When a unit is sold: updating your OMC's register of members

Membership moves on its own

In a multi-unit development, the owner of each unit is a member of the owners’ management company. When a unit changes hands, membership passes to the new owner automatically, whatever the Companies Acts or the OMC’s constitution would otherwise require MUD Act 2011 s.8(1).

That means:

• there is no share transfer form for the board to approve, and no power to refuse the buyer;
• the new owner can attend and vote at the next general meeting;
• the new owner takes on the member’s obligations, including paying the service charge.

The board’s job is not to approve the change but to record it.

What the board must do

Even though membership moves automatically, the OMC must still, promptly after it learns of the sale MUD Act 2011 s.8(2):

• issue the new member’s share certificate, or membership certificate if the OMC has no share capital;
• update its register of members;
• deal with anything else the Companies Act requires for the change.

The 28-day deadline

The Companies Act sets the clock for the register itself. The new member must be entered within 28 days of becoming a member CA 2014 s.169(3), and the seller’s exit within 28 days of the company receiving evidence of the sale that it considers satisfactory s.169(4)(b).

Since the buyer becomes a member on completion, whether or not the board knows, the safe habit is to update both entries together, as soon as you have proof of completion. Failing to keep the register is a category 3 offence for the company and any officer in default CA 2014 s.169(6).

What goes in the register

For each member, the register shows CA 2014 s.169(1):

• the name and address of the member;
• the date they were entered as a member;
• the date they ceased to be a member.

If the OMC has shares, the register also shows the shares held and the amount paid on them. Most OMCs are companies limited by guarantee (CLG). For a CLG, the register only needs names and addresses s.1201. Keep former members in the register with their exit date rather than deleting them: the history is part of the record.

What evidence to ask for

The Act leaves it to the company to decide what evidence is satisfactory. A sensible standard for a volunteer board:

• a letter from the buyer’s or seller’s solicitor confirming the sale has closed and the date of completion; or
• a copy of the Land Registry folio showing the new owner.

An email from the estate agent saying “sale agreed” is not enough: a sale can fall through until it closes.

What owners must tell you

The obligation is not only on the board. Every unit owner must give the OMC their name and address, the names of any tenants and details of anyone else living in the unit, plus reasonable contact details the company asks for, and must tell it promptly of any change MUD Act 2011 s.8(3).

So you are entitled to ask the new owner for these details, and to remind owners who let their unit to tell you when tenants change.

Before the next AGM

A sale late in the year is easy to miss. Before sending the notice of the AGM, check the register against the units, so that every current owner gets the notice, the proxy form and the annual report, and no former owner does. Notice sent to the wrong person can be an argument for challenging the meeting.