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Are there spending restrictions on EC of a non-large scheme (other than legal)? The Act states restrictions on large schemes, but no reference to regular schemes.
Our EC overspent line-item budget for “consultants” by 150% last year, without seeking approval of the OC.
Thanks
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No there isn’t, unless the OC specifically sets a limit by resolving at the AGM. For example, you can resolve that the EC can only approve building works up to an amount of $20,000, or can only engage a consultant up to costs of $X. Or you can set a more general limit, so the EC can only approve expenditure up to $Y, otherwise it has to go to the OC.
I am an EC member, and I would be reluctant to approve anything major without going to the owners. When we did a major building project, we had that approved at an AGM. There were variations to the project, and these were approved by the EC. One amount was about $40,000 but I wasn’t concerned about that, because the project couldn’t continue unless we did it.
However, the EC is accountable to the owners. If they went that much over budget, then at the next AGM, they should be asked why, and perhaps someone could put in an agenda item to limit their expenditure. Consultant fees wouldn’t be an enormous amount, how much was it?
Basjan27 – not only can an Owners Corporation impose limits on its Executive Committee’s spending, that’s actually a mandatory motion for the Agenda of every General Meeting, where those in attendance have to resolve one way or the other. As Scotty advised, any restriction can be a monetary limit or apply to a category of expenditure such as “consultants”, or be a mixture of both.
The relevant provision is Schedule 2, Cl 34(g) of the NSW Strata Schemes Management Act (1996) that states that every Meeting Agenda MUST “include a form of motion to decide if any matter or type of matter is to be determined only by the owners corporation in general meeting”.
@basjan27 said:
The EC and current SM have interpreted Cl 34g very broadly to mean they could take whatever action, at whatever cost, without consultation.This probably won’t help you to sort out what’s happened, but just to be clear…Clause 34(g) is not open to interpretation.
What it requires is that at every General Meeting the Owners Corporation (O/C) will vote on a mandatory motion on the Agenda about whether it will, or will not give its Executive Committee (E/C) carte blanche to spend whatever amounts ($) it likes on simply everything.
If that motion was not on the Agenda, then whoever prepared it is in breach of the Act; and whilst that probably won’t help you sort out what’s happened either, I hope it assists you and the new E/C to get things back on track.
As an aside, the more I read the posts on this forum the more astounded I become at how poorly so many Strata Schemes are managed. I just hope that the NSW Government’s Strata Reform process gives birth, amongst other things, to a stronger and better resourced Office of Fair Trading who can “educate” E/C Members and Strata Managers, randomly audit the results, and cane those who offend! Does anyone think that will happen?$15K is a lot of consultancy, that is just silly.
I think what might have happened is that the motion re EC spending was on the agenda, and there were no limits placed on EC spending. However, as Whale says, if it wasn’t on the agenda then that is a serious matter.
I completely agree with Whale’s comments re strata managers. The low standards and general misbehaviour of a number of them raised in this forum confound me. We have had our share, I have despatched three of them to date, but we seem to have now found one who is good. When we terminated the last one they said I was too demanding.
There is very little in the legislation to hold strata managers accountable, there should be. This was something that got scant attention in the recent review. If they were more accountable, strata management would probably cost more, but the standards would likely be higher.
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