – In a standard situation in a vote at a management company meeting, each resident has a vote, as does each director.
    In some situations, if the developer owns multiple units, then he has multiple votes.
    However, in some management companies, it’s written into the Memorandum and Articles of Association that the Board (essentially the developer before an estate is handed over) would have a block vote equal to the number of units.
    So, with that block vote, plus the directors, the developer will always overrule the wishes of the residents.
    And, all legal as it’s in the documentation up front before a purchaser signs the contract for their own unit.

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