Question: Our builder appointed an unhelpful OCM. Levies have not been sent, maintenance has been neglected, and AGM has been delayed. Can owners who haven’t received levies still vote, and how can we improve the situation?
Our builder appointed an owners corporation manager (OCM). The OCM doesn’t seem very co-operative. Owners moved into the building mid 2022. We have to contact the OCM to send our annual levies. Maintenance isn’t carried out, and our first AGM with the lot owners has finally been scheduled, only after one owner kept following up.
As owners did not received their annual levies prior to the AGM, are owners unfinancial for purposes of voting. Aside from seeking another OCM once the existing agreement ends, what remedies do owners have?
Answer: Victoria’s lack of industry regulation makes it very difficult to hold owners and corporation managers accountable for their actions.
This sounds like an unacceptable situation that no ownership group should have to find itself in.
The unfortunately reality is that the legislation and lack of industry regulation in Victoria makes it very difficult to hold owners corporation managers accountable for their actions. Terminating the manager sounds as though it’ll be your best and only recourse.
If the owner corporation manager is a member of the Strata Community Association (SCA), you could lodge a complaint with them (SCA Complaint Management Form) to see if they will help address your concerns.
Regarding your financial status for the meeting: to be considered unfinancial for voting at the meeting, an owner must have been issued a levy notice and failed to pay by the due date. If the annual levies have not been distributed, then owners haven’t been given the required opportunity to pay and thus would be considered financial (subject to payment of previous levies).
I suggest contacting a strata consultant, as they can talk you through your options to get the best outcome from the meeting.
Callum Wilson
The Strata Shepherd
E: info@thestratashepherd.com.au
P: 0431 925 908
This post appears in the May 2024 edition of The VIC Strata Magazine.
Hi can the Strata Manager (SCA member) here in Victoria legally refuse to provide OC records and register as they claim they are not having ‘face to face’ meetings due to Covid restrictions? Thanks.
Hi Verity
This Q&A should assist: VIC: Q&A Vibrant and Connected Communities
Hi Nikki thanks for you reply.
I am not sure how VIC: Q&A Vibrant and Connected Communities can assist with this query. Can a strata manager deny an owner access to the OC records in Victoria and because of Covid restrictions? And how can owners (and inc. entitled to vew under th ‘Act’) access OC records otherwise? Thanks.
Hi Verity
As stated in the article I pointed you to: “The owners corporation must make these records available to you, but may charge a reasonable fee for a copy of any record.” Michael Darby then goes on to point to the section of the legislation that allows you, as a lot owner, access to the records. I’m unsure why COVID has been mentioned as a reason to deny access. If you are unable to visit the premises to obtain a copy, the information can be supplied to you electronically.
Hi Nikki (I see now) and thanks for your reply. I agree I wouldn’t have thought it to be an issue (considering legal obligations as per ‘Act’) and as they are a large Strata Manager : I will check with Strata Manager re provision of records electronically.
Hi Nikki
I have had a recent reply from Manager and re obtaining records: The Manager claims because of current Vic Govt. restrictions, their offices is closed – no face to face meetings are permitted and until the govt changes their directives. So the Manager has said the only way to obtain records ( and this is the Manager claiming this and not the OC, as a I am on COM), i.e. and that any copies of records must be paid for by the lot owner and as per Owners Corporation Act 2006: SECT: 146(2)(3) and that there is not any alternative solution at this time. Is this correct, can the Manager on there own volition claim this? I thought OC records were free to view and usually the OC incurs the charge for the Manager’s time and if Manager decides to charge. Is this part of SCA’s policy now if so, it seems exploitative of covid i.e. taking advantage of this apparent ‘closed corporate offices’ restrictions and as (apparently) mandated by the Vic Govt. (as according to our Strata Manager’s email) and then Manager being able to charge the lot owner directly for obtaining OC records? What are the charges? I am am up to date with all vaccinations so not sure why this is the case and then how Manager (without the say so of the OC) can charge for records from the individual lotowner? Is this correct? Any help on these strata queries would be appreciated. Thanks.
