Multi-Unit Developments Bill 2009: Report and Final Stages

Tuesday, 1 June 2010

Seanad Eireann Debate
Vol. 203 No. 2

First Page Previous Page Page of 9 Next Page Last Page

An Cathaoirleach: Information on Pat Moylan  Zoom on Pat Moylan  Before we commence, I remind Senators that a Senator may speak only once on Report Stage, except for the proposer of an amendment, who may reply to the discussion on the amendment. Also, on Report Stage each amendment must be seconded.

Amendments Nos. 1, 26 and 27 are related and may be discussed together with the agreement of the House. Is that agreed? Agreed.

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  I move amendment No. 1:

I welcome the Minister to the House. We had a full debate on Committee Stage on many of these amendments. The Labour Party’s amendments have been updated to reflect the debate on Committee Stage. Amendment No. 1 was tabled on Committee Stage but amendment No. 26 was not. It arises out of the debate on Committee Stage.

I am grateful to the Royal Institute of the Architects of Ireland, RIAI, and to the Apartment Owners Network, both of which have been helpful in conveying their views as to how the Bill [49]could be improved. We are all seeking constructively to improve the Bill rather than oppose it. The Department has also been in contact with different parties with an interest in the Bill. There may well be further amendments. The Government has tabled a number of amendments on Report Stage today and others may be introduced in the Dáil.

Amendment No. 1 was tabled on Committee Stage. It arises out of a concern to ensure completion is properly dealt with in the Bill. It would place in section 1 a new definition of the word “complete” which would be “complete to the agreed satisfaction of the developer and the owners’ management company and the planning authority”.

This amendment is being debated with amendments Nos. 26 and 27. Amendment No. 26 elaborates on the need to ensure more specific detail about completion. It would insert a new section 11, requiring a developer who has completed a development in accordance with the definition in amendment No. 1 to serve a notice of completion on the owners’ management company, the planning authority, the building control authority and the other parties scheduled in section 20 stating that the development is complete. It goes on to give some very detailed provisions as to the sequence of events where, for example, a party listed in section 20 objects to completion of the transfer to the owners’ management company. The amendment provides a great deal more certainty as to the process of completion. The RIAI has been in contact with the Department of Justice and Law Reform and has raised concerns about the need to ensure this level of detail about the completion process. I will be interested to hear what the Minister has to say on this and if he is willing to accept in principle the need for an amendment of this nature.

Amendment No. 27 was tabled on Committee Stage. It refers to an aspect of completion which is the snag list. The amendment proposes that the relevant local authority or an independent party may be requested to carry out a snag list where the development is substantially completed. The amendment then provides that where the developer fails to carry out a snag list within three months of the determination, he or she should pay to the owners’ management company “a sum equal in value to the cost of completing the development to enable the snag list to be completed”. This amendment also seeks to ensure the completion process is watertight and that completion is carried out to the agreed satisfaction of the developer, the owners’ management company and the planning authority. It is in keeping with the spirit and stated aims of the Bill which are to ensure greater certainty and security for apartment owners and purchasers in the completion of apartments.

Senator Eugene Regan: Information on Eugene Regan  Zoom on Eugene Regan  I second the amendment.

Minister for Justice and Law Reform (Deputy Dermot Ahern): Information on Dermot Ahern  Zoom on Dermot Ahern  I have looked at these amendments. I cannot accept them because, in the view of the Department, they would introduce a complex and unwieldy mechanism for determining completion of multi-unit developments. I do not believe amendment No. 1 is practical for a number of reasons. First, it seeks to impose a new statutory duty on local authorities which would be additional to their existing statutory functions as set out in the Planning and Development Acts 2000-2009. If the planning authorities were to be given additional responsibility, those Acts would need to be amended, as appropriate. It certainly would not be appropriate to provide for such additional responsibilities in the manner proposed in these amendments.

The Long Title of the Bill does not refer to planning. The Bill is entitled “an Act to amend the law relating to the ownership and management of the common areas of multi-unit developments and to facilitate the fair, efficient and effective management of bodies responsible for the management of such common areas, and to provide for related matters”. Any such expansion of local authorities’ statutory functions would only be considered following an assessment [50]by the Minister for the Environment, Heritage and Local Government and his Department as to whether taking on an additional role would be appropriate for planning authorities and, if it were, whether they would have the necessary resources to undertake it. Proper advanced consultation with the planning authorities and adequate preparation for any such role would be essential. For that reason, I cannot accept amendment No. 1.

Amendment No. 1 states that ““complete” in relation to a development means “complete to the agreed satisfaction of a developer and the owners’ management company and the planning authority”. On many occasions there may not be agreement. From what I understand from the legislation and from proposals to amend it further, there is no opportunity to determine what is meant by “complete” in the event of agreement not being reached.

  4 o’clock

With regard to amendment No. 26, the provisions of sections 4, 5, 10, 11 and 19 deal with the issues raised in this amendment. Under section 4, which deals with partially completed developments, and section 5, which deals with fully completed developments, the owner of the common areas is required to transfer control of these common areas to the owners’ management company within six months of the coming into operation of the Act. In the case of partially completed developments, the transfer of the common areas is subject to the retention of the beneficial interest by the transferor. The retention of the beneficial interest is designed to ensure the developer completes the development. The mechanism for the eventual transfer of the beneficial interest is set out in sections 10 and 11 while section 19 provides that in the event of a dispute about completion, the matter can be brought before the courts or to mediation under the disputes resolution mechanism. The mechanism proposed in the amendment is complex and likely to lead to disputes which would end up before the courts.

On amendment No. 27, snagging is an extremely complex issue. As far as I am aware, there is no provision under the Planning and Development Acts or the Building Control Acts that would permit planning authorities to require performance bonds to ensure snagging of multi-unit developments. Therefore, the proposed requirement in section 11(3) that future planning permissions for multi-unit developments should be subject to the lodgment of a bond would require amendment to those Acts. This is a matter for the Minister for the Environment, Heritage and Local Government and his Department to consider with the planning authorities in the context of any such legislative reform.

Section 19(4), under a later amendment, will contain a provision for the Circuit Court to make an order directing the developer to complete a development in compliance with the planning permission, the terms of building control standards and the terms of any contract. Under amendment No. 10, which we will come to shortly, a developer will be required to have a contract with the owners’ management company. I envisage that this will contain commitments by the developer in relation to the completion of the development, including common areas. If the terms of this contract are not honoured, the unit owners will have recourse to the courts which may order mediation with a view to resolving the issue.

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  I should have referenced the Minister’s amendment No. 10 which seems a good first step in meeting some of the concerns about completion the RIAI and the Labour Party have. The amendment requires a written contract between the developer and the owner’s management company. While that would allay some of the concerns about the need to tighten up the completion provisions, the concern still remains that the other amendments proposed by the Minister do not build on this provision for a contract in writing. In particular, there is a lack of detail regarding how the contract will provide sufficiently for consumer protection.

[51]Amendment No. 50 provides for alternative dispute resolution procedures and it is unfortunate that the Minister did not see fit to at least accept the principle involved. This might also allay concerns about disputes that arise following inadequate completion or a completion that was not carried out ultimately in a satisfactory manner. If there were an alternative dispute resolution procedure, this might provide for greater consumer protection.

