Report on Multi-Unit Developments - Law Reform Commission

6.52 The Commission acknowledges that the level of dissatisfaction with
service charges, leading to their non-payment by some unit owners, can be
attributed at least in part to the understanding deficit problem. Many people
when buying their apartments are simply not aware that they will also have a
responsibility to pay for maintenance of the common parts and building
structure. 42 Accordingly, problems surrounding service charges may be tackled
in part by the provision of greater information, which has clearly already begun
to happen even in the relatively short period since the publication of the
Consultation Paper.
6.53 However, there are also clearly situations where unit owner
dissatisfaction with regard to service charges is justified. The Consultation
Paper pointed to the lack of regulation to ensure transparency and equitable
apportionment in the calculation of service charges. 43 The Commission
indicated that a statutory obligation should be imposed on developers, while
retaining a controlling interest in the owners‘ management company; and on the
owners‘ management company itself to set service charge costs which are
‗reasonable‘ and ‗appropriate‘ in accordance with an objective standard. 44
Moreover, questionable practices such as the developer setting service charges
at an artificially low level for the first couple of years of the development in order
to appeal to prospective buyers were identified. 45 It also appears that other
unsatisfactory practices such as unit owners absorbing the service charges of
units which remain unsold by the developer continue to arise in some
instances. 46 Non-payment of service charges by unit owners is in itself a very
serious problem which can have far-reaching consequences for the
development. 47
42
See Dublin City Council Successful Apartment Living Part 2: Survey of Service
Charges, Design, Management and Owners‟ Attitudes in 193 Private Apartment
Schemes in Dublin City, June 2007, p. 95.
43
(LRC CP 42-2006) Chapter 5.
44
Ibid, paragraph 4.107.
45
The Commission accepts that the maintenance costs tend to be lower generally
in the earlier years of the development as the effects of wear and tear are minimal
for newly-built developments.
46
The developer, as owner of such units, should have responsibility for the service
charge payment for those units.
47
See Van der Merwe and Muniz-Arguelles ―Enforcement of Financial Obligations
in a Condominium or Apartment Ownership Scheme‖ (2006)16 Duke Journal of
Comparative & International Law 125, at pp.126-127.
150