Am I entitled to a refund when my management company records a surplus?

Published date01 December 2022
Publication titleIrish Times (Dublin, Ireland)
The apportionment method used is based on a two-, three- or four-bedroom house. But as the houses have no impact on the cost of maintaining the common areas, I think this method is unfair and it should be equal payment for everyone. They say that all our deeds would have to be changed to reflect this and it would be too costly. Is this the case

A An owners' management company (OMC) has obligations that require funding and such funding only comes from the service charges payable by the owners. The funding of the management company is not something that is ever "given back" and nor should it be as there is good reason why an OMC should be properly funded.

A surplus of funds from an overestimated budget is a good thing for a management company. It is normal practice that these funds remain in the company bank account. This is what is provided for in the MUD Act from section 18(13) to section 18(6). It states that a management company must ensure that at the end of the financial year, any money that is not spent during the year must remain in the management company's bank account. It is, in essence, the level of the bank balance that will determine the amount of a service charge required to be collected from owners in the following year.

The issue here is the interpretation of the Act. The Act does not set out to provide refunds for owners but rather it seeks to ensure that the OMC is funded and that the funds remain in the OMC. The relevant subsections are as follows:

Section 18(14)(b): "To the extent that any part of the service charge levied is not required for the year concerned any excess shall be taken account of in setting the service charge for the following year."

Section 18(16): "[...] any excess may, notwithstanding subsection (14), be applied on expenditure which may be incurred by the sinking fund established pursuant to section 19."

In this case, it is possible that the clause contained in the lease agreement is a version of what is contained in section 18 of the Act, and it would be highly unusual for a lease agreement to state that refunds should be given to owners from service charges paid.

I note there are seven references to "they" and "them" in this query. I think this demonstrates a misunderstanding of the role of the OMC. An OMC operates upon the principle of collective responsibility. The directors of the OMC are volunteers who act out of a sense of civic duty and give of their time freely to represent all the members of the management...

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