Who said Owners Corp meetings are boring?

Finally a strata that has worked out they don't need to sort out world peace but be reasonable and get on with the job

 

Hehe. That meeting went up in smoke.

 

Isnt that a typical Mount Druitt Body coprporate meeting ?
Its a wonder you all didnt share it around.

 

You've hit on quite a big problem, and cons are generally recognised to be more real than the pros. Under current legislation in NSW people have to disclose if they were or have any connection to the original owner (developer). Supposedly that was enough to suggest to the people at the AGM that they should be sceptical about appointing them, for the reason you identify - hiding defects.

Under new legislation which will start 1 September 2016 (or later) there are new controls coming in, including that the developer cannot appoint a related entity to be the strata managing agent until 10 years after the plan is registered. By that time they're clear of defect liability anyway, but the idea is to prevent 'developer-friendly' strata managers hiding defects and screwing over the normal owners.

The legislation isn't perfect, and even these changes which are well-intentioned will only be partially effective. Owners need to be vigilant. With so many of the recently built buildings having defects, Owners should be careful about letting building managers and strata managers hide defects or letting time slip away when they're being non-responsive.

 

Great to read - there's no reason that shouldn't be the norm at strata meetings!

Friendly, respectful, comfortable meetings are no less effective at doing what the meetings are there to achieve, in fact they're usually more effective. If there's a critical mass that sets the tone 'we get together and discuss things like adults, and we all give and expect respect (even though we don't always all agree on everything)' it goes a long way to perpetuating that style of meeting. As a strata manager I've looked after buildings where the meeting might move location each year depending on whose unit is available, but chips and dips and friendly discussion is the constant.

Set the tone and new people get on board. If someone new turns up and there are 5 or 10 people who welcome you to a civilised and comfortable meeting - it takes a special kind of pest to throw a tantrum or otherwise degrade the meeting. They're rare, but unfortunately they do exist.

 

Thanks for sharing Russ.

Totally agree that the cons always overweight the pros in this situation. With my limited experience, I have heard that the cons occurred more often than not. And yes, this is a tricky issue for body corporate or government to tackle.

If I understand correctly, the developer cannot appoint a strata manager at the beginning of 10 years. If so, who would appoint a strata manager? or the building will go without a strata manager at the beginning until body corporate is formed? If then, it would be fairly difficult as not everyone would move in or participate in the meetings.

Anyway, my concern is more for the strata companies as they tend to look after the developer as oppose to body corporate. The developer is more likely to give them future businesses rather than members in the body corporate who might only have a couple of units (even so they might not have the full power to appoint a strata).

 

Most welcome inspiredbyprop, and you're exactly correct about the concern.

Nothing prevents or will prevent the developer, or people connected to them, from being elected to the Committee. The only way to not have them on your Committee is to vote for them not to be appointed. Now and in the future: if the original owner still owns more than half of the building (calculated with reference to units of entitlement which reflect the relative values of different units) their vote is reduced by 2/3. But if they own 49% then they vote with full power.

In the future the original owner won't be able to vote on matters relating to defects, at General Meetings.

EDIT: There is also a section in the new legislation which states (worded differently) that Committee members have to do the right thing by the Owners Corporation. This is meant to mean against self-interest, which was already confirmed in case-law but was not in the statue. Being in statute makes it clearer and easier to 'point to'.

There are a couple of separate restrictions that will apply, but fortunately it won't create that situation you're concerned about. The scheme can certainly have a strata manager appointed.

1) The Strata Managing Agent contracts won't be able to be for longer than 3 years, except for the appointment made at the first AGM (which would be the agent the developer puts forward) - that will be limited to maximum term of 12 months. This means Owners should be watching the first year very closely, and switching agent if the agent is not looking after the Owners Corporation properly. In practice, this will not be very easy.

2) The developer, or someone connected to the developer, can't be appointed as Strata Managing Agent until at least 10 years after registration of the plan. By then they would not be interested - for the purpose of this discussion (hiding defects while the developer is liable).

3) A Strata Managing Agent (or a Building Manager) that is connected to the original owner will have to disclose that fact prior to appointment.

There are still more details we're waiting on, when the Regulations that will support the new act are released, but above is the short version. Not perfect, but the legislation is TRYING to help, and it implicitly acknowledges the validity of your concern.

 

Is there anything around how much they can charge?
Too little and it might not cover maintenance, too much and it could be going somewhere else.

 

How much who can charge?

If you mean the sinking fund contributions there is a rephrasing of how those levies are to be determined, trying to encourage schemes to stick to the sinking fund plans (compulsory schedules of how much should be put away to provide for capital and major works). Each strata scheme can stick to the plan or choose to do otherwise, though.

There is a new provision for the Original Owner (developer) to be ordered to pay compensation to the strata scheme if the original levies were insufficient, but we'll have to wait and see how useful that protection is, in practice. The wording is copied below.

"The Tribunal may, on application by the owners corporation for or an owner of a lot in the strata scheme, order the original owner of the strata scheme to pay compensation to the owners corporation if the Tribunal determines that the estimates and levies determined during the initial period for the purposes of determining and meeting expenditures relating to the scheme were inadequate to meet the actual or expected expenditures of the owners corporation."

 

Yeah, they them those guys.
Thanks for the quick answer.