It is correct that the Minister of State, Deputy Mansergh, speaking on behalf of the Government in the House on 19 May, expressed support for a system of adjudication similar to that operating in Britain, and we will come to that later when we debate amendment No. 50. The need for some form of a dispute resolution procedure is also linked to the issue of satisfactory completion

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  I am inclined to agree with the principle of amendment No. 50 and we will come to that later. The completion not only of individual apartments but also of entire estates, including the communal areas, is a vexed issue. We also have the 5% retention issue. While, with the best will in the world, we would like to have a system to hold developers, that issue is fraught with difficulty. Primarily, completion must be dealt with by the local authorities, the planning authorities and the Department. There was a time local authorities issued certificates of compliance, but that is not the practice anymore and, therefore, the amendments would put a substantial administrative and resource requirement on local authorities. If that were not the case, the various architect representative groups would be in like a flash seeking that their members would provide the necessary certificates which, ultimately, wouldresult in additional expense being passed on to the consumer. We are looking to solve this some other way in the Lower House. We will be in more detailed discussion with the Department of the Environment, Heritage and Local Government in this regard.

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  I thank the Minister for his reply and I am grateful to him for indicating he is willing to accept amendment No. 50 in principle.

An Leas-Chathaoirleach: Information on Paddy Burke  Zoom on Paddy Burke  We will get to that amendment later.

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  I am also grateful that he wants to resolve the vexed question of completion in some way. I regret it cannot be addressed through amendment in this House but I echo what he said. We are trying to help him to resolve the vexed issue of completion through amendments Nos. 1 and 26, in particular, and also through amendments Nos. 15, 27 and 50, which deal with the retention principle. Members of both Houses are well aware of the serious difficulties people face because of inadequate competition not only of individual apartments but of entire complexes and communal areas. This is an ongoing problem for many people and we must be cognisant of that. We are trying to come up with a workable and practical solution to this. I am grateful for the Minister’s comments but I regret we cannot make the amendments in this House.

Amendment, by leave, withdrawn.

An Leas-Chathaoirleach: Information on Paddy Burke  Zoom on Paddy Burke  Amendments Nos. 3 and 53 are related to amendment No. 2 and all may be discussed together.

Government amendment No. 2:

[52]Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  The purpose of amendments Nos. 2 and 3 is to amend the definition of “development stage”. The current wording provides that development stage ends when certificates of compliance with the planning and building control codes have been issued. It has emerged from consultation with the Department of the Environment, Heritage and Local Government and other stakeholders that definitive certificates of compliance are not issued currently in respect of planning permission or building control standards. My concern is if the definition is not amended, the reference to certificates of compliance might provide a loophole which could be used to delay the transfer of control of the common areas of multi-unit developments to the owner or management company. The revised definition provides that the development stage ends when the development is completed in accordance with the planning permission and building control regulations and there is no longer a reference to the issuing of certificates of completion. Amendment No. 53 brings the wording of paragraph 1 of Schedule 3 into line with the amended definition of “development stage” in section 1.

My officials have met officials of the Department of the Environment, Heritage and Local Government since our Committee Stage deliberations to discuss completion issues under the Planning and Development Acts and the Building Control Acts. I understand a review of enforcement proceedings under both codes is being undertaken by the Department with the aim of ensuring improved enforcement of statutory requirements. I also understand the building review advisory group, which advises the Minister for the Environment, Heritage and Local Government, has established a working group specifically to examine the building control enforcement system and it will report to him shortly on the issue.

Amendment agreed to.

Government amendment No. 3:

Amendment agreed to.

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  I move amendment No. 4:

We debated this on Committee Stage. The amendment was suggested by the Apartment Owners Network to delete the definition of “relevant parts” in section 1 because their view, as consumers, is that the developer should have to indicate what are intended to be the common areas in the planning application and in all the literature and brochures in order that there can be no room for subsequent changes by him or her. Their concern is this definition qualifies the notion of “relevant parts” and allows developers to change areas. The example the organisation has given is where a park is viewed by the owners as part of the common area but the developer subsequently seeks to build on it. This comes back again to issues relating to completion which are constantly being raised with us by people living in apartments who thought some area was common ground, such as a communal garden or recreation space, but which was subsequently changed by the developer. The amendment is suggested in an attempt to ensure against such change.

Senator Eugene Regan: Information on Eugene Regan  Zoom on Eugene Regan  I second the amendment.

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  The deletion of this definition would case grave difficulty regarding multi-unit developments that are completed in phases. If we were to delete this, it would leave the legislation deficient and I cannot accept the amendment.

[53]Amendment, by leave, withdrawn.

Government amendment No. 5:

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  This amendment replaces the text of section 2(4) and involves two changes in the existing text. The current text is restricted to mixed-use multi-unit developments in which there is more than one owners’ management company. It has been drawn to our attention by the Law Society that some large mixed-use developments have only one such company and it is therefore necessary to broaden the scope of the subsection to include such cases.

The second change is a technical matter which substitutes a reference to membership of the owners’ management company instead of holding shares in it. The revised text will mean that the scope of this provision of the Bill will extend to all mixed-use multi-unit developments.

Amendment agreed to.

Government amendment No. 6:

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  My Department received a number of queries following Committee Stage. It became apparent that there is still some confusion about whether the Bill’s provisions apply to all existing multi-unit developments. This amendment makes it clear that except where otherwise stated, for example, in sections 3 and 13 which apply to future multi-unit developments, the provisions of the Act will apply to all existing multi-unit developments. In practice this means that the new requirements, such as the holding of annual meetings, the arrangements in relation to the annual service charge and the sinking fund as well as dispute resolution mechanisms, will apply to existing, as well as future, multi-unit developments.

Amendment agreed to.

Senator Eugene Regan: Information on Eugene Regan  Zoom on Eugene Regan  I move amendment No. 7:

This is an amendment which I believe has been discussed previously. It simply suggests that instead of “A person to whom this section applies”, the Bill should specifically refer to the developer. I am still at a loss as to what other person this section may apply to. The Minister, on Committee Stage, indicated that subsection (2) covers the issue. That section applies to “(a) a unit which has not previously been sold” and “(b) a person”. I am not sure that the definition and the person to whom the section applies is clear. It seems to me it is a developer, which term is defined in section 2. Subsection (5) states: “The developer shall ensure”, which highlights the fact that it is, in fact, the developer we are talking about in this section. I wonder whether the language is quite coherent and if it would not be more appropriate in section 3(1) simply to refer to a developer.

[54]Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  I second the amendment.

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  This was debated on Committee Stage. I believe section 3(2)(b) makes it clear that the section applies to any person who is the owner of common areas of a multi-unit development, which in most cases, although not all, would be the developer. It might very well be a builder or subcontractor. It is trying to encompass all the persons that would be involved in the laying out, ultimately, of the multi-unit development.

Amendment, by leave, withdrawn.

An Leas-Chathaoirleach: Information on Paddy Burke  Zoom on Paddy Burke  Amendment No. 10 is consequential on amendment No. 8. Amendment No. 11 is an alternative to amendment No. 10 and must be discussed with it or else there would not be an opportunity to discuss amendment No. 11. Amendments Nos. 18 and 24 are related to amendment No. 11. Therefore amendments Nos. 8, 10, 11, 18 and 24 will be discussed together. Is that agreed? Agreed.

Government amendment No. 8:

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  This Bill seeks to address shortcomings in current arrangements concerning the transfer of control of owners’ management companies to unit owners. One of the shortcomings that has come to light in recent discussions with stakeholders is the lack of any detailed contract between the developer and the owners’ management company which would set out the developer’s obligations to the company in a manner which would enable it to enforce discharge of these obligations. The purpose of amendment No. 10 is to ensure that prior to the sale of the first unit of a development, the developer and the owners’ management company must enter into a contract setting out the rights and responsibilities each has to the other. I envisage that this contract will include a commitment by the developer to complete the development in accordance with the planning and building control codes and a commitment to attend to any other snagging matters. The existence of such a contract would also provide protection for any purchaser of residential units within a multi-unit development because any person considering purchasing such a unit or his or her solicitor would have the opportunity and the possibility of examining commitments regarding completion which the developer has committed to in the contract. Amendment No. 8 is a drafting amendment arising from the insertion of the new paragraph (c).

