David Norris (Independent)

This is a technical Bill which was, to a certain extent, reflected in the Minister's delivery of his speech. Although clear and articulate, he did go through the matter at considerable speed. It is an important Bill and the careful consideration which the Minister's advisers gave to the speech indicates he understands and respects this.

The legislation is important because it goes to the very heart of people's enjoyment of their homes. There have been considerable problems with management companies in the past. I raised them many times only to find it difficult to get any interest, precisely because it is such a technical area. Senator O'Donovan did the House a service by putting clear case histories on the record and which are very much in accord with the abuses of which I am aware. It is a growing problem because up to 5,000 management companies exist. Until the passage of this Bill, they will remain very largely unregulated.

Like Senator Regan, I pay tribute to the Law Reform Commission on its work in this area. In its report it has identified four particular facets in the functions of a management company. The management company usually enjoys a substantial legal interest in the property. First, there is the freehold interest in the common areas of the complex, such as stairwells, entrances and exits, lifts and gardens; and second, the management company is usually the holder of the reversionary interest in the lease of each individual unit.

The second key aspect is that its members, usually the owners of each unit within the complex, have two different types of ownership rights in respect of the property — the leasehold interest in their own individual units and ownership of the freehold interest in the common areas in the complex through the company. The third factor is that management companies should be subject to company law under which this Bill brings them.

Service charges and sinking funds were identified as the fourth aspect. This is an area where there have been many problems, as indicated by Senator O'Donovan. Technical devices have been used, such as the non-transfer of property in which the developer held on to one apartment, allowing him the stranglehold of not having to vest in the management company. Senator O'Donovan spoke about this as a random bohemian approach but some times it was much more cynical, done deliberately as a profit-making exercise. Also, instead of accepting their responsibility as residual owners, the developers spread the charges among the other owners thus inflating their charges. I am glad this is addressed in section 14(9). Other examples of these devices include inappropriate companies appointed to do phantom work which is never done while the unfortunate property-owners are bludgeoned into meeting these requirements.

Many purchasers are unaware of the management company charge which can be quite substantial. They may ask themselves for what are they paying €2,000. I am glad section 14(3) requires an estimated breakdown of every service charge. People are entitled to know what they are paying for and to decide whether it is a fair charge. I also welcome the transparency that will entail.

The Law Reform Commission has also identified the problems associated with developers' failure to vest the freehold title of a development in the management company, which has resulted in unit owners unable to sell their apartments. It is a serious problem where a person buys an apartment, but because of a technical failure by the developer, is unable to sell it on. I welcome the Minister tackling this problem in the Bill.

While I welcome the provisions for resale and transfer of the common areas, I want to get a reading on a specific matter of interest to myself, a situation in which many people find themselves. Some years ago I acquired a car parking space which is freehold. I enjoyed this car park for quite a number of years having paid for the key. In the past two years, I have received demands for service charges from a management company. I was never given any information about it with no notice of meetings or accounts. I have refused to pay for it because it is on a freehold and I do not have an apartment to which the garage is related. I consider myself within my rights not to pay, particularly without a detailed breakdown. It is a personal matter but many others are in a similar situation. What are my rights? Am I entitled to refuse because I bought it leasehold?