This Q&A about our Strata Manager in Victoria overcharging and not providing good service has been supplied by Jane Giacobbe, Strata Reports Victoria.
Question: We are sick of being overcharged by our Strata manager, with additional billings of all and sundry for their strata management services. They are under a three year term, signed by the developer. What can we do?
We have quite a bit of unrest amongst our Owners Corporation committee members over the additional billings of all and sundry for management services of our strata. They want to seek an alternative. I’m interested to know a few things:
- Is it lawful for a developer to sign up the strata manager for a three year term? Why would they do that? Are commissions often involved here?
- The agreement was not signed by a witness. Could this void the agreement?
- The strata manager on a previous enquiry told us we did not have rights to the strata roll as it was a Privacy Act issue. This surely cannot be correct? Are they just preventing us from accessing owners contact details in order to block communications about this and/or other issues?
I’m sure there are other strata management companies whose billings are more in line with expectations. Are you aware of other more innovative ways of managing an Owners Corporation’s requirements that don’t involve overcharging like this strata manager?
Answer: The developer may have sold the OC management contact to the OC management company as a way of maximising their return on a project.
We can confirm that it is legal for a developer to sign a 3 year term in a contract of appointment with an Owners Corporation management company.
The developer holds that power as the original owner at the time of the First Annual General Meeting (sometimes also referred to as Inaugural Meeting in VIC) where the resolution is passed and the contract is signed and sealed. The actual term of the contract is also a decision that is made by the OC management company at the time of preparing the draft contract of appointment and relevant motions for the FAGM.
Their reasons for doing this do vary and in the best interest of full transparency for the Owners Corporation, you could present that question directly to the developer and the OC Manager.
We would like to think that the developer and OC manager have set a term of 3 years as they would like a strong long-term working relationship with the Owners Corporation to help establish things and have the building running efficiently.
However, there are sometimes other reasons that contracts of appointments are longer than 1 or 2 years and with some new developments. One reason is that the developer may have sold the OC management contact to the OC management company as a way of maximising their return on a project.
The OC management then needs to recoup the fee they have paid to the developer and one way to do that may include proposing that the term of the contract with the Owners Corporation is set for longer.
Having said all of this, we do not know that this is the case with your current OC management and it would be best to ask them directly so that you have full transparency and disclosure around the term that has been set.
If the contract has not been signed by a witness, it does not necessarily mean that it will be void.
You would need to go back and review the minutes from the First Annual General Meeting and the resolution that was made around the contract of appointment which should state how it would be signed and sealed.
If it is all correct, then my understanding is that the contract of appointment will not be made void without a witnesses signature, however, I would suggest possibly seeking legal advice if you feel strongly around that as there may be something more than what I am aware of.
Concerning the access to the strata roll, each owner does have the right to inspect the books and records of their Owners Corporation and that includes viewing the strata roll (which is known as the owners register in VIC). The owners register must include each lot owner’s name and address as a requirement under the Owners Corporation Act 2006 and as such that information is not subject to the privacy act.
The OC management may request that you complete the “Request to inspect Owners Corporation register and/or records” form which can be found on the Consumer Affairs Victoria’s website and you may need to pay a fee for any copies that you would like to take.
Should the owners corporation members feel uncomfortable in attending the OC management’s offices, you could also engage an independent company such as Strata Reports Victoria or Strata Reports NSW, to carry out an inspection of the books and records on behalf of the members within the owners corporation and obtain documents and information that you require.
We hope that our responses have been helpful and please feel free to reach out if you would like to discuss things further as we would be delighted to assist where we can.
Please note that the above is based on my knowledge and experience but if you would like to obtain actual advice it would be a good idea to seek that from a specialised Owners Corporation lawyer.
Have a question about strata managers overcharging in Victoria or something to add to the article? Leave a comment below.
This article is for reference purposes only and is not intended to be a comprehensive review of the developments in the law and practice or to cover all aspect of the subject matter. It does not constitute legal or other advice and should not be relied upon this way. Readers should take legal or other advice before applying the information containing in this publication.
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This post appears in Strata News #294