Hi Verity
As mentioned previously: “The owners corporation must make these records available to you, but may charge a reasonable fee for a copy of any record.” The charge is the cost of the lot owner requesting the information. You can also find information about this on the Vic Consumers Affairs page here: Records – owners corporations
Thanks
Hi and thanks. Yes I thought that was the case so, the (SCA) Manager is out of order for charging for inspection and access to records and register. Which is exactly what the Strata Manager (in question), is doing and irrespective of reasons.
Other (SCA) Strata Manager’s (for other property I own with an OC) do not charge and if provided electronically due to not being able to attend office – they fairly on charge the OC and for the Strata Manager’s time to collect and process records and as requested under S146 of ‘Act’. It would now seem conclusive, there is an unfair inconsistency and n this regard and that some OC’s and Strata Manager’s are (exploiting) and taking advantage of Covid restriction/s situation and by choosing to claim they are providing a copy rather than providing ‘access’ to records and register. The other OC uses a drop box arrangement to view records and register requested and do not charge lot owner for this service. SCA should ensure ALL its members address covid restrictions and by eliminating convenient excuse to view/inspect records and unlike those with seemingly more integrity and scruples by making records available (as per S146 of ‘Act’) and by Dropbox to lotowner.
Thanks all the same for your assistance.
Withdraw my last email.
So we have 10 strata units paying $11,200 annual Administration Levy for collecting levies. When it comes to upholding the By-laws and acting against unlawful acts on behalf of the Owners Corporation the Strata Manager pass the buck back on to the Committee. .We could get an Accountant for less than half the cost to do the same thing. .It’s a cash gravy train for Strata Managers. for bugger all service..
Thanks Jane, for your advice on whether OC managers are justified in charging for two OC certificates per sale. I also followed this same enquiry up with the SCA (Vic) Legal Hotline and their response was:
“You are justified in charging for each requested Owners Corporation Certificate. There is no reason to provide the same by way of a free service. That said, we refer you to section 14 of the Owners Corporation Regulations 2018, which sets out the manner in which costs can be charged for an initial certificate, and a subsequent request for a certificate.”
Reg.14(b) states for each additional certificate made by the same applicant a lesser fee is charged for the additional certificate. If we are first contacted by the vendor and secondly by the purchaser, these are considered two different applicants (according to the Legal Hotline), and the second certificate can therefore attract the full fee.
Jane, when you mention the “duration of time that has passed since the first oc certificate, then depends on whether they need to request an updated oc certificate. Herein lies the annoyance around the second fee for often just a slight update” – this is where I believe many people are unaware how the certificates work and what is actually involved in their preparation.
There are 16 questions plus up to 10 attachments. Each question needs consideration and the answer needs to be gathered from the OC records. Even in a month, levies can be issued, an AGM can be held, a budget updated, a committee meeting held, a special levy issued, major works finished or started, the insurance renewed etc.
The reports all need to be generated again as per the correct date. The OC certificate needs every figure to be correct or we are held liable. It needs the common seal and to be signed by two people. It all needs to be scanned, have a cover letter and emailed to the correct person, usually with numerous communications prior and some afterwards. All of this for $150? I think that’s good value and it’s below hourly rate.
Thanks to Look-Up Strata for opening up these type of discussions – much appreciated!
Jeanie, on the contrary, if a strata manager’s service agreement doesn’t list insurance renewals and management of insurance claims as a service they provide within their strata fee scope of work, then it is reasonable that they exclude themselves from claims administration and annual insurance quoting once the committee eliminates their insurance policy commissions or kick backs. The owner’s corporations I have led down this path (three to date) have fully understood this quid pro quo and don’t hold that against the strata manager at all. The annual quoting / renewal is done by our independent brokers at nil cost and they by definition provide at least three quotes from three insurers each year (instead of jus blindly rolling over the existing insurer with the commissions in place). When claims happen (as they have with these new arrangements), the committee does need to take more individual and prescriptive responsibility for managing the claims and settlement process (but again the broker assists and the insurer invariably appoints a loss assessor to work through the issues and negotiate the settlement deal).
