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Topic
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In Nsw.
At last year’s AGM it was discussed that a burst Flexi hide in a Lot occurred but and the S/M said it was the Owner’s responsibility. This is also duly recorded as owner’s responsibility in a document titled ‘Who’s Responsible?’ on the managing Strata Agencies website. Some time after the meeting the S/M even sent a flyer to all owner’s warning them to get all Flexi hoses maintained due to the damage they can cause. Can anyone help with the following:
1) Our building insurance is now due and low and behold there are two (2) insurance claims listed for two Lots – just after all of the above – both exceeding a total of 55K, both citing a burst Flexi hose as the cause? How so?
2) These claims have now pushed up our building insurance premium by another 5K this year!
3) The S/C were never informed of any of this. No documents, photo’s, quotes – not a single iota was provided.
Also the whole building is now so badly mismanaged the admin account is in deficit and the S/M is constantly just drawing on the capitol works fund, saying “there’s still money in the bank’. ??
Who’s approval do I need to rescind/terminate their contract as we still have another year of them, the S/C, the O/C?And can I get an urgent order from NCAT for this? I am so worried about our funds.
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Replies
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If you think getting rid of the strata manager is the answer, you can do this by mutual consent, by getting orders at NCAT or – and this is the trickier of the three – finding a clause in their contract that they have clearly breached.
The use of money from the capital works (sinking) fund to pay Admin shortfalls is not that unusual but under Section 76 (2) that money has to be repaid withing three months or a special levy raised to repay the money.
Many strata committees and strata managers will avoid the latter by moving the money back and forth during the course of a financial year, then adjusting the amounts of the levies at the next AGM, evening matters up between the two funds while avoiding the pain of special levies.
It does sound, however, that your budget is out of whack and needs close examination, especially for future maintenance. It may be that your strata manager is keeping committee members happy by avoiding increases in levies through plundering the capital works fund.
On the matter of the insurance claims, you need to discover who made them and under what circumstances. This sounds suspiciously like individuals taking advantage of insurance coverage of fixtures and fittings to get themselves a nice new kitchen or bathroom.
But individuals can claim against strata insurance for items covered in their own lots – and some of the lots covered would surprise you. Tighten up procedures with the insurers and the strata managers and ask them to investigate and report on the incidents on which they paid out.
The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
Hi Lawoftheland
Not knowing the exact details of the claims histories I will give a general overview.
If there is damage to an insured part of the property then a claim can be put in. The SM really doesn’t have to tell other owners. If its a claim they have no choice but must lodge it, they can’t say that they will not lodge a claim. Its the insurance company that will seek all the information regarding the claim. They may also have carried out rectification works directly.
The flex hose is the owners but damage to the building is the Owners Corporations responsibility. This can lead to the situation here.
As to the shortfall in the Admin funds, remember the manager does not set the levies. The owners do at each AGM.
So look at how much you spend in the Admin fund each year, what is the deficit in it, how much of a safety buffer you want in it and then set that as your admin levy. As for the Capital fund always review the current amount in it, the Capital Funds Report recommended levels and future works.
I can not say it enough, if your funds are too low then raise them its up to the owners not the manager.
As to removing the manager either
1. Let it run for the year and then change. (this is the simplest)
2. Terminate the contract by paying them out there management fee etc for the contract term. (you would need the other owners to agree and have a new manager lined up to take over)
3. Go to NCAT and have a compulsory manager put in. (this is hardest, as you must prove that the Owners Corporation is Dysfunctional and needs someone to make ALL decisions for them, including setting the levies)
I agree with SPmanager (above). What I forgot to say was that the strata manager may not be at fault on any of the matters raised, especially if individual owners are working the rules to their personal advantage.
The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
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