Multi-Unit Developments Act, 2011
A summary of the Multi-Unit Developments Act, 2011 for unit owners, purchasers and management companies.
The Multi-Unit Developments Act (the Act) was signed into law by President McAleese on 24 January 2011. Sections 14 and 32 of the Act have immediate effect. Section 14 deals with the structure of owners' management companies, and Section 32 restricts such companies from entering into certain types of contract. The remaining sections of the Act received Commencement Orders on the 2nd March, 2011.
A "multi-unit development" is defined in the Act as being a building or part of a building which contains at least 5 residential units with shared amenities, facilities and services. A multi-unit development may also include a child care facility. The Act also applies to "mixed-use multi-unit developments" which in addition to the minimum 5 residential units can include a commercial unit. Certain of the provisions in the Act also apply to small developments which comprise between 2 and 5 residential units.
The principal features of the Act are as follows:-
It provides for the establishment of an owners' management company which is to be set up at the expense of the developer;
- The developer must transfer legal ownership of the relevant parts of the common areas to the owners' management company prior to the disposal of any units within the development or if units have already been transferred, within 6 months of the commencement of the Act i.e. by 1st October, 2011
- The transfer of the beneficial ownership is to take place as soon as practicable after the completion of the development which will obviously only apply in the case of new developments
- The developer is required to indemnify the owners' management company against any claims made in respect of acts or omissions by the developer in the course of completing the development;
- Service charges must be approved by the members at a general meeting;
- A sinking fund is required in all cases to be set up within 18 months of the commencement of the Act i.e. by 1st October, 2012 and a payment of €200 per annum or such other amount as may be agreed by the members;
- Resolution of disputes is specifically dealt with in the Act;
- The time period for management companies to be restored to the register if struck off has been extended to 6 years;
- Service contracts are limited to 3 years.
- The name of each management company should be changed to inculde the words ‘owner management company’
- Directors cannot be appointed for greater than three years.
- The management company should establish a scheme in respect of the service charges as soon as is practicable.
- It allows for the making of House Rules
- One vote will attach to each unit at A.G.M’s
- Restriction on certain contracts. The management company
- Directors and the professional advisors to Management Companies should be cognisant that changes may be required to the Memorandum and Articles of Association e.g. the common areas may need to be defined, specific clauses may need to be inserted relating to service charges, the sinking fund, changes to the voting rights as discussed above and issuing membership certificates to name but a few of the potential changes that could be required.
This article is a summary for information purposes only. It does not constitute legal advice.
Brian Moloney
Solicitor
Limerick 13th June, 2011