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again we are having more problems with the initial owner / developer of our 14 unit strata scheme. Early in 2016 the developer advised us and the other owner ( only 2 Apartments had been sold) that we would need to pay 1/3 of the very large water bill received by him as we were the only people living in the complex. He said he would also pay 1/3 even though he only lived here part time. This was despite the fact that he had a full time maintenance person who was watering lawns sometimes overnight and from time to time left the hose on for days at a time . In addition to our quarterly levy we paid the developer our lot percentage amount ( 7%) of this water account .
Two more people have now bought in to our Strata scheme, the initial owner/developer has now sent our new neighbours and us an email stating that we are indebted to him and due to this outstanding debt we do not have the right to vote at the First AGM which he intends to hold shortly. He has also stated in that same email that he would not support our nominations for a position on the Strata Committee and as he has the majority vote then he will have the say, he says. He still owns 10 units and now intends to transfer one to his partner (who is an overseas country citizen) so he can retain the majority vote.
My questions are these :
1. How should we respond if he does not allow us to vote at the first AGM?
2. How should we dispute his claims that we owe him money for the water?
3. Should we apply direct to NCAT for an adjudicator to appoint a Strata Managing Agent so this guy can be removed from his position of “Owners Corporation” during this initial period?
Your advice on this would be very much appreciated
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There have been a couple of developments on this. The owners asked to see all the records of the strata scheme and were told they could view them at head office – four hours away.
But finally the developer saw sense and has hired the owners’ choice of strata manager to help set up the strata scheme and get everything in place for the first AGM.
Result! But we will be keeping an eye on it.
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Faraway girl – It looks like you have posted the same comment twice.
I gather from your comment that your scheme is yet to hold its first AGM – am I correct?
Can I address the water meter issue first? Being a new building I would have thought that there would be a requirement for a master meter AND individual meters. I do not know where you are located in NSW but it is my understanding that the Sydney Water Catchment area has mandated individual cold water meters for new apartments since 2014. Have you checked the laws with your local water authority?
Regarding the water bills to date – It appears that Jimmy T may already have replied to this issue in a previous comment. See here for validation of Jimmy T’s assessment of the correct way to divide a water bill: https://greenstrata.com.au/topic/understand-water-metering-billing-strata
As for the issue of the Developer and his unpaid levies: An ‘unfinancial owner’ cannot vote at a General Meeting. An ‘unfinancial owner’ means an owner of a lot in a strata scheme who has not paid all contributions levied on the owner that are due and payable, and any other amounts recoverable from the owner, in relation to the lot.
It is my understanding that if you have not paid your water bills then you too may be considered an ‘unfinancial owner’ and not be permitted to vote.
An unfinancial owner can nominate someone for a committee position but cannot vote. To become a ‘financial owner’ the outstanding amount must be paid before the meeting.
Faraway girl – I have re-read the advice provided by previous respondents and I believe that you may have become a bit confused about the water bill allocation and when and how it is billed to you.
It is my understanding that the water bills for each owner do not need to form part of the actual Sinking or Admin Levy. They can be billed separately.
Ask the Developer if the water utility bills have been included in the Admin Levy? If they haven’t been included then they can be charged separately.
Each lot has a unit entitlement. The requirement for the separate water bills is that they reflect the unit entitlement. If your entitlement is 7% then you should be charged 7% of the total water bill from the time that you owned your unit. This water bill can be a charged separately from the other levies. You cannot avoid paying the water bill on the basis that it has not been incorporated into your Sinking or Admin Levy.
Ask the Developer for a copy of all of the master water bills from the time that you purchased your Lot, and then total them up. Your portion should be 7% of that total.
If you have not paid your water bill then you may be deemed to unfinancial and may not be able to vote.
The water bill would be the ‘any other amount recoverable from the owner‘ from the following SSMA 2015 definition of an ‘unfinancial owner’. ‘An ‘unfinancial owner’ means an owner of a lot in a strata scheme who has not paid all contributions levied on the owner that are due and payable, and any other amounts recoverable from the owner, in relation to the lot.’
In my opinion you are correct in stating that that the Developer would be deemed to be an ‘unfinancial owner’ if they have not paid their Sinking and Admin levies (and their water bills). Be very careful that you too are not an ‘unfinancial owner’ with an unpaid water bill.
@Lady Penelope said:
It is my understanding that the water bills for each owner do not need to form part of the actual Sinking or Admin Levy. They can be billed separately.
Ask the Developer if the water utility bills have been included in the Admin Levy? If they haven’t been included then they can be charged separately.
There seems to be some confusion – but FarawayGirl says the developer has said the water bills were coming out of the Admin Fund. The building has only one meter so they have to be apportioned somehow and that would be according to the Unit Entitlements. And they have to be paid by a single account and that would be the Owners Corp Admin Fund.
So, yes, the water bills don’t NEED to come out of the Admin Fund but in this case they do.
Or am I missing something?
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I agree Jimmy T. that the scheme’s water bills (annually, quarterly or whatever) will be paid by the Admin Fund because it is a bill(s) for the whole scheme. How to recoup this money is the issue.
The water bills, at this stage of the development would be wildly fluctuating due to the fact that the scheme is only partially sold, with sales ongoing.
There are two ways to recoup the money (1) via an Admin Levy, or (2) by a separate direct contribution after the issuing of a separate bill.
It would be extremely difficult to ascertain how much money needs to be levied at this stage of the development. Levies are usually calculated once a year to cover costs for the upcoming year, and these are presented at a General Meeting at or around the beginning of the scheme’s Financial Year. To base a contribution for water usage on a scheme with 5 occupants at the beginning of the levy period, but have the possibility of this expanding to 14 occupants by the end of the year could throw the Admin Fund into disarray. A water usage amount, at this stage, could only be guessed at.
It would be far more accurate to leave the water bill out of the levy assessment at this early stage and instead have the water bill divided according to the unit entitlement whenever the water bill comes in i.e. a separate bill. The owners should be given a copy of the scheme’s bill to enable them to verify that the amount charged to them is correct. This would be a more efficient and responsive way to ‘top up’ the Admin Fund.
At a later time, when all of the lots are sold, the water bill would be better able to be calculated as it would be more ‘settled’ and predicable, and perhaps then it could be included in the Admin Levy rather than billed separately. This could be decided upon at a general meeting by an ordinary resolution.
NB: I personally have had no experience with being an ‘off the plan’ owner or developer.
Until the first AGM, the developer is the Owners Corporation. The owners Corporation can only charge for services relative to Unit Entitlements. There is no capacity that I know of for “sharing” of expenses by any other means. If the developer want to alter the conditions under which owners are charged for services, then he has to get a ruling from NCAT. If he doesn’t want to carry the burden of the rest of the costs he needs to sell the other units.
It occurs to me that they must be very close to having sold units adding up to one-third of the unit entitlements. As soon as that point is passed they have two months in which to hold the first AGM. The developer will have his vote reduced to one-third and everybody else can get on with running the building properly.
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If I was you I would contact the Office of Fair Trading and ask to speak to someone who is familiar with strata schemes in their initial phase. Yours is a complicated and specialist type of problem rather than a general problem.