Game of Thrones – a hard seat to sit on

I was recently briefed to advise a lot owner in a strata scheme. The owners corporation had been self managed for a number of years. The lot owners had started with good intentions but the strata scheme was a microcosm of the politicking in HBO’s Game of Thrones hence the title of this blog.

While it may sound like a great way to save costs, retaining a licensed strata manager should be seen not as a cost but as a sound investment. Why?

1. Decision Making. What many lot owners don’t realise is that an owners corporation can only make decisions at either a general meeting or an executive committee meeting. Holding a valid meeting is harder than it sounds as there are requirements for meeting notices and notice periods must be strictly complied with otherwise the meeting can be later be challenged and held to be invalid. Competent strata managers have the required knowledge to prepare valid motions and meeting papers and the time and resources to do so. Further, strata managers are also generally empowered to act in an emergency.
2. Knowledge. Managing a strata scheme is technically complex. One of the key tasks of a strata manager is to advise lot owners and the executive committee on their responsibilities and to ensure that all legal requirements are met. Importantly, licensed strata managers must undertake a certain amount of training each year to remain current with legislative changes.  Unfortunately, many lot owners and executive committee members are unaware of what they are required to do/not do and have never undertaken any training. As an example, recently an executive committee member told me it was okay to add motions to the agenda at the general meeting and that they had done this for the past couple of years. This is both in breach of the Strata Schemes Management Act 1996 (NSW) and unfair to other lot owners both those who are in attendance who then can’t consider the motion / new information in their own time but also to lot owners who aren’t in attendance.
3. Money & Trust. Managing a strata scheme involves managing the finances of the scheme and handling trust money. How well do you trust your neighbours? Do you trust them to manage your money? Strata managers must be licenced and their trust accounts are regularly audited.
4. Time. Managing a strata scheme is time consuming and involves keeping accurate records. Do you have the time to prepare meeting minutes, prepare section 109 notices, provide access to the books and records of the scheme when required and to deal with the inevitable tradespeople? This is in addition to answering the queries of other lot owners and the inevitable disputes over the contents of meeting minutes, levy payments and interest contributions. It really is a full time job.
5. Contacts. Strata managing agents are real estate professionals; they will have a network of reliable tradespeople and be able to obtain discounts for services that self managed strata schemes can’t.
6. Insurance. Finally, should the worst happen, licensed strata managing agents are insured.

Any one of the items above can cause dissent in a strata scheme and my experience is that where there is already a lot of emotional investment (a home is generally the biggest financial outlay a person will make) the involvement of an impartial third party is often key to a successful, healthy strata community.