I thank Deputies for their comments and particularly their desire to get this Bill passed as soon as possible. There is common cause on the floor of the House that it is important to have this legislation on the Statute Book and available by the end of the year. We finished Second Stage in the Dáil to have Committee Stage taken during the summer before the Dáil resumed. If we can do this, it would be beneficial for everyone. Therefore, I welcome the sentiments expressed.
The amendments go to the core of the Bill. They deal with the paramount issues of compliance and completion — compliance with planning conditions under the planning Acts and the building control standards under the building control Acts and completion of common areas in a development. We discussed these issues at great length in the Seanad where, as Deputy Rabbitte said, much good work was done and amendments from both sides were accepted. We have been grappling in the Department with the significant number of practical difficulties regarding compliance. While we can deal with the issue in the Bill, it should be dealt with primarily in the planning and the building control Acts. As statutory certificates of compliance are not being issued under the Acts by the planning or building control authorities, there is no statutory provision which allows planning authorities to require performance bonds to be lodged by a developer to ensure adequate completion of snag lists in multi-unit developments. That is at the core of what we all want to ensure, but there is only so much we can do in this legislation.
Since the Seanad debate and the Second Stage debate in the Dáil we have been in contact with the Department of the Environment, Heritage and Local Government and I have had a number of meetings with the Minister, Deputy Gormley, to discuss the issue. The Department of the Environment, Heritage and Local Government is carrying out a review of enforcement procedures under both codes, namely, the planning Acts and the building control Acts, with the aim of ensuring improved enforcement of statutory requirements. It has a building review advisory board which advises the Minister. It has also established a working group to specifically examine the issue of building controls enforcement. I understand the group will report to the Minister shortly.
The Bill seeks to deal with the issue of completion in the following way, not the way the Deputies opposite or the Law Reform Commission are suggesting. Under section 3(1)(c), a developer will be required to enter into a written contract with the owners’ management company setting out the rights and obligations of each party. It will set out the commitments given by the developer regarding completion of the common areas in a development. If the terms of the contract are not honoured, under section 21 the owners’ management company may obtain a court order requiring completion.
One proposal to deal with the issue of completion would have involved the retention of 5% of the purchase price of each apartment in a special fund pending completion of common areas. I have sympathy for the principle behind it. My Department consulted stakeholders, but there was no consensus on the proposal. After the Law Reform Commission had reported, an interdepartmental committee was set up to examine the commission's proposals. As Deputies will be aware, the Bill is not along the lines of the Bill proposed by the commission because it was considered that its Bill — no disrespect to the commission — was not comprehensive enough in that it did not take into account other aspects, particularly those relating to planning and building control. That is the reason we had to bring in the Departments of the Environment, Heritage and Local Government and Enterprise, Trade and Innovation in regard to company law issues. They were both part of the interdepartmental examination of this issue in terms of how we would deal with this aspect, particularly in the aftermath of the commission's report. The initial reaction of some in the interdepartmental group to the proposal to retain 5% of the purchase price was that it would merely add another 5% to the purchase price of a property and have a negative effect on property prices. I understand the reason the Deputies opposite are particularly taken by the idea behind the proposal, but extreme practical difficulties remain in terms of the way the sum of 5% would be released and whether it would entail more expense on the owners of properties and the owners' management company. While some of the representative associations of engineers and architects may well be supportive, it would mean, in effect, much more work for them for which somebody would have to pay.
Amendment No. 1 in the name of Deputy Rabbitte would introduce to the Bill a new and unknown concept of completion. It would not be practical for a number of reasons. It seeks to allocate a new statutory duty to planning authorities. If they were to be given additional responsibilities, the planning and development Acts would need to be amended, as appropriate. It would not be appropriate, therefore, to give such additional responsibilities in this legislation. Moreover, any such change would only be contemplated following an assessment by the Department of the Environment, Heritage and Local Government of whether undertaking such a role would be appropriate for planning authorities and, if so, if they had the necessary resources to undertake that function. As the Deputy is aware, there was a time when planning authorities issued certificates of compliance, but that practice has fallen by the wayside in recent decades.