On Committee Stage I indicated I would table an amendment on Report Stage to provide that a purchaser or unit owner must provide contact details to the owners’ management company. Amendment No. 24 inserts a new subsection in section 7 which provides that a unit owner must supply contact details to the owners’ management company and must notify the company of any changes in those details.

Amendment No. 11, tabled by the Labour Party Senators, deals with the same issue, but we believe section 3 is not the correct section in which to make a change. I cannot accept amendment No. 18, tabled by the Labour Party Senators. It seeks to restrict unreasonably the right of an apartment owner to sell his or her property unless the purchaser gives an undertaking to supply contact details. Such a restriction would be likely to infringe the property rights of an apartment owner.

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  I support the Minister’s amendment No. 10, which is an important safeguard for consumers. I note that he envisages the contract in writing would include a commitment by the developer to complete the development satisfactorily. That is important [55]and goes some way towards meeting the concerns we have about ensuring this provision for adequate and effective completion to the satisfaction of ultimate purchasers. I have a technical issue with amendment No. 8 in that I do not see why the Minister is deleting “and”. As a drafting point, it seems clearer in its current formulation. Perhaps I have missed something, but removing “and” seems to make the meaning somewhat less clear. That is amendment No. 8 and relates to section 3(1).

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  It is in the introduction to amendment No. 10.

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  I believe amendment No. 8 is about a different issue, which is section 3(1)(a).

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  It is simply to allow for the addition of “(c)”.

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  I see the point and thank the Minister for that clarification. Amendment No. 11 refers to an amendment we tabled on Committee Stage. It was suggested by the Apartment Owners Network to facilitate the enforcement of charges, but I take the Minister’s point about the difficulty in requiring a residential address to be supplied, and so I am not going to press that amendment.

Amendment agreed to.

An Leas-Chathaoirleach: Information on Paddy Burke  Zoom on Paddy Burke  Amendments Nos. 9 and 25 are related and may be discussed together. Is that agreed? Agreed.

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  I move amendment No. 9:

Amendment No. 9 arises out of Committee Stage proceedings. It was not tabled on Committee Stage but arose from the debate on an amendment to section 4(2). It provides for the insertion of, in line 36 in page 6, before “ownership”, the words, “the unencumbered beneficial and legal”, to qualify what is meant by ownership. The reason for this is that we believed the Minister might have created an ambiguity in terms of what is to be transferred to the management company. We had assumed that both legal and beneficial interest in the common areas and the reversions would have to be transferred to the management company, but the Minister, if I am right, is now providing in section 4(2) that the developer can retain the beneficial interest in any development established before the Act. This makes it more important to ensure the beneficial interest in developments after the Act is transferred, not just the legal interest.

We can deal with pre-Act developments when we get to section 4. This amendment would also ensure the developer is not entitled to transfer the reversion or common areas subject to a mortgage or charge — hence the word “unencumbered”— because we felt that would frustrate the purpose of the Bill.

Amendment No. 9 is to be discussed in conjunction with amendment No. 25, which attempts, again, to insert the word “unencumbered” into section 10(1). The Bill would thus state “the unencumbered beneficial interest” rather than “the beneficial interest”. This would clarify that the management company is to get clear title under section 10 as well as under section 3 as amended by amendment No. 9. Both of these amendments arose from debate on Committee Stage.

Senator Eugene Regan: Information on Eugene Regan  Zoom on Eugene Regan  I second the amendment.

[56]Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  On the transferral of beneficial ownership, as is being opposed in this amendment, the idea is that the beneficial and legal ownership is split. The legal ownership transfers on the sale of the first apartment but the beneficial ownership ultimately merges on completion of the development. Transferring the beneficial ownership of the common areas in the manner suggested would therefore run counter to sections 10 and 11, which provide for the transfer of beneficial ownership only when the development stage has ended. I believe the current wording is clearer.

With regard to amendment No. 25, (2) and (3) of section 10 deal with the issue of consent by any mortgagee or owner of a charge with regard to the interest of the owner of the common areas in a development. The insertion of the word “unencumbered” appears to be superfluous in that context.

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  The Minister stated in his response that he feels the amendment would be superfluous. We felt it was important to clarify what is meant by “interest”, and that it should be unencumbered. I wished to raise this point with the Minister because it arose on Committee Stage debate. I ask him to consider it again, perhaps before it goes to the Dáil. I will not press the amendment.

Amendment, by leave, withdrawn.

Government amendment No. 10:

Amendment agreed to.

An Leas-Chathaoirleach: Information on Paddy Burke  Zoom on Paddy Burke  Amendment No. 11 cannot be moved.

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  It was already discussed.

An Leas-Chathaoirleach: Information on Paddy Burke  Zoom on Paddy Burke  It was already discussed but it cannot be moved because amendment No. 10 has been agreed to.

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  All right. I was going to withdraw it in any case.

Amendment No. 11 not moved.

An Leas-Chathaoirleach: Information on Paddy Burke  Zoom on Paddy Burke  Amendments Nos. 12 and 42 are related and may be discussed together. Is that agreed? Agreed.

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  I move amendment No. 12:

[57]The Minister may recall that this section was the subject of the most light-hearted discussion on the last occasion, with quite a lively debate, although the point is a serious one, that is, the right to dry laundry. Many apartment owners are concerned about clauses in their leases which prohibit them from air-drying laundry. Amendment No. 42 was moved on Committee Stage and the Minister had a good deal of sympathy with people who are faced with this real and practical issue when living in flats and apartments. They do not want to see house rules prohibiting the air-drying of laundry. Equally, there are those who feel it is unsightly to have laundry drying outside. As I said on Committee Stage, in countries in which a much higher proportion of people, particularly families, live in apartments, provisions are made in the building and construction of apartment complexes to ensure there are aesthetically pleasing ways of air-drying laundry so people do not have to resort to the most environmentally unfriendly method of the tumble dryer. For environmental reasons as well as practicality, we should be encouraging apartment complexes to be constructed, where possible, in such a way that people can air-dry their laundry.

We suggest in amendment No. 42 that house rules should not prohibit air-drying of laundry, but the Minister felt that was too specific although, as I said, he had some sympathy with the principle behind it, so we have tabled a separate amendment, No. 12, in answer to the points raised by the Minister. It is not exactly an alternative to No. 42 but it would certainly go some way towards meeting the concerns raised in the tabling of amendment No. 42, although in a more general sense. We have suggested in amendment No. 12 that “An interest in a unit shall not be transferred subject to any conditions or covenant unless in the formulation of such condition or covenant, due regard has been had to environmental considerations”. This is a general formulation which is designed to encourage the deletion of any clauses that prohibit air-drying of laundry in conditions or covenants.

I am interested to hear what the Minister has to say, particularly about amendment No. 12. We have already debated amendment No. 42 in some detail and his concern was that it was too specific. However, having regard to environmental considerations, such clauses really should be discouraged. That is what we are trying to do in amendment No. 12.

Senator Eugene Regan: Information on Eugene Regan  Zoom on Eugene Regan  I second the amendment.

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  We did take up the matter of amendment No. 42 with the Department of the Environment, Heritage and Local Government, which said it had already issued guidelines on the design of new apartments, including minimum standards for floor areas, storage spaces, balconies and room dimensions. In addition, communal facilities for drying clothes may be provided in well ventilated areas and, where this is not done, consideration should be given to the provision of drying facilities within each unit, such as screened balconies. There is a balance to be struck with regard to air-drying laundry while not causing an unsightly aspect to apartment blocks. There may be something of an outcry in this regard.

