WA lot owners are wondering what Strata Managers do, and whether they need one.
Table of contents:
- QUESTION: What happens when figures presented by the Strata Manager do not balance/reconcile?
- QUESTION: We are a 95 site strata-titled caravan village. The Landgate site says the amended STA does not require us to employ a strata manager. Do we need to have a volunteer strata manager? I assume this would have to be an owner?
- ARTICLE: WA: Strata Manager’s Duties under the Strata Titles Act Amendments
- QUESTION: The strata manager for our new building was appointed by the developer and is located in the eastern states. He has no idea of the needs of the building. Surely this is not ideal.
- QUESTION: We’ve been using a resident’s sweeper for our large common area for years. Our strata manager will no longer allow the use of the sweeper. No real reason has been given. Is that right?
Question: What happens when figures presented by the Strata Manager do not balance/reconcile?
At our AGM, the Statement of Financial Position (Balance sheet) did not balance. The Chairperson stated there was no requirement in the STA for it to be adopted and tabled. Sect 101 says the Strata Company must keep proper records. What happens when figures presented by the Strata Manager do not balance/reconcile?
Answer: Whilst the Act does not specifically state that the financials should balance, it would not be considered a proper record of accounts without it balancing.
There is a requirement under section 101 of the Strata Titles Act for the Strata Company to prepare a statement of accounts for each financial year showing the assets, liabilities income and expenditure. This same section requires that the strata company keep a proper record of accounts.
Section 127 requires the statement be presented to the annual general meeting for consideration.
Whilst the Act does not specifically state that the financials should balance, it would not be considered a proper record of accounts without it balancing.
My recommendation to any annual general meeting that is not completely satisfied by the financial reports being presented is not to accept them. Perhaps a counter motion that the council of owners be authorised to accept the financial statement once all concerns have been satisfied and they are confident that the statement represents a true and correct record of the Strata Companies financials.
101. Accounting records and statement of accounts
- A strata company must keep proper accounting records of its income and expenditure.
- A strata company must prepare a statement of accounts for each financial year showing —
- the assets and liabilities of the strata company at the end of the financial year; and
- the income and expenditure of the strata company for the financial year.
Luke Downie
Realmark
E: [email protected]
P: 08 9328 0999
This post appears in the March 2021 edition of The WA Strata Magazine.
Question: We are a 95 site strata-titled caravan village. The Landgate site says the amended STA does not require us to employ a strata manager. Do we need to have a volunteer strata manager? I assume this would have to be an owner?
The Landgate site says the amended STA does not require us to employ a strata manager. Do we need to have a volunteer strata manager, who I assume would have to be an owner?
Answer: A 95 Lot Caravan Park strata scheme has its own unique problems and operating requirements.
Answer 1: A 95 Lot Caravan Park strata scheme has its own unique problems and operating requirements.
Under the new changes to the Act, Strata Managers are required to have a good understanding of the Act.
Strata Managers should attend regular training to keep up to speed with the new version of the Act and how things are implemented.
It is a decision to be made by the strata company if you want to be managed by a strata management company as opposed to self-managed.
You would have to weigh up whether you wish to run on a shoestring or pay the real cost to be managed by a strata manager.
Answer 2: You are left to your own devices if you are self-managed. There is no requirement for self-managed schemes to undertake educational courses but “ignorance of the law is no excuse”.
For a large scheme such as yours it may be of some comfort to the owners that the bookkeeper has a Criminal Record check done to satisfy any enquiry. It is not required to be supplied to everyone but would be of some assurance if there are requirements to deal with money.
Shane White
Strata Title Consult
E: [email protected]
This post appears in Strata News #382.
ARTICLE: WA: Strata Manager’s Duties under the Strata Titles Act Amendments
Owners of strata titled properties can expect changes to strata management when the amendments1 to the Strata Titles Act 1985 (WA) (the Act) become law. One of the major changes to the legislation is the introduction of statutory duties for strata managers.
This article will look at some of the new standards imposed on strata managers, and what this means for strata council members.
