Most common resident management company problems
Our team at Advanced Property Care has years of experience in residential estate management and in that time, we have been asked to explain or resolve a multitude of problems. Here we set out those we most frequently encounter.
What is a residential estate management company?
Since most property in Gibraltar is owned leasehold, most homeowners belong to a residential estate management company (REMC), but not everyone is aware of what this means nor what the REMC is responsible for. Most apartment blocks, even small ones, have a leasehold agreement between the owner of the building (often the freeholder or head lessor, or the developer of the estate) and the buyer of each individual apartment. This lease specifically sets out the precise footprint, or demise, of the property that the individual owns.
The communal land in the estate (stairs, lifts, corridors, lobbies, gardens, footpaths and so on) are often held by the head lessor, and the management of this is assigned, also by a deed of lease, to the REMC. In many cases, the head lease is also assigned to the REMC, so the management company is not just responsible for managing the communal areas, but it also has head leaseholder responsibilities.
The main function of the REMC is to make sure that the requirements of the leases are kept, enforcing these if necessary, for example, the requirement for each individual owner to pay service charges. But the REMC is also responsible for the care, repair and maintenance of communal areas and making sure that the company is financially viable and able to meet its expenses.
Most of this is usually understood by owners who purchase an apartment along with, perhaps, a car parking space and a store within the estate.
What is less well understood is that each owner, by virtue of owning the apartment, is also usually a member of the management company. Some management companies issue membership certificates defining the membership. When the property is sold, that membership is cancelled and the new owner becomes the REMC member. It’s a bit like being a company shareholder, but an REMC is a non-profit making company and therefore there are no dividends to share out – the ‘return’ for each member’s investment in the management company is the increasing value of their property.
REMC’s are managed by a council or committee of management, which is the equivalent of a board of directors. In fact, council members are directors of the REMC and have to register their directorship at Companies House and carry all the responsibilities that company directors carry. It is, although voluntary, a very serious position to hold. Council members are elected every year by the members of the company at the company AGM. This means that each property owner always gets some say in how the estate is managed.
Four common problems encountered by residential estate management companies
Day to day running of the estate
The day to day running of an estate can often be dismissed by members as minor work, trivial or just not particularly important. Most people are simply not aware of the complexity of ensuring that an estate is: safe, clean, in a good state of repairs, that the lights stay on and the lifts work, that the insurance policy is adequate and that the roofs don’t leak and so on. And if there is a caretaker employed by the REMC, there are employment responsibilities to consider.
Lots to do, and it should be remembered that council members are volunteers and most also have their day jobs to attend to, and families. They cannot be expected to be everywhere at once. Members can smooth this process by keeping in close touch with what is going on at the estate, and reporting any issues or concerns they have, whether these affect their own apartment, or it is something that has been noticed in a communal area. This does not mean sitting at a keyboard and shouting at council members via social media: that is simply not helpful and causes unnecessary conflict. There is usually an email address or telephone number to contact and simple polite reporting is always the most effective way of communicating.
Poor communication
This really can sour neighbour relations on an estate and it is always best to follow these basic tips:
Be polite, always. There is never any need for rudeness.
Listen first, speak afterwards. When a member listens to the directors, they get to learn why things are being done the way the council members have chosen to do them – it may be because of supply issues in getting spare parts that the lift is not yet fixed, or that there is simply not sufficient money in the kitty to repair the children’s play par. But by the same token, council members are responsible for finances and the state of the building, and they must listen to the members and learn from them what it is like to live in their corner of the estate and their ideas for improvement.
The council should always have open lines of communication, and for any emergencies, a 24-hour phone answering service is ideal.
Communicate regularly with the membership: monthly surgeries, quarterly newsletters, regular email or mail shots, even social media and social events all help to keep information flowing well and relationships positive.
Members also need to remember that they are not the only ones living on an estate and that their queries or calls can sometimes take a few days to receive a response. This is because resources are always limited on a residential estate and matters are usually prioritised, with urgent items tackled first. This usually means property damage and health and safety issues are put above overgrown bushes in the general priorities of caring for the estate. Ask and if necessary, send polite reminders, but raised voices and rudeness simply do not help good relations, and good relations usually result in more efficiently run estates.
Remember: apartment owners are members of the company, and attacking the council is in reality only attacking the company of which you are a member.
Polite talking almost always resolves everything.
Money
We all want more and it’s never enough! Money can be a significant source of conflict on an estate. Often members do not understand the true costs of running an estate. It is important for members to look out for information that is circulated about the estate’s finances and it is vital for a council to make financial control and management their top priority.
No-one wants to pay high levels of service charges but with escalating costs for even simple repairs to the buildings, let alone items like insurances, if the estate is to remain in a good state of repair, then a reasonable amount must be charged to members. Service charges are usually the only source of income that an REMC has, so if the estate is not to become dilapidated, members have to share the cost out in a way that safeguards the future of the estate. Simply patching up, making do and mending simply does not work in the long run.
This said, it is the duty of council members to ensure probity, transparency and accountability in all financial dealings, so that the membership understands what is needed, why and how much it is going to cost.
Disagreements about repair and maintenance work
This happens more frequently than anyone would like and it often boils down to being clear on who is responsible for what. Is it up to the apartment owner to repair a particular item such as a burst pipe, or for the REMC?
The responsibilities are usually laid out in the underlease, but this is a complicated document that is not often read thoroughly by owners, and sometimes not even by council members. This document will state who is responsible for repairing items such as drainage pipes, roof terraces and areas that may appear to be communal, but which may fall within the demise of the individual’s property.
Some underleases have covenants controlling the type of alterations that are permitted in apartments (if any are permitted at all) and some also prohibit hanging anything on the property’s facades, placing personal items in communal areas, even installing air conditioning units can be prohibited. The breaking of these covenants, usually unwittingly by property owners, can cause problems in an estate, especially when council members have no other option but to enforce the underlease covenants (which they are obliged to do).
It is always worth having a copy of your underlease and referring to it if in doubt.
We hope this basic run down of the most common problems faced by residential estate management companies answers some of your questions. But please do reach out and email us if there is anything specific you might need our help with.