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VIC: Q&A Owners Corporation Manager’s Poor Behaviour

The LookUpStrata Team
owners corporation charges

These Q&As about Owners Corporation Manager charges in Victoria have been supplied by Jane Giacobbe, Strata Reports Victoria.

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Question: Our overbearing strata manager retains control of our inexperienced chair and committee, refusing to share financials or committee contact details. What can I do?

My complex’s strata manager illegally refuses to show me banking transaction details, job verification details and won’t provide me with remote members’ contact details. They do favours for members in return for votes.

The most inexperienced unknowledgeable meekest persons are elected as Chairperson and committee. This strata manager rules them absolutely and always maintains the ‘committee’ instructs and approves all the maintenance reports.

Now we are in indefinite lockdown. Against COVID, not DIVOC (divided OC).

What can be done about a dysfunctional strata manager and dysfunctional committee?

Answer: The simplest solution to your concern is to join the Committee.

The simplest solution to your concern is to join the Committee. The manager is employed by and working under the direction of the Owners Corporation as an entity, the Manager is not employed by an individual lot owner. As a result, no individual lot owner can give the manager an order or direction, however, the Owners Corporation can. The Manager cannot, and should not act under the direction of an individual lot owner unless that individual has been delegated those specific powers by the Owners Corporation.

Please remember, the Committee is, by extension, the Owners Corporation. The act goes so far as to say S113 “A resolution of the Committee of an Owners Corporation in respect of any matter has effect as a resolution of the Owners Corporation”. Therefore, if the Committee makes a decision, that decision is and holds the same weight as, a decision of the Owners Corporation.

As a member, you have the ability to join the Committee and help steer the ship. If your concerns are primarily around banking, financial operations/data, I would suggest when you join the committee, seek to be appointed as treasurer or financial controller. In doing so, delegating your authority to request financial statements, bank statements, and other relevant documents on behalf of the Owners Corporation. It is also worth noting you would be undertaking this task on behalf of the Owners Corporation, not yourself individually. The Owners Corporations Act 2006 has clear conduct provisions for committee members under S117.

It is also worth noting, if you don’t join the Committee but still wish to see the financial data, the committee could approve a request for the Manager to provide additional financial data, however aren’t obliged to.

If for whatever reason your foray into Committee life doesn’t work out and your concerns remain, you have the ability to lodge a formal complaint under the act. However, I would only ever suggest going down this pathway if you are sure you have exhausted all other diplomatic options. Sometimes, once internal grievances are formally escalated, it can result in a permanent breakdown of relationships between all parties which can be extremely unpleasant when instead, a direct phone call or face to face chat may have been all that was needed to diffuse or resolve a situation.

Your claim that the manager is essentially manipulating the committee is serious, not a claim I would make lightly, and if true would be grounds for termination, if not more serious legal action. The Owners Corporations Act 2006 states the manager “must act honestly and in good faith” and “must not make improper use of the manager’s position to gain, directly or indirectly” – and (an amendment to come into effect on 1st December 2021) S122 “must not exert pressure on any member of the owners corporation in order to influence the outcome of a vote or election held by the owners corporation”.

The key to harmonious relationships in a Strata Community (or any community for that matter) is based around objectivity, competency, communication, with a sprinkling trust and respect between all parties. The way in which some of your comments/assertions are couched could be taken as quite antagonistic, and it is well known you’ll catch more flies with honey than you will with vinegar. I am not saying your concerns aren’t valid, but it is possible to communicate the same concerns in an objective way that doesn’t antagonise those people that you are ultimately seeking to help you, work with you or live next door to you.

In relation to obtaining other lot owners contact details. Under S150 of the Act, all members are permitted to view the Owners Corporation Register which includes all lot owners names and mailing addresses. So obtaining this information will allow you to send a letter to the registered address of other lot owners. The register does not contain phone or email information. In saying that, it is not uncommon for a Manager to forward one lot owner’s phone/email details to another lot owner, and then it is up to the recipient if they want to contact that person back, or not. The Manager is not required to provide this additional service, but in saying that, my experience has been that the overwhelming majority will be willing to help if, as above, the interaction/request is polite and respectful.

