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Topic
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I am new EC member (because of my concerns) and as the former long term Chairman and Secretary sold their units and resigned, I am continually being shocked at what I am seeing and experiencing, I hope someone can help me with just a couple of the anomalies I am coming across.
For the last 10 yrs our Strata Manager (SM) has had the Building Managers (BM) Agreement prepared annually and the AGM Agenda 2013 and 2014 included particulars of the annual renewal of the BM Agreement as follows –“Resolved to renew the terms of the BM Agreement dated 1 July 2006 with xxxxxx for a further 12 months according to NSW CPI increase”.
We are a very large Strata and there’s never been a quorum for the AGMs, so following necessary adjournments Minutes are issued. These Minutes do not mention the BM Agreement at all. The process then seems to be the BM invoices the OC/SM monthly for his fee and the SM pay on behalf of the OC.
I have noticed that his invoiced fee paid last financial year had been increased by a figure greater than the usual ABS CPI and as well it was increased by another 10% . This is not in accordance with statement in the AGM agenda circulated to owners. Upon querying with the SM if the GST had been included or not in the BM Fee I was advised “to take this up with the BM”.
I have reviewed the last 2 years BM Agreements and there is no mention at all of any GST, which could equate to the extra 10% paid ? The AGM and EC Minutes provide no mention of any increase or changes to the 2006 Agreement..
BM Fee 2012-13 – $ 120,000.00 out of which the BM Schedule of Duties included Garden Maintenance
BM Fee 2013-14 -$127,000.00 + a new fee of $20,000 pa for the Garden Maintenance which had been previously included in the Schedule of duties for the previous years. No mention of this additional Fee can be found in EC or AGM Minutes and this increase is being paid by the SM!
Questions
What is the normal practice for approval and payment of BM invoiced fees ?
Who normally is liable for payment of the CPI for BM services?
Can SM’s pay Fees /variation/increases that have no approval from the AGM, EC or without adequate documentation?
Is there any way major costs can be Benchmarked? It would seem we are paying exorbitant charges for items for a 15 year old building eg Fire annual
To mulch several medium sized garden beds $4,000, the work being carried out by the gardener employed by the BM for the $20,000 fee above
Payments have also been made for work never undertaken and the more I look the more horrified I am becoming.
Advice would be most welcome.
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Replies
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Building managers are always difficult – unfortunately large buildings need them. But there is no overarching mechanism for accountability of this service industry. Which often leads to unscrupulous behaviour.
1. As a large building it is often a really good idea to engage the services of a really good solicitor who is a specialist in strata. Build a relationship so that you are able to ask questions and get reliable responses and support.
2. Request a copy from both the SM and BM of the building managers contract, give a time frame for this to be delivered. Then have this contract reviewed by a good strata solicitor.
3. If there is no contract then the BM is basically on a ‘contract’ that corresponds to their billing period.
4. You will need specific advice on the specific costs and invoices. I would also be looking a little more closely too, and asking who writes the work orders, is there a ceiling on the cost of work orders that the BM can authorise.
You may need to consider reviewing the SM as well. it sounds like they are not doing a great job of looking after the interests of you, owners in the SP.
A good building manager and strata manager can enhance the lifestyle of all residents in strata, and working together can save money in the long term.
Well done for taking on this voluntary role.
Yes, well done for taking it on, particularly without a hand-over from the previous EC. Much is communicated verbally as new people join the EC and old people leave and ideally some stay on through the transitions.
GST can be confusing. Our budget is all set out on the basis of the costs anticipated without GST, and the same for our levies. Then GST is added to our levies when individual owners are billed. Similarly, there is GST to be paid on most OC costs. The GST collected on levies has to be passed on to the ATO but the GST we have paid on our costs can be deducted from that. The consequence is effectively that the GST that is passed on to the ATO is approximately zero.
Your strata manager should be able to explain that to you. The EC is relying on the strata manager to get the accounting right. If you can’t satisfy yourself that it looks to be correct and reasonable then keep asking questions. Remember their job is to satisfy you that the place is being managed properly.
In the specific instance, the strata manager should be able to provide a copy of the invoices from the building manager and it they don’t show whether there is GST included or not, then you have to ask how the SM is doing the accounting correctly.
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