Management Corporation comprising of unit owners imperative for wellbeing of people in condominium

Management Corporation 

Condominium Management Authority Chairman Sarana Karunarana

Condominium Management Authority General Manager Dr. Indunil Liyanage

A person living in a condominium property should invariably adopt a collective lifestyle where common elements and common amenities are shared by all unit owners. A simple definition of the condominium concept is the shared

enjoyment of common rights among unit owners. A Management Corporation is established in a condominium property to regulate the use of such common amenities and elements. 

What is the Management Corporation of a condominium property?

As per the Apartment Ownership Act No. 11 of 1973, upon the registration of the Condominium Plan or the Semi Condominium Plan, the condominium parcel owners themselves should form an association with perpetual succession and common seal which is known as Management Corporation. 

The first general meeting of the Management Corporation, which is established six months after the registration of the Condominium Plan should be held for the election of office bearers. Such meeting should be held with the intervention of the property developer and the Condominium Management Authority (CMA). 

The objective of constituting a Management Corporation is for the maintenance, management, control and administration of common amenities and common elements in a condominium. 

What is the composition of a Management Corporation?

The Council of the Management Corporation should consist of not less than three and not more than 14 owners. 

The official term of the Management Corporation is 12 months and the period between two annual general meetings should not exceed 15 months.   

The Council of the Management Corporation should consist of Secretary, Treasurer and committee members. 

The chairman of the Council shall be elected from amongst members present.

All documentation activities should be handled by the Secretary of the Management Corporation.

The Treasurer of the Council should handle the finances of the Management Corporation and is responsible for maintaining proper accounting reports, issuing receipts to unit owners for maintenance fees and service charges paid, maintaining the bank account, maintaining the amount spent on monthly maintenance with transparency and the accounts to be audited before conducting the next annual general meeting and issuing a copy thereof to all unit owners. 

For the withdrawal of money from the bank account, the signatures of the Secretary, the Treasurer and one committee member should be furnished to the bank and when committee members are changed annually, it should be brought to the notice of the bank. 

How to conduct the first annual general meeting and subsequent Annual General Meeting? 

At the first annual general meeting, the developer should hand over all designs and plans pertaining to the condominium property, the originals of plans and agreements, things that should be maintained and updated in future and warranties of the generator and the lift to the committee members of the Management Corporation. 

Before convening an annual general meeting, the management committee should be convened to decide on a date and time. 

Such decision should be communicated to all unit owners within a period of not less than seven days. 

Together with the notice of the annual general meeting the budget for the upcoming year, agenda of the meeting, the report on the auditing of accounts of the previous year, resolutions expected to be adopted at the meeting, proxy letters should be handed over to the unit owners. At the first annual general meeting, the constitution of the management corporation and a document on housing laws should be provided to residents.

One half of the number of housing units shall constitute the quorum and the quorum should be determined on the basis of unit owners who have paid the monthly maintenance fee.

If within half an hour after the time appointed for a general meeting a quorum is not present, the meeting shall stand adjourned to the same of the next week at the same place and same time. 

If a unit owner is unable to be present or if a unit is occupied by a tenant, a letter of proxy should be obtained through the owner for attending the meeting.

Proxies only have the voting right. 

Those who have not paid contributions are not entitled to vote. 

Only unit owners can be appointed as office bearers of the Management Corporation. 

A chairman should be elected to preside over the meeting who shall be a unit owner. He is entitled to casting a vote in addition to his original vote. 

When is an extraordinary general meeting conducted? 

Upon a requisition made by the owners who are together entitled to at least 25% of the condominium share units

Where consent is required for an emergency maintenance work

Where disputes have occurred in the management committee

Prior to obtaining money from the sinking fund for an emergency expenditure relating to a major repair in the housing scheme, an extraordinary general meeting should be convened and a resolution on the expenditure and institutions involved in the maintenance should be tabled and adopted with majority vote. The approval of the CMA too should be sought before obtaining money from the sinking fund.

The procedure followed here is similar to that of an annual general meeting.

What is the role of the Management Corporation? 

Maintaining and keeping common elements and common amenities in a state of good and serviceable order for the wellbeing of all owners of the condominium property. 

Holding the annual general meeting on time when it falls due.

Levying monthly maintenance fee from all unit holders. The monthly maintenance fee should be calculated on the basis of the floor area of a housing unit. 

*The area referred to here is the total area of all housing units and does not include the areas of shared premises.

Maintaining a ban account for the monthly maintenance 

Maintaining proper accounts on the amounts spent monthly/annually on managing and maintaining common elements and common amenities.

Maintaining a sinking fund for future needs by the Management Corporation.

What is a sinking fund? 

The fund maintained by the Management Corporation for meeting emergency expenses of any major repair is known as the sinking fund. The amount to be allocated for the sinking fund should be determined at a general meeting. Having explained the matter which requires funds from the sinking fund, a resolution should be adopted at an annual general meeting or an extraordinary general meeting and the agreement of the CMA too should be obtained thereto in writing. 

Providing audited reports of accounts to all unit owners prior to the annual general meeting held at the end of the year. 

Making interventions with regard to all issues relating to common elements and common amenities. 

Making decisions in a transparent manner at the annual general meeting.

Entering into agreements with the National Water Supply and Drainage Board, the Ceylon Electricity Board and the relevant local government authority for the provision of water, electricity and other utilities to housing units. 

Registering the Management Corporation annually with the CMA.

Submitting the following documents annually to the CMA – the report of the annual general meeting, the signature list of unit owners who attended the annual general meeting, audit report, building insurance which is renewed annually, a list containing positions and telephone numbers of committee members and the register with names of all unit owners.

What are the powers of a Management Corporation?

Disconnecting water supply and suspending all utility services provided to units of owners who have defaulted the monthly maintenance fee and the service charge collected in terms of the condominium law. 

Taking steps for the removal of all unauthorised constructions constructed in violation of the certified building plan and making a request from the relevant state institution to remove them. 

Levying an interest until the completion of the payment of the monthly maintenance fee and service charges by unit owners to the Management Corporation as decided at an annual or extraordinary general meeting. 

Initiating legal action when residential unit is being used as a commercial unit. 

What are the duties and responsibilities of a unit owner? 

Not using the unit for any illegal purpose which may be injurious to the reputation of the building. 

Duly paying the monthly maintenance fee and services on time to the Management Corporation.

Not carrying out any construction contrary to the building plan.

Making the Management Corporation aware of any repairs carried out within the unit and seeking its approval for same.

Not using a residential unit for commercial purposes.

Not using any substance or fuel which may give rise to smoke or fumes or obnoxious smells and not making loud noises that may become nuisance to others. 

Disposing garbage properly.

Not keeping any animal on his/her unit. 

Notifying the Management Corporation when the unit is rented to another party on rent basis and providing a copy of the lease agreement and details of occupants to the Management Corporation. 

By adhering to rules and regulations set out by the Management Corporation, a pleasant lifestyle and conducive environment is created for you and you will be entitled to ownership of a housing unit of which the value will increase.