Deryck Walker SMTI deryck.walker@smti.com.au

This post appears in Strata News #532.

Question: For the amount that we pay our Owners Corporation management company, what level of service should we expect? Why do management fees vary so much?

For the amount that we pay our Owners Corporation management company, what level of service should we expect?

We note that different Owners Corporation management companies prepare their quotes and charges differently. Is it important for the committee to looks at the total costs, rather than just a base fee plus disbursements?

Answer: Owners Corporation fees do differ amongst companies in Victoria

This is really ‘how long is a piece of string’ because different Owners Corporation Management companies offer different services. The fundamental services that an Owners Corporation Management company will offer is:

There are the fundamental services for an Owners Corporation Manager. Others will get involved in dispute resolution. Also, dealing with other maintenance works as well, getting quotes in behalf of the committee of management and preparing those quotes, providing a summary to the committee of management.

In terms of the structure of Owners Corporation fees, they do differ amongst companies in Victoria. Some companies will actually include the core services and a lot of the additional services other companies would charge extra for under the one management fee, whereas other companies will charge a low management fee for those core services. But then they’ll charge extra for every single other service that the Owners Corporation committee wishes them to carry out.

On top of that, there’s also the cost of disbursements as well. So disbursements covers things such as postage, phone calls, those types of things that the Owners Corporation manager will incur on behalf of managing the Owners Corporation.

Then on top of that, there’s one additional revenue stream, which is Insurance Commission. Insurance Commission is prevalent in the industry. Basically, the Owners Corporation manager will take a commission from the base insurance premium of the owners corporations insurance policy, and that helps to subsidise the Owners Corporation management fee. There are plenty of companies out there who will opt not to take Insurance Commission, but that will result in a management fee increasing and the Owners Corporation insurance premium decreasing slightly.

Another point to make in regards to the question, there are different disciplines. You’ve got Owners Corporation management, you’ve got building management and facility management, so especially for the larger properties, you have a dedicated building manager, and then an Owners Corporation manager as well. For a lot of the smaller properties, there won’t be a full time or even a part time building manager but you do have an Owners Corporation Manager.

A lot of owners probably believe that the Owners Corporation manager should fulfil the role and be that quasi building manager at times. It’s a very different discipline. Some companies will report to provide some of those services, but just be mindful that that’s not part of the core responsibilities of an Owners Corporation Manager. When it comes to building management services, that involves attending the property to supervise contractors, dealing with resident queries on site, those types of things.

I think it’s really important for a committee to look at the total cost of the Owners Corporation Management charges if they’re looking to appoint a new manager to understand exactly what the additional services are going to be, and what they’re going to charge for because, as I said, at times, managers will provide a low fee and then charge excessively for additional services. It’s really important to to dig deep and understand what the total cost is going to be. A lot of committees will come to us saying, ‘Can you provide an all inclusive fee?’, and we can do so minus a few additional services that we just can’t budget for (potentially attending VCAT or attending site or committee meetings). Unless they provide a good understanding as to the time for attending committee meetings, we wouldn’t know what the charge is going to be. It’s about getting as much information as possible and understanding the committee’s expectations and the Owners Corporations expectations and then costing it based on that.

Gregor Evans The Knight Email P: 03 9509 3144

This post appears in Strata News #485.

Question: As Owners Corporation Manager’s we’d like to know if we are justified in charging for two OC certificates per sale – one at the beginning & one prior to settlement.

As Owners Corporation in Victoria, we charge the standard fee for an Owners Corporation certificate (per CAV) for the vendor when preparing sale documents.

Just prior to settlement, a conveyancer/lawyer contacts us for an update to the OC certificate. This is usually 2 – 3 months later. They are always upset at having to pay another fee for an OC certificate even though we have to do the work from scratch: reviewing all 16 questions, multiple attachments and financial statements. The fee is only approx. $150. Some say we should provide FREE updates for 3 months (although lawyers and other professionals would not provide their services for free) or phone updates (but which figures in particular?).