I would hazard a guess that amendment No. 12, if inserted as a clause in the Bill, would cause much dispute and create more problems than it solved. The amendment states: “An interest in a unit shall not be transferred subject to any conditions or covenants unless in the formulation of such condition or covenant, due regard has been had to environmental considerations”. Who would determine whether due regard had been given to environmental considerations? It is a pretty nebulous provision and would lead to legal difficulties in that an interest in a unit could not be transferred without due regard to whatever are considered “environmental considerations”.

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  To sum up the Minister’s response to the two amendments, we have been too specific in amendment No. 42 and too general in amendment No. 12. However, I [58]hope he accepts the policy interest I am expressing, which is to ensure the quality of life in apartments is improved and that environmental considerations are taken into account in their construction. I am glad to hear what he has to say about the Department of the Environment, Heritage and Local Government; these are among the issues that developers must take into account in constructing new complexes.

It occurred to me after the debate on Committee Stage that whenever I have stayed in an apartment in the US or Canada, there has generally been a basement area in the apartment block containing a communal laundry facility and, often, communal drying space. Unfortunately, when basements are built in apartment complexes in Ireland, they tend to house underground car parks and there is no space for communal laundry or drying facilities. This is perhaps a commentary on the priorities we have had in the past, but I hope this will change. I am glad we have had a debate on this issue and I hope the need for environmental considerations to be taken into account will be considered in the construction of apartment complexes.

I will not press the amendment as I take the Minister’s point that this might give rise to difficulties in interpretation. However, perhaps the Labour Party contributors in the Dáil will be able to tweak the amendment in some way to ensure it meets the Minister’s concerns.

Amendment, by leave, withdrawn.

Government amendment No. 13:

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  This is a drafting amendment. Section 3 deals with new multi-unit developments in which no units have been sold at the date on which the Act comes into effect.

Amendment agreed to.

Government amendment No. 14:

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  This is a technical amendment to cater for the fact that certain multi-unit developments are completed in phases. It makes clear that the obligations on developers set out in section 3 also apply in respect of such phased developments.

Amendment agreed to.

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  I move amendment No. 15:

This amendment was tabled during Committee Stage proceedings when Members had a full debate. This amendment has been discussed and debated at length. It is supported strongly by both the Royal Institute of the Architects of Ireland, RIAI, and by the Apartment Owners [59]Network. It considers the problem of unsatisfactory completion of complexes or individual units and calls for the developer to pay a retention of 5% of the purchase price to the owners’ management company to hold such sum in trust for the developer until the development is completed. The idea is to include an additional protection for the consumer. I acknowledge there has been discussion following the Committee Stage debate and note the Minister stated during that debate that he had some sympathy for the point raised and would reconsider it before Report Stage. However, I cannot discern an amendment tabled by the Minister on this subject although I note amendment No. 21 tabled by Senator Regan is similar.

The idea of such a retention of 5% originally was proposed by the Law Reform Commission but the interdepartmental group did not accept its recommendation as it was feared the builder simply would raise the price of apartments by 5%. As a result, this ultimately would not give any security or safeguard to the consumer and would actually contribute to rising prices. As the Minister has acknowledged, given the change in the property market and falling property prices, this fear has been diminished. The RIAI took some expert advice on the issue of the effect a 5% retention would have. The advice the institute received was that it would not necessarily raise prices and that were the price to increase, it would only be because what was being acquired was a qualitatively better property than one sold without the 5% retention. Therefore, a rather complex issue arises in that by including a clause such as this, a dwelling then comes with a greater assurance because many of the problems pertaining to completion that now are being experienced by purchasers would have been resolved by the vendor before the sale of the apartment was finally completed. I also have been informed that the straightforward view that additional costs incurred by the producers of new residential property are passed directly onto purchasers is not supported by the literature. Consequently, there is some contradiction of the generally held and intuitive view that the 5% retention would contribute to an increase of 5% in the purchase price. In any event, the Minister himself accepts the market now is very different from the property market that was in place when the interdepartmental group ruled out such a clause.

On balance, the Labour Party certainly considered the safeguards this clause would offer to the purchaser would outweigh any other negative effect and given the current market, I doubt whether there would be such a negative effect. I will be interested to hear what the Minister has to say, given that on Committee Stage he indicated he would revert to Members on Report Stage in this regard. I believe he then stated it would be helpful to go back to the interdepartmental group and the National Consumer Agency for their opinions on the matter at this changed time. I believe I am correct in stating the interdepartmental group reported two years ago and of course in the intervening period, there has been an enormous economic downturn and the property market has changed out of all recognition. Therefore, the concerns raised by the interdepartmental group are no longer in any way as strong. While I will be interested to hear the Minister’s views, I am disappointed he has not accepted this amendment at this point.

Senator Eugene Regan: Information on Eugene Regan  Zoom on Eugene Regan  I second the amendment, which is similar to amendment No. 21 that I tabled but which has been ruled out of order because of its references to value added tax and the manner in which it should be calculated. As Senator Bacik has indicated, there was a debate on this issue on Committee Stage. The purpose is to ensure complexes are properly completed and the nub of the issue is how to determine the date of completion and what constitutes completion. However, that is a general problem to which the Minister referred earlier in today’s debate and which must be clarified in the Bill. In itself however, that is not a justification for failing to adopt this approach of holding on trust 5% of the purchase price by an owners’ management company. There must be some leverage by which people cannot simply walk away from a development without a price being paid for so doing. I do not believe there is a dispute [60]in respect of the principle in this regard. The issue is about how it would be implemented and that has to do with the issue of completion, determining what constitutes completion and who certifies that. I commend the amendment to the Minister.

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  I indicated on Committee Stage I would reconsider this matter in the meantime. It may well be that I will be obliged to reconsider this matter further between now and the Bill’s appearance before the Dáil because the Department received a complex submission from the architects’ body late last Friday. It was too late to be considered in the context of Report Stage in this House and consequently I may well revert to it.

However, my Department has consulted the principal stakeholders since Committee Stage and it is fair to state there was no consensus on the 5% retention proposal. While I stated previously there was some merit in the idea as a means of seeking to ensure completion, there also are practical difficulties. During my time as a solicitor in previous years, when a one-off house was built, the person who owned the site would get it built in stages. However, when it came to the end of the completion of the particular dwelling, a dispute always arose about whether the owner of the site was entitled to retain the balance, that is, the last amount. I accept we have moved on and that facilities such as mediation etc. now are available. However, I believe there would be a considerable risk that the 5% that was to be taken from every unit owner would end up residing in a management company and that no one would be able to get his or her hands on it.

I also alluded previously to the practical issue regarding how the cumulative amount of 5% from all the units should be released and who would determine when it should be released, which leads one back to issues regarding architects’ certificates. As I stated previously, there is a risk that developers might seek to build into the sales price an additional 5% at the outset, which obviously would not be in the consumers’ interests. While I can accept the point that this is less likely to happen in the present economic circumstances, this legislation is being enacted not simply for today or tomorrow but for years to come and the property market will not be down at the bottom, as it is, forever. I anticipate that as always when such issues arise, as was the case in respect of housing grants, they really only act as an opportunity for the builder to jack up prices by the commensurate amount.

I have alluded to the making of a fairly complex submission by the architects’ body. It is described as an interim working draft, represents a work in progress and obviously must be considered in the meantime. The working draft appears to require that planning authorities should provide certification that development has been completed in accordance with the planning permission and any planning conditions attached to it. My understanding is that planning authorities no longer follow the practice of providing certificates of compliance. It appears it is dependent on the local authority completing a taking in charge process where it arises under section 180 of the Planning and Development Act 2000. I understand that in certain cases this may be a lengthy process under existing statutory provisions.

