A recent question mentioned that directors of self-managed apartment blocks are not entitled to remuneration. Does this also apply to management companies for common areas, where all the properties are free standing on their own site and the common areas such as parking, green areas and flower beds are owned by the company? Where can I review the relevant legislation or ministerial order? We are a small management company servicing 25 houses. I act as chairman in a voluntary capacity. We do pay a small annual honorarium to the secretary which is voted on at the agm each year and in light of the article “Untangling apartment building management”, I have a concern that we may be behaving illegally. I am sure many people would be interested in an expanded article.
In short, yes is the answer to the first paragraph of your query. All legislation is free to view online at irishstatutebook.ie.
Your development is indeed a multi-unit development with common areas. The specific affirmation you are seeking is as defined by the Multi-Unit Developments Act 2011 (MUD Act) Section 1.
Property Service Providers (PSPs) are regulated by the Property Services Regulatory Authority (PSRA) following enactment of the Property Services Regulations Act 2011 (PSRA Act) and (Client Moneys) Regulations 2012.
I would draw your attention to Part 3, Section 28 (2) of the PSRA Act which clearly states the consequential ramifications of service provision without a licence:
“(2) A person, other than a licensee, who contravenes subsection (1) is guilty of an offence and liable –
(a) on summary conviction, to a class A fine or imprisonment for a term not exceeding 12 months or both, or
(b) on conviction on indictment, to a fine or imprisonment for a term not exceeding five years or both”.
Part 13, Section 89 of the PSRA Act, “Investigation of persons other than licensees” outlines the regulator’s role for the appointment of an investigator to review and report on the activities of a person who is suspected of providing a property service without a license.
The crux of the issue for directors is whether or not there is consideration, meaning payment, benefit in kind or any material gain such as the owner’s management company (OMC) striking off the service charges due from a director for their efforts. Section 2 of the PSRA Act reads: “property service” means the provision, for consideration, in the State, in respect of property located within or outside the State, of any of the following –
(a) the auction of property other than land,
(b) the purchase or sale, by whatever means, of land,
(c) the letting of land (including a letting in conacre or for the purposes of agistment), or
(d) property management services”.
As you can see from the above, (d) is the relevant category of service in this query and confirms that your board is acting in contravention to the legislation brought forward so as to protect consumers from inappropriate activity in the property market. A director of an OMC in receipt of consideration must hold a D licence no matter how good their intentions may be. A director may provide a management service provided there is no remuneration in return, thus the rational of appointing a licence holder. Property Managers are appointed by boards of OMCs mainly due to the onerous work that is involved in daily management and secondly to avail of their expertise in streamlining management delivery and obtaining valuable services.
The oversight would have been raised by a qualified accountant in reviewing the year end audit pack for any OMC that chose not to avail of an audit exemption, thus providing a service to their clients and a sound argument for having a third party review the books and records of an OMC each year.
Paul Huberman is a Chartered Property and Facilities Manager and a member of the Society of Chartered Surveyors Ireland.