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Do you mean that you will lose the levies in arrears because there will be nothing left from the sale after the secured creditors are paid?
Yes, it is a strong risk. Most of our recent owners would have about $150k in equity at the original purchase price, but some would be less than $100k. Due to our high strata fees, we already have drops in prices of $100k and it will go lower.
There should be a Management agreement. The one we have is the standard REINSW agreement, and what you ahave for the term of the agreement depends on which of the 5 options. Our previous one was for 3 years and may continue for a further 3 years after that. We would sign a new agreement at each AGM. We eventually terminated the agreement during the time of the agreement without any penalty. There were so many cases of bad management that he was in breach of the agreement anyway, so he wouldn’t have wanted to take action.
Assuming that most owners want to change, what I would do is get a copy of the agreement. Find a strata manager that you want, and ask them what options you have. A good one will set up an EGM with the right motions and notify the owners, and change will quickly occur.
A resolution was passed to re-appoint the strata manager, therefore that is what the owners wanted.
Things go wrong, mistakes are made and the agreement wasn’t actually signed until later.
Now what someone could argue is that because the agreement wasn’t signed then it could be argued that some things done by the manager, and the payment of fees were not authorised, but someone would want to do so, and they would go to NCAT.
What the strata manager is saying is that in that situation then NCAT would simply rule that the agreement should be treated as signed a lot earlier. I would expect that they can. They will respect what the owners want.
The strata manager is a bit annoyed because he suspects that rather than leave this, that they will end up at NCAT which will be a nuisance and cost money.
So he is going to get rid of you, because he doesn’t like you anymore and suspects that you will keep raising problems that he feels are frivolous.
In ours there is a bit of anger, but it mainly seems to be against the former strata manager for allowing the arrears to become so high. I was worried but assumed that the strata manager had it all under control.
I’m starting to wonder if we are going to end up as a failed strata. The best outcome is that we are going to have a lot of forced sales, and some of those we are going to lose the levies that are in arrears. The banks are going to get battered, but they are doing quite nicely. My unit goes on the market early in the new year because I can’t cope with it anymore.
We switched to a new and well regarded strata manager. Previous manager would give the arrears information to the committee and I was careful not to share it. New manager allows everyone in the strata to download the current financials including everything.
If it is common property then you cannot put anything there. If not, there are usually bylaws about changing the external appearance.
To actually take action they would need to go to NCAT. It would be a waste of time for everyone because all that would happen is your brother would agree not to do it again.
The most important point is does he really want to annoy his landlord. At the end of his lease might he want to extend the lease. Maybe the landlord will find a way to make life difficult. Is it a small town and the landlord will make sure everyone knows that he is a difficult tenant. The easiest and most sensible thing to do is to dismantle them. If he wants to he could apologise for not checking with the landlord first.
I don’t have an understanding of strata law, but I think this would be difficult because the proportion of the strata fees paid is based on the allocation when the strata was set up. Also the other owners are not likely to agree to having their strata fees increased. When you bought, you agreed to paying that fee.
There is a legislated requirement that the strata should be kept in good repair. Get a lawyer and go to the tribunal, to get an order for strata to repair your building. Even if it requires a special levy, then it still has to be shared among all owners.
The problem is that most levy problems are not that unexpected. Things like the need to fix building defects are usually because at least a certain proportion of the owners have been ignoring things.
Our previous manager had allowed the unpaid levies to build up. We have 5 owners with debts totalling $150,000 which means we are short about $3,000 for each of the total owners. Supposedly it was going to the debt collectors, but who knows. Shortly we will. We are going to end up having so many forced sales because we have a massive remediation bill, so we need to get the arrears under control.
Most of the owners wont be able to afford the remediation, so they will be added to the list. What a neighbouring unit block seems to have done is to increase the capital works levy to about $3,000 a year, and there are now 3 out of 24 up for sale. They will be borrowing $150,000 per unit, so the repayment will be $23,000 a year. Buyers are probably looking at $200,000 off.
1.5 million in debt isn’t a lot for a 70 unit block. You have 1% so your share is $15,000. They will probably be paying 9% interest, so there is likely a move to firstly get rid of the debt, so they aren’t paying interest, and there are probably other things that they want to do. It also is possible that some of the debt is due to strata arrears and that can take a while. You will need to take into account that there will be special levies.
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I find the idea that different classes of owners will be treated differently a bit difficult. Now if the banks decide to write off the debt for certain classes of owner, then that is fine, as it is a commercial decision for them. What isn’t clear is how much the banks are going to receive from the sale of the property.
This also shows a deficiency in strata law. The have a strata scheme that is basically defunct, which can only re resolved in two ways. Either the owners decide that the strata will do the repairs, which probably meant unacceptable levies or borrowings or they sell it to someone who will fix it. It seems that if a significant proportion of the owners decide that neither meets their expectations then they can just leave it sitting there.
One point is that the banks and the strata committee could probably force the sale of most of the units, except it would be a public relations nightmare. There was something today in the SMH which suggested that a lot of owners didn’t pay the special levies for the legal action. Our strata has bylaws which specify what is to happen when unpaid levies exceed a threshold. May strata is in breach of theirs.