As regards building control standards which also must be complied with, section 6 of the Building Control Act 1990 provides for the making of regulations requiring the submission of certificates of compliance prescribing the form and content of such certificates and designating those who may issue them. To date, however, regulations have not been made under section 6 of the Act mainly because, I understand, of professional indemnity insurance issues on the part of the architects’ profession. It is not clear from the architects’ submission that a solution has been found to this issue since it states they did not have sufficient time to consult their professional indemnity insurance advisers before submitting this working draft.

[61]In view of the fact that policy responsibility for at least some, if not all, of these areas rests with the Minister and the Department of the Environment, Heritage and Local Government, I will be forwarding the architects’ submission to the Minister, Deputy Gormley, for an assessment of the proposals set out in it. The architects are prepared to issue and stand over certificates of compliance which may facilitate further progress on completion issues. Obviously, the question of cost is one that will have to be examined. I also want to seek the views of the Law Society on the matters raised in the architects’ submission.

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  I am glad to hear the Minister say he will still look at this issue. I understood him to say there was an ongoing process of consultation with stakeholders, including the architects’ body and the Law Society. On that basis, I will not press the amendment at this point. It is a pity we could not have had the consultation before the Bill was returned to this House for Report Stage. Perhaps it was brought back a little too quickly. I accept, however, that the Minister will look at the matter again between now and when the Bill is debated in the Dáil. On that basis, I will not press the amendment, although this is an important principle for us.

Amendment, by leave, withdrawn.

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  I move amendment No. 16:

This amendment has been designed to make section 3(6) compatible with section 10(1). It is to try to ensure we have the words from section 4(2) transposed into section 3(6) to make it compatible with section 10(1) which deals with the determination of certain beneficial interests on completion of a development. The amendment is aimed solely at trying to ensure compatibility between the two sections.

Senator Eugene Regan: Information on Eugene Regan  Zoom on Eugene Regan  I second the amendment.

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  The amendment seems to be based on a misunderstanding of section 3, the requirements of which apply to future multi-unit developments. If some of the units in a development have been sold, section 4 applies, while if the development has been substantially completed, section 5 applies. I am told the amendment is not necessary.

Amendment, by leave, withdrawn.

An Leas-Chathaoirleach: Information on Paddy Burke  Zoom on Paddy Burke  Amendment No. 17 is in the name of Senator Bacik.

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  I will not be pressing this amendment.

An Leas-Chathaoirleach: Information on Paddy Burke  Zoom on Paddy Burke  Amendments Nos. 17, 31, 32, 34 and 35 are of the same nature and can be discussed together.

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  I move amendment No. 17:

[62]As I said, I am not pressing this amendment.

An Leas-Chathaoirleach: Information on Paddy Burke  Zoom on Paddy Burke  Does the Senator want to speak to the other amendments?

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  I am sorry, I did not not realise they were being discussed together. No, I do not want to speak to them.

An Leas-Chathaoirleach: Information on Paddy Burke  Zoom on Paddy Burke  Amendment No. 31 is in the name of the Senator.

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  Amendment No. 31 is to section 14 and would insert a new subsection (2) providing that the “developer shall be liable to pay any charge under this section or section 15, within 30 days of invoice, for any unsold unit as if there were a unit owner for that unit.”. It is an amendment that was suggested initially to us by the Apartment Owners Network to ensure the obligation to pay service charges would begin on the date the first unit was sold in order that the developer would pay service charges on all unsold units from that date. It is to ensure service charges would not be left unpaid on unsold units.

Senator Eugene Regan: Information on Eugene Regan  Zoom on Eugene Regan  I second the amendment.

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  I indicated on Committee Stage that I would be proposing amendments to deal with the liability of a developer to pay service charges and the sinking fund contributions in respect of unsold units. Amendment No. 32 will make the developer liable for the annual service charge on unsold units from the date on which the first unit in the multi-unit development is sold. Amendments Nos. 34 and 35 have been tabled to bring the sinking fund provisions into line with those relating to service charges. This means that for the purposes of section 16, a developer will be liable to pay the sinking fund contribution in respect of unsold units from the date on which the sinking fund is established.

Amendment, by leave, withdrawn.

Amendment No. 18 not moved.

Government amendment No. 19:

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  This is a drafting amendment.

Amendment agreed to.

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  I move amendment No. 20:

[63]This amendment would provide for a new subsection (2) in section 4. It is to replace the existing wording because we considered it seemed to mean that while the developer would have to transfer the legal title to common areas in reversion, he or she would retain the beneficial interest. As I said on an earlier amendment, it is to try to clarify what is to be transferred because, presumably, the intention is that the developer will only retain the beneficial interest until completion, but it seems somewhat less clear following an amendment to the Bill on Committee Stage. It is simply to clarify the meaning of section 4(2) by altering somewhat the wording and providing that it would be subject to section 10(1).

Senator Eugene Regan: Information on Eugene Regan  Zoom on Eugene Regan  I second the amendment.

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  This amendment fails to recognise that section 4 has been designed to cater for multi-unit developments which are partly completed, that is, some units have been sold but the development is not substantially completed to the standard which would bring it under section 5. It is, therefore, incumbent on the developer to complete the development. We do not see a basis for the proposed additional subsection.

Amendment, by leave, withdrawn.

An Leas-Chathaoirleach: Information on Paddy Burke  Zoom on Paddy Burke  Amendment No. 21 in the names of Senators Regan and Cummins has been ruled out of order by the Cathaoirleach as it would involve a charge upon the people. It seeks that developers would be liable for VAT on 100% of the purchase price while only initially receiving 95% of the price.

Amendment No. 21 not moved.

Senator Eugene Regan: Information on Eugene Regan  Zoom on Eugene Regan  I move amendment No. 22:

I note the Minister has referred to the difficulty of certifying completion and issues of professional indemnity insurance, but I would have thought that in this section we would have some mechanism by which we can determine the point at which a development is completed. If “certified by a professional person” or some such wording was inserted, at least we would have an objective basis on which the words “whether or not a development has been completed” could be contested or judged. I put the amendment to the Minister to have inserted the words “as certified by a professional person” in section 5.

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  I second the amendment.

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  Section 4 imposes an obligation on a developer to transfer the common areas in substantially completed developments to the owner-management company within six months of the enactment of the legislation. On the issue of certifying by a professional person, we will look at this issue between now and the Dáil examination of this Bill because there are issues relating to surveyors and other similar persons. We will have a look at it.

Senator Eugene Regan: Information on Eugene Regan  Zoom on Eugene Regan  On that basis, I will not press the amendment.

Amendment, by leave, withdrawn.

An Leas-Chathaoirleach: Information on Paddy Burke  Zoom on Paddy Burke  Amendment No. 23 is a Government amendment. This amendment needs a recommital proposal and I ask the Acting Leader to propose a recommital.

Senator Denis O’Donovan: Information on Dennis O'Donovan  Zoom on Dennis O'Donovan  I move:

[64]

Question put and agreed to.

Government amendment No. 23:

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  This inserts a new section into the Bill and arises from recent discussions between my Department and the Law Society. The new section will place an obligation on the owners’ management company to join in any transfer or conveyances of units and to take any reasonable steps to enable a purchaser to obtain good marketable title to the property.

The Law Society suggested that a provision along these lines is needed so as to ensure the intending purchasers of units in a multi-unit development do not become caught up in any disagreement or dispute between the developer and the owner or management company. For example, an owner’s management company might decide to try to bring pressure to bear on a developer by refusing to join in a transfer due to an ongoing dispute over the common areas. In such cases the people who would suffer most would be those intending purchasers and this provision is intended to prevent such situations from arising.

Amendment agreed to.