Key Points
- Strata managers will be subject to new statutory duties
- If breached, their contract with the strata company may be terminated
- The reforms aim to clarify strata managers’ duties and provide a higher level of protection for lot owners
Why the reforms?
The previous legislation did not acknowledge the role of strata managers, nor were there any regulations in place to govern strata managers.
Until now, good strata management has been the result of diligent work by strata managers who happened to subscribe to high standards. There were no minimum standards for strata managers to be held to, nor were they held accountable by any statutory obligations. As a result, the rights and duties of strata managers and lot owners were not always clear.
The reforms will make strata managers more accountable and require them to deliver high standards of professional services to strata companies.
What are the new duties for WA strata managers under the reforms?
The new statutory duties will establish a set of standards that will contribute to the effective management of a strata company.
The new duties for strata managers will include:
- minimum education requirements (which will be set out in the regulations);
- an obligation to have a strata management contract signed with the strata company. These contracts must contain requirements outlined in the amendments;
- holding the strata company’s funds in a trust account that can be audited;
- disclosing any conflicts of interest or commissions received;
- obtaining policy clearance and professional indemnity insurance;
- avoiding improper use of information or their position as a strata manager; and
- having a substantial working knowledge of the Act.
“The reforms will make strata managers more accountable and will require them to deliver high standards of professional services to strata companies.”
Why is this important for strata council members?
To best fulfil their role, council members should be aware of the statutory duties owed by the strata manager to the strata company. This will enable the council to select a suitable strata manager. Furthermore, if the strata manager does not comply with their statutory duties, the council can resolve to take legal action against the strata manager.
For lot owners, the reforms will provide a higher level of protection, as well as greater clarity as to what the duties and obligations of a strata manager actually are.
What can be done if strata managers are not fulfilling their duties?
Once the amendments are in place, the strata company will be able to terminate the strata management contract if a strata manager breaches any of their statutory duties. This is in addition to the rights they should have under the strata management contract.
The strata company will also have the right to seek remedies from the State Administrative Tribunal if there has been any wrongdoing by the strata manager. Those remedies may include obtaining orders that the strata manager pay damages to the strata company. This could apply where the strata company has suffered a financial loss resulting from a breach by the strata manager.
When do the strata reforms come into effect?
The amendments are expected to come into effect at the end of 2019. Those amendments will be accompanied by a range of regulations to assist in the operation of the legislation as a whole.
Conclusion
In order to make the most of the reforms, strata councils should make themselves aware of the new standards and statutory duties of strata managers.
This will enable strata councils to be better equipped to oversee strata managers and protect the interests of lot owners.
Have a question about strata manager’s duties under the WA reforms or something to add to the article? Leave a comment below.
A PDF Version of the article can be accessed here.
Footnotes
1. Strata Titles Amendment Act 2018 (WA)
For more information please contact:
Civic Legal
E: [email protected]
T: 08 9200 4900
Disclaimer: This article contains references to and general summaries of the relevant law and does not constitute legal advice. The law may change and circumstances may differ from reader to reader. Therefore, you should seek legal advice for your specific circumstances. The law referred to in this publication is understood by Civic Legal as of publication date.
This post appears in Strata News #275
Question: The strata manager for our new building was appointed by the developer and is located in the eastern states. He has no idea of the needs of the building. Surely this is not ideal.
I am a lot owner and resident in a new building (12 months old) and the strata manager is based somewhere in the eastern states. He has appeared once for the first AGM and never been seen since. The strata manager was chosen by the building developer, also based in the eastern states.
He has no idea of the building or the problems associated with a new building. He asks for photos to be sent to him of problems and has no idea of suitable providers of services eg gardeners.
Is it considered suitable to have a strata manager based in another state?
Answer: There is nothing that requires the Strata Manager to be in the same area or state as the property they are managing.
There is nothing that requires the Strata Manager to be in the same area or state as the property they are managing.
I would note however that the WA Strata Legislation is not the same as the Eastern States so it would beg the question as to what legislation they are using in relation to the management of your particular Strata Company.