The purpose of amendment No. 2 in my name is to enlarge the definition of "development stage" to include a reference to the contract between the developer and the owners' management company under section 3(1)(c). In future developments the development stage will end only when the development has been completed in compliance with the planning Acts and the building control Acts and where the terms of the contract referred to in the section have been satisfied. I refer the Deputy to section 3(1)(c) which states: “A person to whom this section applies shall not ... transfer his or her interest in a unit in a multi-unit development to which this section applies unless ... (c) a contract in writing is entered into between the developer and the owners’ management company concerned prior to such transfer setting out the rights and obligations each of those persons has in relation to the other”. This will have the effect of grounding a dispute in a contract. Any issue regarding completion will have to be determined ultimately, if not by agreement, by a court. That will happen in individual cases to prevent costs being heaped onto the entire operation and, ultimately, the consumer. Amendment No. 9 in my name makes it clear that the contract between the developer and the owners’ management company must provide for the work to be carried out in accordance with all statutory requirements and include provisions for the completion of common areas.
I do not want to be too prescriptive in this legislation about the details of the contract. However, a number of meetings have taken place between the relevant stakeholders, including the Law Society, the Royal Institute of the Architects of Ireland, RIAI, the Irish Property and Facility Management Association, Engineers Ireland, the Association of Consulting Engineers of Ireland, consulting engineers, as well as the Apartment Owners Network, with a view to putting together a model contract that would be acceptable and agreed. My Department, as well as the Department of the Environment, Heritage and Local Government, has also been involved in the discussions. I thank all of the stakeholders for their support in that regard.
Amendment No. 12 tabled by Deputy Rabbitte would require retention of 5% of the purchase price pending satisfactory completion, but there is not universal stakeholder consensus on this. I mentioned that a contract must be drawn up in future between the developers and the owners' management company, which would deal with the issue of compliance with statutory requirements and completion of common areas. We are approaching it from an another direction and probably a more practical one. To prevent potential conflicts of interest, I believe the owners' management company should have separate legal representation in the conclusion of such contracts.
Amendment No. 13 states that the owners' management company shall have separate legal representation from a different firm of solicitors. This will, I believe, protect the future interests of the unit owners of the development.
Amendment No. 22 proposes to introduce new procedures on completion of the development. It is a long and, to my mind, unnecessarily complex provision which involves parties serving notices on each other with regard to completion notices. I believe that the conditions to be included in future contracts between developers and owners' management companies together with the provisions in the Bill deal adequately with this matter. The issue of service of notice generally is dealt with elsewhere in the Bill. However, I accept Deputy Rabbitte is trying to be more prescriptive in regard to the service of notice and change of address aspects.
Regarding amendment No. 23, there is no provision under the Planning and Development Acts or Building Control Acts which would permit planning authorities to require performance bonds to ensure snagging of multi-unit developments. The proposal in subsection (3) is a matter for the Department of the Environment, Heritage and Local Government and it would need to consider that with the planning authorities in the context of any future reforms.
Section 21(4) already contains provisions for the court to make an order directing the developer to complete a development in compliance with planning permission, building control standards and the terms of any contract. There is a statutory requirement to have a contract under section 3(1)(c).
Deputy Shatter raised the issue of NAMA. We checked with the Attorney General's office on whether there was any requirement to change this legislation in the context of NAMA and the existing NAMA legislation and the office advised that as far as it was concerned no issues arose. In regard to the issue of rights and responsibilities of owners' management companies that are taken over by NAMA, if NAMA becomes, as Deputy Shatter says, in effect the owner, the rights and responsibilities under existing legislation and this legislation, when passed, would accrue to NAMA. If there are any existing owners, it would be to NAMA they would go in order to enforce their rights.