Bill reported with amendment.

Government amendment No. 24:

Amendment agreed to.

Amendments Nos. 25 to 27, inclusive, not moved.

An Leas-Chathaoirleach: Information on Paddy Burke  Zoom on Paddy Burke  Amendments Nos. 29 and 30 are alternatives to amendment No. 28. Amendments Nos. 28 to 30, inclusive, can be discussed together by agreement. Is that agreed? Agreed.

Senator Eugene Regan: Information on Eugene Regan  Zoom on Eugene Regan  I move amendment No. 28:

[65]

[66]

I do not propose to press this amendment. It has been discussed on Committee Stage. Some of the elements in this amendment have been taken on board or are included already in the Bill as initiated. Given the other amendments that have been made to the Bill by the Government, I do not propose to pursue this amendment.

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  I second the amendment.

Amendment, by leave, withdrawn.

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  I move amendment No. 29:

This amendment seeks to ensure that “Where development works commenced prior to the enactment of this Act, this section applies subject to the modification that any existing rules contrary to this section shall be modified within the 24 months following the commencement of this section”.

It is trying to deal with this issue that the Minister raised already, where development works on a multi-unit development have commenced prior to the enactment of the Bill. There has [67]been a great deal of concern — I think the Minister has heard from various concerned parties already — where apartment complexes are in the process of being constructed already prior to the commencement of the Act about how the Bill will affect those. Our concern was that subsection (4) apparently appears to mean the one-unit-one-vote rule would not apply to existing management companies, which seems undesirable.

The Minister on Committee Stage stated he could not retrospectively amend memoranda and articles of association. My party felt that as an alternative approach such memoranda could be changed within two years from the commencement of the Act. This would be an alternative way of dealing with the application of the Bill to the complexes where development work had already commenced.

Senator Eugene Regan: Information on Eugene Regan  Zoom on Eugene Regan  I second amendment No. 29.

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  On amendment No. 29, the same principle applies — whether it is 24 months, 12 months or whatever — that there is a difficulty in passing legislation which would purport to change existing rights and obligations laid down in the memoranda and articles of association of companies. Under section 19(4)(a), it will be possible to seek a court order to amend legal documentation on a case-by-case basis but I would have thought an all-encompassing amendment would not pass muster.

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  I see the Minister’s issue with it but there is this more general problem of how the Bill applies to developments that are still in the process of being constructed when the Bill comes into force.

Another person raised with me a similar issue in respect of section 5, that it does not appear to apply to a development which has been completed where the common areas have still not been transferred. Section 5 applies to developments which have been substantially completed before the commencement of the Act requiring the developer to transfer the common areas to the owners’ management company within six months of the coming into operation of section 4, but there is still this anomaly. Where the development has been completed and the common areas have still not been transferred, the section does not seem to apply.

Similarly, with this amendment we are trying to resolve the issue of apartment owners in a complex where the development has been commenced prior to the passing of the Bill. It seems to us that this is a loophole or an anomaly where the provisions of the Act will not apply to a company that is already in existence. There is a difficulty for individual consumers.

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  Where no unit has been sold, the new arrangements would obviously apply. Where some units have been sold, it would cause grave difficulty in that, ultimately, on completion of the entire development, some apartments would be dealt with under the old memorandum and the newer apartments would be dealt with under the amended memorandum, and there would be a complete inconsistency. As I stated, it is not possible for us to implement this retrospectively and to have consistency ultimately in the way in which the development is generally managed thereafter.

Amendment, by leave, withdrawn.

Government amendment No. 30:

Amendment agreed to.

[68]Amendment No. 31 not moved.

Government amendment No. 32:

Amendment agreed to.

Senator Rónán Mullen: Information on Ronan Mullen  Zoom on Ronan Mullen  I move amendment No. 33:

This amendment seeks to amend section 15(11), which currently provides that “The annual service charge shall be calculated on a transparent basis and shall be equitably apportioned between unit owners”. For reasons I shall explain, I am proposing that the subsection, in light of the amendment, should it be accepted, would require that the annual service charge be calculated on a transparent basis and shall be equitably and proportionately allotted between unit owners, with due consideration given to the type and size of the unit covered.

When Senator Quinn spoke to this on Committee Stage, the Minister generously acknowledged that he was sympathetic to the concerns raised, but raised a concern that were we to be prescriptive in this regard, we might see officials going in to measure units to determine their size and type.

However, he also pointed out that he intended to err on the side of over-regulating and undertook to consider whether he could come up with an appropriate wording before Report Stage.

  5 o’clock

This amendment is grounded in the real life experience of people. I note what the Minister said about our inability to make some provisions retrospective. It would be nice if we could because I have come across situations where people who own properties in multi-unit developments find themselves being hit for the service charge at the same level as those who own superior properties. They may have the same number of bedrooms, there may well be a sub-division of units which have one, two or three bedrooms and there may be scaling in terms of the service charge to be paid. However, that in itself does not deal with the difficulty. It can be the case that somebody has a three-bedroom apartment in a multi-unit development that is effectively a penthouse and is using all of the facilities within the building, while another person has a much smaller property, also with three bedrooms but perhaps facing in the wrong direction or not nearly as advantageously situated. Therefore, while it is welcome that the law will require the calculation to be transparent and equitable, there is a need to go further and be more specific as to what is required. The concept of proportionality should be introduced, as well as the need for consideration to be given to the type and size of unit owned. If I was rewording the amendment, I might add the words, “type, size and location”. As it is, my amendment presents a significantly better formulation. Whereas I agree with the Minister that one would not want to see an excess of bureaucracy in this regard, it is important to note that the law operates as a teacher, that what the law requires [69]is already very important and will be to the benefit of future property owners in multi-unit developments. Therefore, I am hoping for a favourable response from the Minister.

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  I second the amendment which deals with an important principle. As Senator Mullen said, it relates to a very real issue of pressing concern to many apartment owners, the level — often the excessive level — of service charge payable. Generally, the provisions of section 15 are to be welcomed, as they will, I hope, guard against excessive service charges being levied on apartment owners. The point is that the equitable apportionment of the service charge should take account of the type and size of unit owned. I suspect the Minister may say in response, if he is not willing to accept the amendment, that it is superfluous because the principle is already encompassed by the phrase “equitably apportioned”. I hope this is the case, that it is unnecessary to include this provision and that it is superfluous. However, the wording proposed would give greater protection and security to apartment owners in that it might make them feel a little more secure about what is meant by “equitable apportionment” of the service charge. Therefore, this is an important principle.

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  The advice of the Office of the Attorney General was taken on this point. I have some sympathy for the proposal, but it is a case of where do we draw the line. With regard to due consideration being given to the type and size of the unit owned, it would be necessary to take into account the fact that one unit had a bigger balcony; that one unit had a sea view whereas another did not; that one unit had a view of the back, while another had a view to the front. It would be preferable, therefore, to leave it the way it is which, as acknowledged by Senator Bacik, encompasses what we are trying to do, that the service charge will be calculated on a transparent basis and will be equitably apportioned between unit owners. It has to be said this issue has not been raised by any of the representative bodies. It may not be satisfactory to the Senators who have tabled the amendment, but I will look at it between now and Report Stage in the Dáil and perhaps liaise with some of the interested representative groups. However, they have not raised the issue with me. The Bill provides sufficient safeguards to achieve what we are trying to do. It might become overly complex and complicated if we were too prescriptive regarding what considerations should be taken into account.