It would be worth reviewing your bylaws to determine how long this Strata Manager has been appointed for, or if there is a contract in place. It may also be worth contacting the elected Council Members and discussing the concerns you have. Any changes will require the support and consent of other owners in the complex and the Councillors should be fully informed of any specific arrangements in place with the Strata Manager.
It would seem that there would be issues around appointing local contractors, liaising with contractors, and obtaining keys to access the site to carry out repairs and maintenance. The Elected Council Members should be the informed parties on these types of matters for the site.
If there are any future building defect matters to be attended to you may find that your Strata Manager has a conflict of interest in pursuing the builder, causing delays and further complications.
You have noted that the Strata Manager asks for photos of any reported problems and this would be the case with local service providers also. It is always best to try and quantify what the matter is before allocating work/investigation to a tradesperson. The difference with a local Strata Manager is that they would have knowledge of the local qualified professionals to arrange to attend and investigate.
We strongly recommend that you gather your information and conduct your discussions now to put your mind at rest, rather than leaving it until a problem arises.
Shelley Fitzgerald
Strata Alliance
E: [email protected]
P: 9330 3959
This post appears in Strata News #314.
Question: We’ve been using a resident’s sweeper for our large common area for years. Our strata manager will no longer allow the use of the sweeper. No real reason has been given. Is that right?
We have a large common area which we have been using a mechanical non motorized sweeper for about eight years. The sweeper is owned by one of the residents.
We have recently been told by our strata manager that we can’t use the sweeper anymore. As well as the lot owners, the gardener was also using it and has been told she can’t use it anymore either.
I’m not quite sure why the Strata Manager has said no. All the information we have received is that it is strata law not to use the sweeper.
If this is strata law how can we, ‘the residents’, vote to again use the sweeper in this complex?
Answer: Your strata manager should really be providing the residents with more information and facilitating what the lot owners want.
If there is a by-law, then the owners simply need a unanimous vote at a meeting to remove/amend the by-law. Then the council organises for someone to lodge this with Landgate.
If there isn’t a by-law there is nothing to say they can’t use it unless it is breaching any general by-law such as noise and nuisance. If this isn’t causing a problem to any owners then I don’t see a problem.
Your strata manager should really be providing the residents with more information and facilitating what the lot owners want.
Jordan Dinga
Abode Strata
P: 08 9368 2221
E: [email protected]
This post appears in Strata News #232.
Please note this advice was provided prior to the proclamation of the new strata title amendments and will be updated in due course.
Read next:
- WA: Relationship between Strata Manager and Strata Council
- WA: Resolving Strata Disputes Under the Strata Title Act Amendments
- WA: Q&A Where can I make strata manager complaints in WA?
1 May 2020 Update:
The amended Strata Titles Act 1985 took effect in Western Australia on 1 May 2020. It includes grace periods for some new requirements to ensure those affected have adequate time to meet them. This information has been taken from Landgate: Timelines for Change.
Improving strata management and by-laws: Changes to the role of strata managers
| What’s new? | Timeline for change | Who needs to know? |
There will be clear statutory duties for strata managers which require them to:
|
Started 1 May 2020. |
|
Strata Managers Will Also Need To:
| a) Attain educational qualifications. | By 1 May 2024. (Four years after commencement). |
| b) Have a written contract between them and the strata company, specifying the functions they are contracted to perform. | Starting 1 May 2020, all new contracts must meet the new requirements. There is a six-month grace period for existing contracts to reflect the new requirements (to 1 November 2020). |
| c) Obtain a current national criminal record check for themselves and employees who perform strata management functions. | Starting 1 May 2020 for all new contracts. There is a six-month grace period for existing contracts (to 1 November 2020). |
| d) Have professional indemnity insurance coverage. | Starting 1 May 2020 for all new contracts. There is a six-month grace period for existing contracts (to 1 November 2020). |
| e) Lodge an annual return to Landgate with general information about the schemes they manage. This annual return will enable the government to determine if the licensing of strata managers is viable or required in the future. | The first annual return will need to be lodged with Landgate between 1 January 2022 and 31 March 2022, and then annually after that for the next four years. |
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If a Strata Manager fails to provide information in the required time when requested by an owner and is subsequently fined $3,000, is the strata liable for this amount or is it the Strata Manager’s company that is liable?
