Multi-Unit Developments Act, 2011

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 will require Commencement Orders, which are expected later in 2011.

The Act addresses some of the practical issues that have historically been the source of much dispute between developers and home owners, such as transferring common areas, completion of developments, duties of management companies and service charges. The Act will apply, not only to new developments completed after the commencement of the Act, but also to existing multi-unit developments.

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;
  • the transfer of the beneficial ownership is to take place as soon as practicable after the completion of the development;
  • 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 with 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.

This Act will be welcomed by those buying and living in residential complexes as it imposes greater legal obligations on developers and provides a framework for the management schemes. It will also assist where either a home owner or indeed a bank is seeking to sell a property in a scheme where the management company is defunct.