This post and Q&A about accurate records and strata defects has been provided by Michael Ferrier, Eyeon Property Inspections.
Table of Contents:
- QUESTION: Our strata fees have been reduced to make units more attractive to buyers. To me, changing Admin or Capital Works Funds to sell a unit is unfair. Is this illegal?
- QUESTION: Our minutes only include the decision taken, with no background or accuracy. Are they leaving out information regarding strata defects and anything which may disadvantage the sales of units?
Question: Our strata fees have been reduced to make units more attractive to buyers. To me, changing Admin or Capital Works Funds to sell a unit is unfair. Is this illegal?
I live in a block of 3 townhouses in NSW. On two occasions now our strata fees have been reduced so a particular unit can sell with lower fees to be more attractive to buyers.
I am against this manipulation and I’ve been outvoted 2 to 1 both times. Our Strata Manager has said they only produce a budget and it’s up to the owners to decide on what budgets to adopt. The Managers don’t offer options and are only there to administer our Strata.
Trying to get investors interested in mainly a well balanced Administration and Capital Works Fund is very difficult.
To me, changing Admin or Capital Works Funds to sell a unit is unfair. Is this illegal?
Answer: There are rules designed to prevent this practice but it still happens sometimes.
Your strata manager is right. They can only make recommendations to the owners. The owners determine the levies and ultimately they have to meet the costs of running the strata plan. We see many buildings that set levies below the required level. This happens for a variety of reasons but often it’s to keep the quarterly levies as low as possible. Usually this results in periodic special levies to fix problems and a poorer quality building over time.
In your example, I assume the drop in levies is temporary so they look lower to potential buyers. If those buyers do proper due diligence they should be able to see the trend of levies over the last 3-5 years and be alerted that current levies are lower than trend.
I agree with you that it’s being tricky to lower levies in this way, but it’s not easy to stop if a majority of owners agree. We see this happen sometimes in new buildings where developers offer units with seemingly reasonable levies, only for them to rise significantly in following years. There are rules designed to prevent this practice but it still happens sometimes.
For any buyers reading these comments, please ensure you get a search of the strata records done so you can see the history of levies and other issues in the building. This is the only way to get a clearer picture of the building you are thinking of buying into.
This post appears in the March 2021 edition of The NSW Strata Magazine.
Question: Our minutes only include the decision taken, with no background or accuracy. Are they leaving out information regarding strata defects and anything which may disadvantage the sales of units?
If Strata Committee meetings are held with only an agree/disagree/abstain reply, how can owners know the background?
The only minutes reflect the voting and there is no real information on what is happening or anticipated to be done in the building.
I have read an article recently that information is not being filed in strata records by some Strata committees with regards to strata defects and anything which may disadvantage the sales of units. Current our Strata Committee of 7 is made up of 3 non resident owners.
Answer: If you think the records are sub-standard in your building, put some pressure on the SC and strata manager to do a better job.
It’s very common for SC minutes (and AGM/EGM) to only include the decision taken, with no background. As a result, there’s a gap in the information available to owners, but also to potential owners.
This doesn’t mean they are looking to hide anything, but are probably just cutting corners on keeping complete records. Background is more likely found in emails between SC members and the strata manager.
If you are looking at records, I recommend you focus on correspondence files to see what’s there. If you still can’t find what you are looking for, you’ll need to speak to the strata manager. Some are more helpful than others, but it’s really the only way to find out what’s going on in many cases.
This fact highlights a big problem. If the strata manager changes, that knowledge can disappear with them. If you think the records are sub-standard in your building, put some pressure on the SC and strata manager to do a better job. You are entitled to complete records, so raise it at the next general meeting or email the SC and strata manager with your concerns..
This post appears in Strata News #273.
Property buyers are now well aware of the building defects disasters seen in Opal Tower and Mascot Towers. But the reality is that any building could hide big issues from potential buyers, meaning that people could land in a nightmare scenario, even if they had carried out all possible checks.
2 Sept 2019: ‘Soil-filled water’ the cause of Mascot Towers’ trouble – Wake Up Australia with Michael McLaren
If you have a question about accurate records and strata defects, some tips or something to add to the article, please leave a comment below.
- Do NSW buyers have a right to up-to-date information when purchasing strata?
- QLD Q&A Alarm Bells: Doctoring BC Records to Hide Building Defects
- Terrible strata records and strata stoushes all too common
- A bigger problem than building defects
Looking for strata information concerning your state? For state-specific strata information, take a look here.
Are you not sure about some of the strata terms used in this article? Take a look at our NSW Strata Glossary to help with your understanding.