Bad strata managers – and unlicensed tradespeople!

Hi Dr Witch,

This doesn't sound good, but I don't know the full circumstances.

I would be asking the exec comm for a written explanation of why unlicensed tradespeople are being used. (for all I know you could be in an isolated part of the state where tradespeople are in short supply)

Ask them about indemnities & guarantees

You had better try & get on the exec comm yourself so you know what's going on.

I think you need to personally lobby all of the owners pointing out these issues & try to get enough numbers to call an extra-ordinary general meeting to decide the matter or dismiss the current exec comm & appoint another.

I don't know about the strata manager. Most strata managers would advise against unlicensed tradespeople & actually want a written indemnity from the exec comm.

you need to do more digging

Sharyn Machin

https://www.stratachoice.com.au

Hi DrWitch

It is an offence under section 12 of the Home Building Act to do unlicensed residential building work or specialist work (see section 12 set out below):

“An individual must not do any residential building work, or specialist work, except:

(a) as, or as a member of a partnership or an officer of a corporation that is, the holder of a contractor licence authorising its holder to contract to do that work, or

(b) as the holder of an owner-builder permit authorising its holder to do that work, or

(c) as an employee of the holder of such a contractor licence or permit.

Maximum penalty: 1,000 penalty units in the case of a corporation and 200 penalty units in any other case.”

I note that a penalty unit is $110 and therefore the fines are up to $110,000 for a corporation and $22,000 for a natural person.

The Office of Fair Trading enforces these matters and presumably any contractor looking to do such work would be wary of any renegade lot owners who might report them to the Office of Fair Trading.

Chris Kerin

In my strata plan the EC is using unlicensed trade person to carry repairs of more than $20k. When questioned they have an “so what” attitude. They also now claim they didn’t know and nothing can be done. When threatened with a complain to OFT the EC say they have immunity and nothing can be done to them. Is this true? I can’t believe they have no responsibility to the Owners. The SM won’t say much in order to keep their job.

I was told that if the EC uses tradespeople provided by the SM then it is the SM’s responsibility to ensure they are licensed, insured, qualifiied etc.  If the EC chooses their own tradespeople, the onus is on them to ensure that all is above board.  If not and something happens, then it falls back on the EC.

Your EC seems to be suffering from the same condition as mine.  The “it’s all OK, we have insurance” syndrome.  But as Jimmy just said and has pointed out previously, they are not covered for absolutely everything, and probably not for making a bad or uninformed decision.  It is easy to get information in this day of the internet so for me there is no excuse.  

The word “duty” only appears in the Act in relation to the Strata Manager.  However, the Owners Corp has an absolute responsibility to maintain and repair common property that supersedes just about anything else that’s going on. For instance, you could be locked in a court battle with a developer over defects but still have to go ahead and effect the necessary repairs if an owner demanded it. And having no money is no excuse either – if repairs have to be done, you have to find it.

There is some excellent advice lower down this thread, from Strata managers and lawyers.  The first thing I would do is to insist that the EC gets a licensed building consultant (like our sponsoprs IBC) to have a look at the work and  see if it is up to scratch.

If it isn’t,  you could be struggling to avoid paying a double whammy on work that’s been done badly. If the builder won’t refund the money you could threaten to report them to Fair Trading where the fines for doing unlicensed building work are hefty (see Chris Kerin’s post below).

You MIGHT  be able to take a Supreme Court  action against the individual EC members who ignored advice about unlicensed builders, forcing them to pay out of their own pockets. 

I hasten to add, I don’t even know if that’s possible – but I do know you can take a strata case to the Supreme Court on the grounds that you are seeking damages and the CTTT doesn’t award them. Even then, this is an expensive and divisive option that could cost more than you gain.

Working back from that, perhaps the first step (after you have consulted a specialist strata lawyer, of course) is to tell the errant members of the EC that if they don’t arrange for the work to be fixed immediately at no cost, that is what you will do.

Regardless of anything else, I would also be writing to every owner – whether they live in the building or not – explaining what has been done with their money, how they face double bills for repairs and how cavalierly your EC has been operating.  Just be careful not to name names  or go over the top with your criticism or you could be the one who’s dragged into court.