Senator Rónán Mullen: Information on Ronan Mullen  Zoom on Ronan Mullen  I thank the Minister for his response, although I confess it disappoints me to some extent. I refer to two issues raised by the Minister. He mentioned that this concern had not been raised by any of the representative bodies. I presume this is further testimony of the quality of the Seanad in that we have a certain ability to think through proposals on their own merits. That in itself is not a reason to consider the amendment, although I certainly welcome the Minister’s commitment to consult the representative bodies to see whether would they be ad idem on what is being proposed. I would be surprised if there was any opposition to it.

The more serious point is that the objection the Minister raises, that this could become overly complex, with people wondering whether they should be paying more or, presumably, less because they do not have a balcony and so on, applies equally to the proposed wording. If the legislation requires that the service charge be equitably apportioned, that already invites people to consider their situation. I find it difficult to see how, by way of the introduction of an additional degree of specificity as to what should be taken into account, one might increase the likelihood of people raising objections. I do not think the logic of the Minister’s response stands. I argue that the more specific one is, having regard to the issues to be taken into account, the less likely one is to have disputes or disagreements as to what should be considered, according to the general term “equitable”. Nonetheless, I hear what the Minister is [70]saying. I wish he would accept the amendment now, but I welcome his further commitment to think about it a little more between now and Report Stage in the Dáil.

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  The Senator will not hear me denigrating the Seanad. I have recently acknowledged both here and in the other House the merits of the Seanad and its discussions. I am the Minister who brings forward at least two thirds of all the legislation passed through the Oireachtas. Perhaps Senator Mullen will impress on some of his colleagues on his side of the House the necessity for a second House. This is a genuine request and I do not say it in a political way.

The Senator argues that our amendment will lead to more disputes or bones of contention than his amendment and that it would be better to be specific. One has to have some general yardstick, which is the number of bedrooms in an apartment. This yardstick is used for a specific reason because it determines not just the size of an apartment although not necessarily, but also the number of people who reside in it. The service charge will be paid on the basis of the number of beds in an apartment. This is probably a better yardstick and I do not think it will change with the passing of this Act. I will discuss the amendment with some of the interested bodies.

Question, “That the words proposed to be deleted stand,” put and declared carried.

Amendment declared lost.

Government amendment No. 34:

Amendment agreed to.

Government amendment No. 35:

Amendment agreed to.

Government amendment No. 36:

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  On Committee Stage I indicated that I would examine the possibility of looking at a more flexible approach to the payment of minimum sinking fund contributions. As I am conscious of the need for flexibility in the matter, the amendment substitutes the word “other” for “greater” in section 16(4). This will mean that the annual contribution to the sinking fund will be €200, unless a different amount is agreed at a meeting of the unit owners.

Amendment agreed to.

Government amendment No. 37:

[71]

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  This is a drafting amendment.

Amendment agreed to.

An Cathaoirleach: Information on Pat Moylan  Zoom on Pat Moylan  Amendments Nos. 38 and 39 are related and may be discussed together.

Government amendment No. 38:

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  These are technical amendments which make it clear that section 17 applies both to the annual service charge referred to in section 15 and the sinking fund contributions referred to in section 16. The effect of section 17 remains the same, that is, that an owner-management company will be able to issue a request for payment of an aggregate amount comprising the annual service charge and the sinking fund contribution. When doing so, it must provide the basis for the calculation of both the service charge and the sinking fund contribution.

Amendment agreed to.

Government amendment No. 39:

Amendment agreed to.

Government amendment No. 40:

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  Issues relating to the recovery of outstanding service charges and sinking fund contributions were raised on Committee Stage when I undertook to examine them. On reflection, the best solution is to insert this new section into the Bill. It provides that the owner or management company may seek to recover outstanding service charges and sinking fund contributions as simple contract debts in a court of competent jurisdiction, normally the District Court. This will help to keep recovery costs to a minimum.

Amendment agreed to.

Government amendment No. 41:

[72]

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  This is a drafting amendment to improve the presentation of section 18(1).

Amendment agreed to.

Amendment No. 42 not moved.

An Cathaoirleach: Information on Pat Moylan  Zoom on Pat Moylan  Amendments Nos. 43, 44 and 46 are related and may be discussed together.

Government amendment No. 43:

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  Amendments Nos. 43 and 44 are drafting amendments. Amendment No. 46 broadens the scope of paragraph (j) to cover all multi-unit developments, not just mixed-use developments. The purpose of the paragraph is to allow unit owners to obtain a court order if a proposal to alter the physical characteristics of a development would disproportionately or inequitably affect them. The scope of the provision will now extend to all types of multi-unit developments.

Amendment agreed to.

Government amendment No. 44:

Amendment agreed to.

An Cathaoirleach: Information on Pat Moylan  Zoom on Pat Moylan  Amendment No. 45 is a Government amendment. This amendment needs a recommital proposal and I ask the Acting Leader to propose a recommital.

Senator Denis O’Donovan: Information on Dennis O'Donovan  Zoom on Dennis O'Donovan  I move:

Question put and agreed to.

Government amendment No. 45:

[73]Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  In section 19(4)(h) we have provided that a court order may be sought where the developer unreasonably refuses to transfer ownership of the common areas to an owner-management company. In more recent discussions with my Department, the Law Society has mentioned possible cases of the opposite arising, that is, where the owner-management company unreasonably refuses, for whatever reason, to accept the transfer of common areas from the developer. For that reason, I am proposing to allow the court to make an appropriate order in cases where the unit owners unreasonably refuse to accept the transfer of common areas.

Amendment agreed to.

Bill reported with amendment.

Government amendment No. 46:

Amendment agreed to.

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  I move amendment No. 47:

This amendment is self-explanatory. It would give the court an additional power under section 19 by inserting a new paragraph (m) enabling the court to make an order “annulling house rules or any provision thereof if such rules interfere unreasonably with the rights of an owner of a unit”. It is to be read in conjunction with the regulations on house rules in section 18. It anticipates that some rules might be adopted in a complex that would be over-zealous, for example, prohibiting the air-drying of laundry in an unreasonable way. This would offer some recourse or mechanism for redress where an apartment owner considered his or her rights were being interfered with unreasonably. It would simply give him or her the power to go to court to seek an order of this kind. It would clearly be up to the court to decide whether it would be appropriate to annul the house rules or any provision thereof.

Senator Eugene Regan: Information on Eugene Regan  Zoom on Eugene Regan  I second the amendment.

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  On Committee Stage I said I was sceptical of the need for this type of amendment. However, we have re-examined the matter and section 18 makes it clear that house rules must be consistent with the covenants and conditions included in the title deeds. A purchaser would have been advised prior to purchasing about such covenants and conditions in his or her title deeds such that he or she would have been able to decide not to proceed. Even after he or she has purchased, however, he or she may still seek recourse to the dispute resolution provisions in section 19. On the other hand, if the house rules deal with matters not dealt with in the title deeds, it means they have been agreed and adopted at a meeting of the apartment owners, due notice having been given of the holding of such a meeting. Therefore, the purpose of such rules is deal with the effective operation and maintenance of the development in promoting the quiet enjoyment of the property by apartment owners. It would not be [74]a good idea for unit owners to have the opportunity to challenge rules properly adopted and designed to improve the quality of living of all residents in the development.

Amendment, by leave, withdrawn.

An Cathaoirleach: Information on Pat Moylan  Zoom on Pat Moylan  Amendment No. 48 is a Government amendment. This amendment needs a recommital proposal and I ask the Acting Leader to propose a recommital.

Senator Denis O’Donovan: Information on Dennis O'Donovan  Zoom on Dennis O'Donovan  I move:

Question put and agreed to.

Government amendment No. 48:

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  The Law Society has suggested the personal representative of the deceased member of an owner-management company should be permitted to make an application under section 19. That is the purpose of the amendment.

Amendment agreed to.

Bill reported with amendment.

