Suite and sour

“You treat this place like a hotel,” is a common cry from parents as their teenage kids come and go at will.  But what if someone actually did run your apartment like a hotel room … and there was nothing you could do about it?

QUESTION: When I bought my investment flat a couple of years ago I was told at that time that I could rent it out, live in it myself or, like most of the owners, rent it to a hotel operating in the building.  Only after I bought I discovered that it’s impossible not to let the hotel manage my unit.

The hotel holds power of attorney from almost every owner who bought their apartment from the developer and they decide on everything to do with the running of the building. The hotel manager is also the building manager and uses proxies to award himself a salary of about $150,000.

Last year, the hotel used their proxies to lease of the common area  for 20 years meaning they can re-let, re-assign or take a mortgage over our it. I couldn’t stop all this happening because the hotel holds the majority of the votes through their power of attorney. Could this issue be brought to the Fair Trading? – Fully Booked, Sydney

ANSWER: This certainly can be brought to the attention of Fair Trading. Without knowing the details it sounds like you will have a very good case under the strata law which specifically forbids the developer or anyone associated with them from obtaining proxy votes or power of attorney as part of the sale of a unit.

The law also says that proxy votes obtained under these circumstances are not valid.  It also seems to me that your building may be being run illegally, with the money allocated to the building manager by the building manager another cause for serious concern and possible legal action.

Check with Fair Trading (Tel 13 32 20) and/or a good strata lawyer and they will tell you what you can do. It sounds to me that these guys need a reality check – unless they’ve found a loophole in the law, you just can’t do that kind of thing anymore.

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