Please advise if we are justified in charging for two OC certificates per sale – one at the beginning & one prior to settlement. Please quote the appropriate legislation if possible.

Answer: This really comes down to your company office processes.

Yes, this is a common process that occurs when someone purchases into an owner’s corporations in Victoria.

A number of strata companies experience the same frustration from conveyancers and lawyers about the costs involved to obtain a second updated owners corporation (OC) certificate, which is at the same cost as the earlier one they have received.

The initial owners corporation certificate is required to be included within the section 32 of the Sale of Contract and to ensure that the purchaser is carrying out a little due diligence. Therefore, a conveyancer factors this cost into their overall purchase process but depending on how long the settlement is and 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 around the information contained within the updated owners corporation certificate.

When questioning whether you are justified in charging for two oc certificates, it really comes down to your company office processes, what is at stake due to the duration of time that has passed and how much time is required for the preparation of it.

Under section 151 of the Owners Corporation Act, a person may request an oc certificate in writing for a fee. Within the Owners Corporation Regulations 2018, a fee may be charged per oc certificate but it would come down to each owners corporation management company to determine whether they will charge the full fee for the second updated oc certificate.

Over the last couple of years purchasers have also started to carry out further due diligence and have been obtaining independent full strata reports before they purchase, as they cover a lot more information than an oc certificate.

Although this is a new process in Victoria it is the normal in other states such as NSW & QLD and has definitely seen an increase in popularity in Victoria as purchasers become more aware of the importance of due diligence before purchasing into an owners corporation.

We hope the above has been helpful but please feel free to contact us if you would like to discuss things or if we can be of further assistance.

Jane Giacobbe Strata Reports Victoria E: info@srvic.com.au P: 0402 341 848

This post appears in Strata News #362

Question: We have been charged a few fees by our Owners Corporation Manager which we feel are not lawful. What fees and charges can the Owners Corporation Manager charge?

A few years ago, we were charged roughly $200 by the Owners Corporation Manager for organising a ballot. 

I noticed that a ballot template can be downloaded for free from the Consumer Affairs Victoria website. Can the Owners Corporation Manager legally charge a fee for conducting a ballot?

Secondly, we were recently advised that in order for the existing Owners Corporation Manager to be terminated, they will need to charge us a fee of $484 for preparation of records. 

Can the Owners Corporation Manager legally charge these fees?

I wrote a friendly note and put it on the notice board in the common area, however, this has achieved nothing. I’ve also informed the owners corporation via email but have not received any response.

We don’t smoke but we are forced to clean up other people’s cigarette butts. We also have dogs and this can pose health risks to them if they accidentally eat one of the butts.

I would welcome any suggestions on how to best deal with this issue or what legal methods I could use to solve this.

Answer: The Contract of Appointment defines the fees and charges the OC Manager will charge the owners corporation for duties and functions that they carry out under their delegated authority.

Each Owners Corporation signs a Contract of Appointment when they appoint an Owners Corporation manager to be their managing agent.

Within that Contract you will find the fees and charges listed that the OC Manager will charge the owners corporation for duties and functions that they carry out under their delegated authority.

The charges that you are questioning around the ballot and preparation of the records for termination, should be listed in the executed Contract.

In order to be confident that the Contract is valid you should confirm the dates for the term of management and ensure that it is signed by the relevant parties and stamped with the common seal.

If it is valid and has been executed correctly in line with the Owners Corporation Act 2006, then the charges within that Contract are able to be charged to the Owners Corporation.

You may also like to visit the Strata Community Australia VIC (SCAV) for a list of their recommend charges that an Owners Corporation Management Company may include in their contract, to determine whether the fees that your Owners Corporation are being charged are fair and reasonable.

Hopefully the above is helpful but I would be able to provide further information if required and can be reached via the information below.

Jane Giacobbe Strata Reports Victoria E: info@srvic.com.au P: 0402 341 848

This post appears in Strata News #343.

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:

  1. 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?

  2. The agreement was not signed by a witness. Could this void the agreement?

  3. 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.

Jane Giacobbe Strata Reports Victoria E: info@srvic.com.au P: 0402 341 848

This post appears in Strata News #294.

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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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