The Strata Manager should be sacked if he or she knowingly allowed the use of unlicensed tradespeople.  The EC should be asked to resign for allowing it to happen or misspending your money. And have a look at their claims of ‘immunity’ – it might sharpen their thinking if it turns out the insurance company iwon’t be coming to their rescue any time soon.

As a pragmatic way forward (rather than using confrontational and threatening gestures) I would suggest putting an item on the next general meeting agenda. Something like:

That the Owners Corporation only ever use licensed tradespeople to carry out repairs or work on common property.

Then let the subject be debated in a forum where all owners can participate and democratically decide on what suits your scheme.  eg. Someone might suggest a minimum dollar cut-off point and amend the motion accordingly.  In most cases common sense ought to prevail in an open discussion. If that doesn’t work you may then consider using more forceful tactics.

Cheers

Ray

Thanks Jimmy for your kind words.

I guess I was thinking that if it is put through a democratic process where there is (say) 10 or more at the general meeting then it’s almost a certainty to be decided that only licensed tradespeople are used.  Probably the criteria would be made tighter (say, also make sure they are suitably insured) because often someone wants to add their piece to justify their attendance. Under this scenario it’s pretty much a done deal to get a good outcome for, in a large group, common sense often (not always) prevails.

BUT, and it’s a big ‘but’, if the meeting has only 4 or less participants then the democratic process can be quite irrational where one loud voice can sway the outcome. In this type of scenario the ‘democratic’ result might not be a reasonable one. Remember that about 30% of schemes are 2 lots so, at a rough guess, about 50% of all schemes would have 4 or less at a general meeting. Many have problems even getting a quorum. But still it’s worth a try and if it doesn’t work, go to plan B.

Cheers

Ray

Hi all,

Some really great responses to this issue, if I may summarise:-

Keep in mind that we are NSW based so my comments may not be applicable to your State.

1) We would all hope that no Strata Manager (SM) worth their appointment would ever consider having any unlicensed contractor on site, however if they did they would breach their duty of care, remember Strata firms and their managers are given delegated authority and as such must act in compliance to the SSM Act and within the laws of their state.

2) All residential building work over $1,000 in NSW must be undertaken by a Licensed contractor for the trade work to be done ( Electrician, Plumber, Builder etc) as such if a SM or EC allow unlicensed and or uninsured contractors to do work then they are in my opinion a dysfunctional OC and not managing the OC in a manner that is required, as such in NSW under these circumstances you may have a very good chance in placing an application to the CTTT to have a compulsory Strata Manager appointed to sort out the mess. You don’t need the support of the committee, the OC or any other owner. If you want to explore this option it is best to discuss with a Strata Lawyer. See this web site Law Firm Sponsor.

3) This issue of licensed contractors is a continuing issue for the Strata Sector to deal with. I support OC subscribing to an a service provider that critique Contractors, however don’t be lured into a false sense of security as these checks only disclose that the contractor is licensed and insured, they don’t provide any review of the contractors quality of work and their dependability. So make sure you ask for references and check them out. Call a couple of OC they are doing work for at the time of getting a quote from them!

4) What I am about to say will seem like I am pushing my companies barrow, but a big problem in Strata is that far too often works are contracted out without ample Research or without a detailed Scope of works. You need to know what is the problem and what is the most cost effective but also BCA compliant way to fix the issue. A good scope should result in you getting apple for apple quotations as well as being able to have a clear document to set the completed works against as undertaken. Which brings me to another issue and that is who should sign off the works? I would suggest that it should not be an Owner or a member of the EC even if experianced. Get an independant expert who has Professional Indemnity Insurance to carry out the progress payment inspection and the final inspection.

5) Finaly maintenance work will be required from time to time and short cut cheap jobs never return anything except short term results. Your Strata Building is the Owners greatest asset. I see far too often Owner’s spending more time and money on their motor car then their home.

I hope this summary has been helpful. If we can help we would be happy to provide a quotation.

Chris Mo’ane AIAMA, MASBC-CPC
GMD Integrated Consultancy Group
Building Consultants, Engineers and Strata Consultancy
Principal Sponcers OCN, Corporate Members SCA, FPA