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Topic
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My Mum is part of a small strata title complex in Tasmania which was built over 12 years ago. At the time the complex was built there wasn’t a formal body corporate established and as such no manager was employed.
Since then a company has offered it’s services for a fee to manage the body corporate stating that it’s a legal requirement to have insurance and that this insurance and indeed the general property maintenance/repairs are to be managed by a strata title manager.
She is one of three unit owners who don’t wish to employ a body corporate manager, although the other five unit owners do. Both she and the other two unit owners carry their own insurance, and do not wish to be part of a combined insurance policy being offered by the strata manager.
Because my Mum is on a fixed income pension she is against any extra costs or management fees that she hasn’t had to pay in the past.
She has received letters from the would be strata manager saying it is a breach of section 99 of the Strata Titles Act 1998 (Tas) (http://classic.austlii.edu.au
/au/legis/tas/consol_act/sta19 98173/s99.html) Could you please advise, is it a legal requirement that she has to accept the appointment of a manager and therefore then be liable for their fees and Insurance contributions or can she just continue as she has done in the past?
Mum has building and contents Insurance but doesn’t have public liability Insurance for the common areas of the complex.
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OK, first things first. Strata insurance is compulsory in Tasmania (as it is everywhere else in Australia). However, you really don’t need a strata manager to arrange it for you.
Your mum may find that once strata insurance is in place, she can reduce the premiums on her home and content insurance and not have to pay any more. The strata secretary can arrange all this very easily. It doesn’t require a strata manager to do it.
For the sake of argument, let’s assume that the prospective strata managers merely said that hiring them would be a good idea. You would then want to look at their charges, including “extras” (like every time they lift the phone in some management contracts).
But it sounds like this strata manager is trying to scare and maybe even deceive owners into taking their contract and for that reason alone, I would send them packing.
So yes, you need strata insurance and you the owners should look at three quotes and choose the best.
If they feel they really need a strata manager – and maybe they do if they haven’t even got round to formally creating a body corporate – they should again get three quotes, look out for “extras” (we call then Schedule B charges in NSW) and only sign a contract with someone with whom they feel comfortable.
And even though this is not a legal requirement in Tasmania, I would not sign any contract for more than three years. That is more than enough time for all parties to discover if they are suited to each other.
It may be that the strata manager mentioned’s intentions were “lost in translation” but if there was the slightest hint of coercion or deception, I wouldn’t let them anywhere near a contract.
By the way, if the other owners at a properly constituted committee or general meeting decided to go along with this, your mum would be obliged to follow.
The question is, if there is no body corporate, how can they have a properly constituted meeting?
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I am not the full bottle on Tasmanian strata act
However looking at the act
A couple of things I can say.
The body corporate is required to take out insurance for the property. Your mother may take out insurance for contents, but the building is insured by the body corporate. I can’t understand how she is even able to take out separate insurance as she is not the owner of the property. Insurance companies generally do not provide building insurance cover for individuals in strata.
If the majority of owners want a strata managed then that is what will prevail. From what you say it seems that the strata is not being managed in accordance with the act and hence may benefit from a strata manager.
The maintenance does not need to be done by the strata manager. In fact they usually get contractors to carry out repairs. The owners can choose the strata contractors or continue to use whoever does it now.
Yes, I agree with Kaindub. I just worry that this prospective strata manager is conflating the idea that they legally must have strata insurance (which is true) with a sense that they also legally must have a strata manager to run it (which is not). Purely on the basis of a lack of honesty, if that’s the case, I would say maybe yes to a strata manager but definitely no to this one.
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And one other thing – if the strata manager organises the insurance, they will get a nice commission from the insurer. Did they mention that?
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The original Flatchatter says “At the time the complex was built there wasn’t a formal body corporate established and as such no manager was employed.”
This does not appear to be correct. A body corporate has existed since registration of the Strata Plan. Section 71 of the Strata Tites Act 1998 (Tas) says “On registration of a strata plan, a body corporate is established under the name Strata Corporation No. ……. with the addition of the name of the strata scheme.”
Appointment of a managing agent (called a manager in Tasmania) is not compulsory. Section 80 is permissive:
(1) The body corporate may appoint a manager and delegate to the manager functions related to the administration, management and control of the common property.
(2) A manager is subject to control and direction by the body corporate acting in general meeting or through a committee of management.
A general meeting should be held to elect the members of the committee of management. How this meeting is to be called in the current circumstances of this body corporate, I must leave to someone more famaliar than I with the provisions of the Tasmanian Act.
Yes but in relation to the insurance commission.
The OC will pay the same premium whether the insurance is arranged through the strata manager or purchased directly by the OC.Many insurers for strata only sell their strata policies through brokers.
The argument for the commission is that the strata manager will lodge claims and follow them up. They deserve to be compensated for their services.
There are also some strata managers who refund the commission to the OC.
The selection of a strata manager needs to consider all the factors.
The original Flatchatter says “At the time the complex was built there wasn’t a formal body corporate established and as such no manager was employed.” This does not appear to be correct.
Technically correct, of course, but I think the OP meant that there were no formal meetings or elections held. However, it’s also worth remembering that this information is third-hand.
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All of Kaindub’s comments are correct – I just wanted to alert the OP that there might be an additional incentive for the strata manager pushing to be allowed to acquire the insurances on behalf of the strata scheme.
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