The Company Formations Requirements of the New Irish Multi-Unit Development ‘MUD’ Act

Sean Kavanagh, MD, Company Formations International Ltd (CFI) accesses the owner management company (OMC) formations requirements of the new Irish Multi-Unit-Development Act, or the ‘MUD’ act as it is now widely called, and highlights some areas that may require specific review.

Explaining how the new legislation came into being, Sean points out that with over 500,000 people in Ireland living in apartment blocks and town house developments it was widely recognised that legislation to provide a statutory framework for the operation and governance of these multi-unit developments was long overdue.

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

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

The new MUD legislation also applies to “mixed-use” developments which, in addition to the minimum five residential units, can include a commercial unit. Certain provisions in the Act also apply to small developments which comprise 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 owners’ management company the name of this new company must, among other things, contain the words Owners’ Management Company or OMC in the title.

Existing management companies, which appear to meet the definition of an OMC as defined by the act, are recommended to review their company articles to establish whether or not changes are required to them in order to comply with the Act.

Areas that may require specific review include:

• voting rights,
• definition of common areas,
• automatic membership for unit owners,
• notice period for AGM’s
• the terms of directors’ appointments

In addition, any Owner Managed Company (OMC) for which no contract for the sale of a residential unit has been entered into prior to 24th January 2011, will need to change its name to include the words “Owners Management Company” or “OMC”. The purpose of this is to make it as clear as possible to everyone that the company is an owner managed company.