Government amendment No. 49:

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  I am proposing this amendment such that jurisdiction under section 19 will be reserved to the Circuit Court in the first instance. Applications to the High Court will not be permitted. This is to help control the cost of applications, avoid the risk of a developer or any other party resorting to the High Court with a view to discouraging the owner-management company or any party entering a defence in a particular case. Obviously, it will be possible to appeal to the High Court a decision of the Circuit Court.

Amendment agreed to.

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  I move amendment No. 50:

[76]

This amendment proposes to delete sections 22 and 23 which deal with mediation conferences and replace them with new provisions in respect of dispute resolution. In essence, it is to try to provide for a speedier and more cost-effective method of dispute resolution, rather than having to go to court. It is something the architects’ body has been strongly advocating. Earlier in the debate the Minister said he agreed in principle on the need to provide for a specific alternative means of dispute resolution other than going to court. The Bill is over-reliant on the court as a means of resolving disputes, for example, in the application of house rules and so on. The form of dispute resolution procedure proposed in the new sections 22 and 23 would be much more consumer-friendly. It would offer a much easier means of seeking redress to consumers — apartment owners and dwellers — where they considered their rights were being infringed upon. I ask the Minister to take on board the principle of the amendments we are [77]suggesting. I am sorry he has not accepted them, but he may have something more to say on whether he will be able to table something similar in the Dáil.

Senator Eugene Regan: Information on Eugene Regan  Zoom on Eugene Regan  I second the amendment.

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  I do not have much more to say. We have provided for definite mediation rules in sections 22 and 23. I support using alternative forms of dispute resolution, including mediation, rather than having recourse to the courts. I assure Senator Bacik and the House that I will examine the matter between now and Committee Stage in the Dáil.

An Cathaoirleach: Information on Pat Moylan  Zoom on Pat Moylan  Is the amendment being pressed?

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  Not in light of what the Minister has said.

Amendment, by leave, withdrawn.

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  I move amendment No. 51:

This amendment proposes that developments of two, three or four units should have owners’ management companies. If this change is not made, the existing paragraphs of the Schedule will make little sense. I suppose it is a clarifying or drafting amendment to Schedule 1. It seeks to ensure sections 2 to 4, inclusive, which set out the circumstances in which owners’ management companies are required, are listed in Schedule 1. I note that Schedule 1 is titled, “Provisions of this Act which apply to multi-unit developments comprising 2 or more units but less than 5 units”. It is a very helpful explanatory heading, but no similar headings are given to Schedules 2 and 3. It might be useful to include such headings for ease of reference. They would make the Bill easier to access when one is looking for particular issues. I ask the Minister to include the provision I have proposed in Schedule 1.

Senator Eugene Regan: Information on Eugene Regan  Zoom on Eugene Regan  I second the amendment.

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  We will change Schedules 2 and 3 to give them headings like that in Schedule 1. An amendment is not required because such headings are not part of the legal text. This change will make it a little easier to understand what we are referring to.

On amendment No. 51, we are happy that the provisions of section 2(1) and Schedule 1 are sufficient to deal with small developments of two, three or four units. The Law Reform Commission also came to the conclusion that the management company structure is not really relevant to such small developments. I intend to accept its recommendation in this regard.

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  I am not pressing the amendment.

Amendment, by leave, withdrawn.

Government amendment No. 52:

[78]Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  It appears that some traditional housing developments that avail of the owners’ management company structure have sinking funds in place. I believe that in such circumstances, the directors of management companies have a responsibility to provide details of the sinking funds’ finances to the residents. Amendment No. 52 will mean that the obligation to provide a statement on a sinking fund will apply to this type of multi-unit development if a sinking fund is in existence.

Amendment agreed to.

Government amendment No. 53:

Amendment agreed to.

Government amendment No. 54:

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  This is a drafting amendment.

Amendment agreed to.

Government amendment No. 55:

Deputy Dermot Ahern: Information on Dermot Ahern  Zoom on Dermot Ahern  This amendment will ensure any safety file required to be held and maintained by a developer during the planning and construction of a development must be given to the owners’ management company.

Amendment agreed to.

Bill, as amended, received for final consideration.

Question proposed: “That the Bill do now pass.”

Minister for Justice and Law Reform (Deputy Dermot Ahern): Information on Dermot Ahern  Zoom on Dermot Ahern  I thank Senators for their deliberations on this legislation. I assure them it is awaited with bated breath in the other House. Hardly an Order of Business goes by without it being raised, to the frustration of the Taoiseach who has to reply that he does not have any say in the progress of Bills through the Seanad. I compliment Senators and the various associations who have made representations on this difficult legislation. This has not been an easy Bill to prepare. When I was drafting this Bill with the Minister, Deputy Gormley, and the Tánaiste, when she was Minister for Enterprise, Trade and Employment, it was ultimately decided that I would bring it through the Oireachtas. It has implications for a number of other Departments, especially the Department of the Environment, Heritage and Local Government. We have encountered a number of issues that are pertinent to that Department, such as completion certificates. I thank the officials in my Department and the other Departments who have helped to bring us to this point. When [79]I go to my parliamentary party meeting, the first thing I will say to the Taoiseach is that this Bill has been passed by the Seanad at long last. I do not suggest that it was delayed by this House because that is not the case. There seemed to be a great insistence in the other House that it be rushed through this House. There has been a bit of a misunderstanding of the complexity of this legislation. I thank Senators for the work they have done on it.

Senator Eugene Regan: Information on Eugene Regan  Zoom on Eugene Regan  I thank the Minister for sitting through the entire debate on this complex legislation right to the end. It is a very different Bill now compared with the Bill that was initiated. In most cases, that is due to the further work that was done by the Government. The Seanad has done good work on this legislation. The uncharacteristically conciliatory and accommodating approach of the Minister on this occasion made its passage all the easier.

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  I think that is called damning with faint praise.

Senator Eugene Regan: Information on Eugene Regan  Zoom on Eugene Regan  I was trying to be nice.

Senator Ivana Bacik: Information on Ivana Bacik  Zoom on Ivana Bacik  I thank the Minister and his officials, who have been very helpful. I would like to express my personal gratitude to them for the accommodating way in which they have dealt with Members on this Bill. We had a good debate on Committee and Report Stages. I thank the Apartment Owners Network and the RIAI for their help and submissions. As the Minister said, it is to be hoped this Bill will meet the concerns of many people. We hear all the time about issues such as completion of apartments and service charges. I am glad the Minister accepted some of my amendments on Committee Stage. I regret he did not do so on Report Stage, particularly with regard to the 5% retention clause. I hope that issue will be resolved on Committee Stage in the Dáil. That is an important point because difficulties with adequate completion need to be dealt with.

Senator Denis O’Donovan: Information on Dennis O'Donovan  Zoom on Dennis O'Donovan  I add my voice to the thanks and praise to the Minister and his officials for bringing this complex Bill through the House. I do not doubt that the debate in the Lower House will be as robust as it has been here. I hope the Bill is passed by the Oireachtas sooner rather than later. When it is on the Statute Book, it will prove to be important and groundbreaking. I thank my colleagues on the other side of the House for their contributions on all Stages which will certainly strengthen the Bill. It is good to know the Minister took on board some if not all the issues raised by my colleagues on Second Stage and the amendments tabled. It is a strong indication of the importance of this House in the passing of legislation.

Question put and agreed to.

An Cathaoirleach: Information on Pat Moylan  Zoom on Pat Moylan  When is it proposed to sit again?

Senator Denis O’Donovan: Information on Dennis O'Donovan  Zoom on Dennis O'Donovan  At 10.30 tomorrow morning.


Last Updated: 15/12/2010 11:00:05 First Page Previous Page Page of 9 Next Page Last Page