Sean Kavanagh, MD, Company Formations International Ltd (CFI) agrees to the Owners Management Company (OMC) formation requirements of the new Irish Multiple Unit Development Act, or the ‘MUD’ Act as it is now known. calls extensively, and highlights some areas that may require specific review.

Explaining how the new legislation came about, Sean points out that with over 500,000 people in Ireland living in apartment blocks and terraced house developments, it was widely recognized that legislation to provide a legal framework for the operation and governance of these developments of multiple units was a long time ago.

This came about earlier this year with the enactment of the Multiple Unit Developments Act 2011. It is now a legal requirement for property developers in Ireland to establish at their own expense a Owners Management Company (OMC) for all multi- unit developments.

The law describes a multi-unit development as a building, or portion of a building, that contains a minimum of 5 residential units that have shared amenities, facilities, and services that may also include a child care facility. The OMC of a multiple unit becomes the legal owner of all common areas of the development and is responsible for managing, maintaining, and repairing those areas.

The new MUD legislation also applies to “mixed-use” developments which, in addition to the minimum five residential units, may include a commercial unit. Certain provisions of the Act also apply to small developments comprising between 2 and 5 residential units.

Therefore, if you are a developer, or indeed someone advising a developer, you must establish an OMC for all multi-unit developments. And if you are forming a new owner management company, the name of this new company must, among other things, contain the words Owner Management Company or OMC in the title.

Existing management companies, which appear to meet the definition of OMC as defined by law, are advised to review their articles of company to establish if changes are required to comply with the law.

Areas that may require specific review include:

• right to vote,
• definition of common areas,
• automatic membership for unit owners,
• notice period for general meetings
• the terms of appointment of directors

In addition, any owner-managed business (OMC) for which no contract for the sale of a residential unit was entered into prior to January 24, 2011, must change its name to include the words “Owner-Managed Company” or “WTO”. . The purpose of this is to make it as clear as possible to everyone that the business is an owner-managed business.