Multi-Unit Development Act 2011

The Multi-Unit Developments Act (the Act) was signed into law by President McAleese on 24 January 2011.

The Act provides a statutory framework for multi-unit developments and for the governance of the property management companies which own and manage the common and external areas in these developments. “Multi-unit development” means land having a building or buildings with not less than 5 residential units and where it is intended that amenities, facilities and services are to be shared. “Residential Unit” means a unit designed for use and occupation as a house, apartment, flat or other dwelling, and with self-contained facilities. It also includes a unit designed and used as a childcare facility where the facility is not intended to primarily share amenities, services and facilities with commercial units in the development.

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.

It is hoped that this act will attempt to fix some of the problems that have befallen Property Management Companies where the developer of the estate is either

1) refusing to resign as a director,

2) refusing to transfer the common areas into the property management company,

3) has allowed the company to be struck off the register of companies and thus incur late filing fees.

5) refusing to recognise the right of the residents to become members of the property management company

The Act basically establishes a new category of company called Owner Management Company (OMC)s

For the first time, we now have legislation that provides a statutory framework for the operation and governance of multi-unit developments. Duties and obligations of developers have been clearly defined. The rights and obligations and members have been established and a framework for dispute resolution is provided for in the Act.

The Act defines a multi-unit development (“MUD”) as a development being land on which there stands erected a building or buildings comprising a unit or units and that as respects such units it is intended that amenities, facilities and services are to be shared.

The main provisions of the act include:

Requirement to establish an Owner Management Company (“OMC”) for all Multi-Unit Developments (“MUD”) at the expense of the developer.

The Act requires that the common areas be transferred to the owners’ management company prior to sale of the first residential unit. In existing developments in which a residential unit has already been sold but the common areas have not been transferred by the developer to the owners’ management company, the transfer must be made within 6 months, i.e. before 30 September next.

New Regulations for Mixed Use Multi-Unit Developments

Automatic membership of the OMC As regards voting rights in owners’ management companies, the general rule for residential developments is that one vote attaches to each residential unit. In mixed-use developments, other voting arrangements may apply as long as they are fair and equitable.

Requirement to hold annual meetings and prepare annual reports to members – The format of these annual reports are defined in the Act

Establishment of a scheme of annual service charges & expenditure categories

Establishment of a sinking fund within 18 months of enactment of the Act (i.e. by 1st October 2012)

Making house rules

Dispute resolution, mediation & rehabilitation of m

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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Cathal N. Young, O'Reilly & Co. Solicitors & Notaries Public in Dublin on:

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