In Western Australia under the amended Strata Titles Act of 1985 how much can a strata manager spend on maintenance per unit without the strata companies approval?
Given the council bears ultimate responsibility for the performance of the strata company and the SM can always assert “we work as instructed”, it would be rare for the Trubunal to be able to hold a SM accountable for anything especially when the SM controls access to strata records and refuse to accept that they include all communications.
Thank you Anthony for taking the time to reply. Your responses to my questions are clear and helpful.
Thanks Danny. We have another article from Anthony in the pipeline discussing this topic in even more detail. Stand by….. We should have it up on the site sometime next week.
Update: the article has been published and can be accessed here – WA: Relationship between Strata Manager and Strata Council
It’s very welcoming and about time strata managers are held more accountable. I imagine that under the reform strata managers will change their attitude, conduct and standard of service to strata companies very quickly, particularly to owners who are not on the council committee. The reform should also apply heavy fines on strata managers not doing the right thing and for being bias in strata company business.
Do the Council of Owners also have a responsibility to fulfil their responsibility as office bearers? For example, responding in good time to give strata manager directions when a matter arises that require their approval? what sort options under the new Act do strata managers have in a situation where a council who insists on spending money where it is not budgeted for or act in contravention of the Act? Can a strata manager take the strata company to SAT under the new Strata Titles Amendment Act?
Check out this article on the Council of Owners duties that may be of interest.
https://www.lookupstrata.com.au/wa-strata-reforms-strata-council-member-duties/
Hi Danny
We have received the following reply back from Anthony Quahe, Civic Legal:
Thank you for your questions, which I will address in three parts below.
Do the Council of Owners also have a responsibility to fulfil their responsibility as office bearers? For example, responding in good time to give strata manager directions when a matter arises that require their approval?
Previously, there were no formal requirements for a strata council to act in the best interests of the strata company. However the legislative amendments create new standards of accountability for council members’ conduct.
Section 137 of the Strata Titles Amendment Act 2018 (the Act) provides that council members, including office bearers, must at all times act honestly, with loyalty, and in good faith.
In performing their functions, council members must also at all times, exercise the degree of care and diligence that a reasonable person in their position would be reasonably expected to exercise. They must also not make improper use of their position to directly or indirectly gain an advantage or cause detriment to the strata company, and must declare any conflicting interests to other members of the council.
In short, the answer is yes. Responding in good time would appear to be an example of how to exercise the degree of care and diligence that should be expected of a reasonable council member.
What sort options under the new Act do strata managers have in a situation where a council who insists on spending money where it is not budgeted for or act in contravention of the Act?
Strata managers would be in a difficult position. Councils make decisions and bear the responsibility that goes with that role. Strata managers merely carry out those decisions under instructions from their council.
However, section 146 of the Act now imposes duties such as having to exercise a reasonable degree of skill, care and diligence in the performance of their functions. So if they identify that the council’s insistence amounts to contravening the Act, they could warn the council against doing so. By checking if a contravention has occurred (e.g. by taking legal advice), and then giving the warning, the strata manager would show that they exercised such care and diligence.
If the council does not heed the strata manager’s warning, the strata manager could terminate their contract with the strata company, depending on the wording of their contract. The strata manager could say that they would not be acting in compliance with their (new) duty under section 146 to act honestly and good faith toward the strata company if they knew they had to carry out the instructions of a council that was exposing itself to risk by the contravention.
Can a strata manager take the strata company to SAT under the new Strata Titles Amendment Act?
Yes, but not for the kind of situation you have described.
Strata managers provide services to the strata company. It is not their role to enforce the law on erring strata companies in the SAT.
I hope these responses help.
Regards,
Anthony Quahe
Managing Principal, Civic Legal
Disclaimer: This comment contains references to and general summaries of the relevant law and does not constitute legal advice. The law may change and circumstances may differ from reader to reader. Therefore, you should seek legal advice for your specific circumstances.