We received the following question about stopping self managed strata from a VIC lot owner. Kristi Kinast, LOC Strata Management has provided this response.
Question: Our developer, who still owns the majority of the lots, wants to revert to a self managed strata. How can I stop this from happening?
I am a lot owner in an apartment building with 52 apartments. We currently use a body corporate management company; however, the developer of the building still owns the majority of apartments and has decided they want to self-manage the body corporate. I am on the Owners Committee and am not comfortable with this approach. Is there a legal avenue I can explore to prevent this from happening?
Answer: Trying to enforce the appointment of a manager is going to be extremely difficult. Often the best way to work toward a resolution is through communication and negotiating.
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Wow, that certainly sounds like a frustrating situation for you! Whenever a large block voter exists – such as the property developer, or in some cases a hotel group, or other very active agent or proxy holder – the balance of power in a strata property is somewhat disturbed.
One side of the argument is that each and every lot should and do have an individual vote and if the majority of those happen to be represented by one person then so be it – it is a fair representation of the wishes of the majority of the property. However it still means that fairly significant decisions are essentially being made by one person, which, even if they are the majority stakeholder, seems like an unbalanced position for an entity.
Under the Owners Corporation Act, the Committee is delegated certain powers and responsibilities and in our state of Victoria, Committee’s have a lot more freedom than in some other states. However, the Committee’s involvement is somewhat restricted in that the Owners Corporation Act determines that the appointment of a manager is a matter that must be dealt with at the Annual General Meeting – ie a matter on which all owners have the opportunity and right to vote. In your particular case, this means that the developer, as the majority lot owner, will be able to exercise their votes to not appoint a manager.
There is a section (S125) in the Owners Corporation Act that allows a lot owner to apply to VCAT for an order to appoint a manager where one does not exist. I personally haven’t seen this applied before and I’m not sure how VCAT would view this particular case, though I’d suggest that it may be a little more difficult to obtain the order where the majority of owners (even if only represented by one person!) has voted against it previously.
Trying to enforce the appointment of a manager in this particular case is going to be extremely difficult, however, as with most things in strata (aka community) living, often the best way to work toward a resolution is through communication and negotiating. Have a think about why the developer may not want to appoint a manager: could it be to save money, or perhaps they might believe they themselves have sufficient experience to do so, or there may be other factors at play. Also reflect on what it is you are hoping to get out of having a professional manager appointed: independence, guidance, professional advice may be a few aspects. And the most important part: how can these things actually be of benefit to the developer? How can you work together to meet both your goals?
It may be that you don’t end up appointing a full-time manager but you agree on appointing a manager as a consultant on certain issues, or to arrange and run your AGM, or to assist with your compliance matters. While appointing a manager may be the best and easiest solution in yours and others minds, there may be a compromise position that still allows you some of best benefits while still allowing the developer to realise some of their aims too.
While it always feel easier to rely on the cut and dry implementation of the law, so many situations arise in strata and community living that require us to engage and find common ground. And this sounds like a really good opportunity to do that! Good luck!
This post appears in Strata News #120
Senior Strata Manager
LOC Strata Management
Brisbane: 07 36678566
Melbourne: 03 86691311
This article is not intended to be personal advice and you should not rely on it as a substitute for any form of advice.
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