I’ve had an insurance renewal situation where the strata manager (taking a commission) said they would not be prepared to deal with a different insurance broker that they didn’t appoint and if the committee went down that path then the committee would have to liaise on all matters relating to insurance claims. I found this all rather odd. Aren’t the strata managers supposed to be working for us?
From an Owners Corporation Management Companies point of view, it is not worth taking on new developments if you are only going to receive a one year Contract. For all the work that it takes to set up a new building, enter all the information into the system, manage the move in process, hold an SGM to appoint a Committee, push to get a defect report completed amongst others, by the time all of this is completed, you have hardly enough time to get your feet under the desk and have the real possibility of losing the Contract to a tender process.
Whilst there is little doubt that some Developers will seek compensation from some Owners Corporation Management Companies as a ‘sweetener’, it is foolish to tarnish all Developers and likewise all OC Management Companies with the same unethical brush.
Also, reading some of the comments from others regarding insurance commissions, it would seem there is a sincere lack of knowledge as to what is involved in the insurance process. Whilst we are advocates for this to change across the board, we propose no insurance commissions and increase the management fee so there is greater transparency within the industry. The lack of understanding of what an OC Management Company does for their commission leads to generic statements like some above.
It is also extremely difficult to incorporate an all inclusive contract cost due to the flexible nature of the industry and building make up. For example, how does an OC Management Company know how many meetings the Committee will hold throughout the year and how long they go for. Some want monthly, 2 monthly, quarterly, 6 monthly or none at all. If an all inclusive cost, the one OC could request attendance by the manager on site for hours on end. This is evidently not suitable for any business.
Disbursements vary so dramatically, how many Owners are going to receive their notices via post compared to email.
Building defects, dispute resolution, VCAT attendance, breach notices, access device requests, insurance claims, quote requests, work orders, debt collection follow up, all of this is variable. The above comment promotes all inclusive Contracts but in reality this is extremely difficult to measure without knowing all of the above, which you never do.
Thanks Scott – well said!
Strata Fair is a broker we have used that doesn’t accept insurance commission. Taxes also get reduced when no commission is taken which makes for some pretty compelling savings.
Interesting point you make about the tax return cost vs interest earned – particularly considering the meager rates at the moment. I’ll have to look into that one.
At a point in the development cycle, the developer owns all the units and hence all the votes ( this is technically called the developer control phase). Contracts made in this period should be carefully scrutinised as part of due diligence as there is an obvious scope for conflicts of interest. This is where developers may do sweetheart deals for management and caretaking with their associated firms.
Hopefully there isn’t an option to renew!
This can be a common problem in new developments in my investment experience – only surpassed by developers appointing caretakers on multi-year, gratuitous contracts that are even more outrageous than the strata manager appointments. Until purchasers get savvy enough to critically evaluate these strata mgt and care taking arrangements as an element of their purchase decision, developers will continue to get away with this somewhat dishonourable (but rarely illegal) conduct. If purchasers said to the selling agent that they weren’t interested in a unit because of these peripheral arrangements and that impacted the developer’s sales, the practice would eventually start to improve? However once you are in the mire as an owner, so to speak, you probably need to wait out the 3 years and then have a much more rigorous approach to selection and appointment of the next strata manager. We have transitioned strata management agreements for properties in NSW, QLD and the ACT to new contracts that are ethical, all-inclusive strata management agreements that eliminate all disbursements, fees, third-party charges and the like. If you would like a copy of a typical all-inclusive agreement, I can send one on request. You also need to be savvy about some of the additional costs. For example paying hundreds of dollars a year for the strata manager to supposedly lodge a tax return for the body corporate is ridiculous if the strata has minimal investment earnings from its capital works / sinking fund account. Your committee might instruct the strata manager to shift the funds into a non-interest bearing account so as to avoid this liability and sham fee? Similarly, for the dodgy practice of insurance commissions retained by strata managers, you can now find independent brokers who will not accept commissions or rebate any received to your body corporate.