Key Aspects of the Multi-Unit Development ActThursday, 30 November 2017
The Multi-Unit Development Act 2011 (the “MUD Act”) introduced a statutory framework for the operation and governance of multi-unit developments. It focuses on issues arising between developers and home owners, which may include the transfer of common areas, completion of developments, duties of home owners and developers, service charges and dispute resolution.
In this update we outline some of key aspects to the Act.
Calling an extraordinary general meeting
If required an owner of a unit can call an extraordinary general meeting (“EGM”) with the owners' management company (the "OMC”), if they can satisfy the requirements under section 1203 of the Companies Act 2014 (the “CA 2014”).
Owners of a unit automatically become a member of the OMC, and are entitled to exercise the powers, rights and entitlement of a member in the company concerned. The voting rights of members in the OMC are allocated as one vote per residential unit in the multi-unit development.
An EGM can be convened by one or more members who hold, or together hold, at least 10 per cent of the voting rights of all the voting members. When requesting an EGM, members must state the objectives of the meeting in the requisition, sign the requisition and deposit it at the registered office of the company.
Upon receipt of receiving the requisition, Directors have 21 days to convene a meeting, which must be held within two months of the requisition date. If this does not occur the requisitionists, or any member representing more than 50 per cent of the total of all voting rights, may themselves convene a meeting within three months of the expiration of the requisition date.
It must be noted that no member will be entitled to vote if there is any outstanding money owed to the OMC.
Steps available when a request for an EGM goes ignored
The MUD Act established a court jurisdiction for the resolution of disputes in relation to multi-unit developments to which any member of the OMC may apply to enforce any rights conferred, or obligation imposed. If the court is satisfied that a right has been infringed or an obligation has not been discharged, it may make such an order (or orders) as it deems appropriate.
Consequently, if the directors refuse to convene an EGM, a member will have strong grounds to succeed in an action as it is clear that a right is being infringed.
It must be noted that some attempt, such as mediation talks, is made to resolve the issue before going to court.
Steps available when a request to become a director goes ignored
If a court is satisfied that a right has been infringed, or an obligation has not been discharged, it may make an order (or orders) as it deems appropriate. However, the MUD Act does not grant an owner the right to become a director, nor does it impose an obligation on a director to accept an application from an owner to become a director.
Consequently, a member will have no grounds to succeed in an action under the MUD Act.
Members’ approval of the service charge budget – 75% of the available vote or 75% present
The OMC is required to establish an annual service charge scheme for which they may discharge ongoing expenditure reasonably incurred on the insurance, maintenance or repair of the common areas and on the provision of shared services.
This annual charge will not be levied for a particular period unless it has been considered at a general meeting where the estimated service charge for the coming period is discussed. Where the estimated service charge for the coming year is disapproved by at least 75% of those present and voting, the proposed service charge will not be levied but the previous year’s charge will continue to apply until a new service charge for the coming year is approved. 60% or more of those present at the meeting can amend the proposal for the coming period.
Sinking Fund and the provision to increase
Under the MUD Act, if an owner declines to increase the sinking fund and work is necessary then a contribution is required to be paid up to the amount of €200, or such other amount as may be agreed by a meeting of the members.
If a court is satisfied that a right has been infringed, or an obligation has not been discharged, it may make such an order (or orders) as it deems appropriate. The court may grant an order to approve a proposal to enable an OMC to deal with a debt, whether caused by an inadequacy in, or the absence of, a sinking fund, and any issues arising therefrom in relation to the future management of the OMC.
If the directors refuse to convene an EGM, a member will have strong grounds to succeed in an action as it is clear that a right granted under statutory law is being infringed.
A member of the OMC does not have a right to become a director in the OMC conferred upon them under the MUD Act or indeed any other legislation.
The annual service charge is prepared by the directors of the OMC. It will be implemented unless at least 75% of the members present vote against it at a general meeting called for the purpose of approving the annual service charge.
The MUD Act includes a section for an increase to be made in the sinking fund. Where the members refuse the increase, the OMC can apply for a court order to approve the proposal. There are strong grounds for this order to be granted as there will be a debt existing to take care of genuine works needed that the sinking fund cannot provide for.