Report on Multi-Unit Developments - Law Reform Commission

the proposal for a Designated Activity Company (DAC) in the 2007 report of the
Company Law Review Group, 17 adapted to reflect the specific multi-unit
development setting. 18
(1) Obligation to Incorporate
2.16 In the Consultation Paper the Commission provisionally
recommended that transfer of the legal title 19 should be made as soon as the
conveyance of the last unit intended to be sold is completed. 20 In preparing this
<strong>Report</strong>, the Commission considered this matter again and has concluded that
transfer of the legal title to the owners‘ management company must occur at the
earliest possible opportunity. The National Consumer Agency has outlined the
current conveyancing practice as regards transfer of legal title to an owners‘
management company:
―The standard conveyancing documentation provides that the
developer will transfer the titles to the management company after
completion of the development rather than when the last unit is sold.
[It] will provide that the sale of the last unit triggers, after a maximum
of 60 days, the resignation of [the developer‘s nominated directors].
This event marks the moment upon which the developer...
relinquishes responsibility to the apartment owner and, indeed, to the
management company.‖ 21
2.17 Under current conveyancing arrangements, therefore, it is common
practice to provide that the head title to the multi-unit development will be
17
Company Law Review Group, <strong>Report</strong> on General Scheme of Companies
Consolidation and Reform Bill 2007, March 2007.
18
The adoption of the standardised owners‘ management company model
recommended by the Commission as a management company will ensure inter
alia that there will be no weighted votes in favour of the developer. See further:
Chapter 3, below.
19
This can take the form of the freehold of the structure and common areas of the
development or, in some cases, comprises a long lease in situations where the
developer has purchased from the land owner; whereby when purchasing a unit;
the unit purchaser in fact purchases a sub-lease rather than a leasehold or
freehold of the unit.
20
LRC (CP 42-2006) paragraph 3.34.
21
Management Fees and Service Charges levied on owners of Property in Multi-
Unit Dwellings, Final <strong>Report</strong> for the National Consumer Agency by DKM
Economic Consultants Ltd in association with Kevin O‘Higgins Solicitors, October
2006, pp.30-31, available at www.consumerconnect.ie
47