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Topic
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The First Annual General Meeting (FAGM) of a new Owners Corporation (OC) of 250 residential units in Sydney was held recently.
A motion was put forward for the OC to borrow between $1.5 – $3.0 million at an interest rate of between 7.5% and 9.25% per annum from strata finance companies using an unsecured loan to fund the purchase of a lot owned by the developer to be used as the Building Managers office and to provide an unspecified “community facility”. Is this the usual way for a new OC in a new building to procure a Building Manager’s office? Are there alternative arrangements usually followed?
A motion proposed that the Building Manager be given a 10 year contract (5+5), lease of the Building Manager’s office from the OC at no charge, furnishing of the office at OC (owners) expense and provision of Building Management software at the OC (owners) expense. The Building Manager has already between providing services on-site prior to the FAGM. I know such a long lease is undesirable but are the other arrangements described above usual?
The repayments on the loan would add between approx. $180,000 to $360,000 per annum to the OC expenses. This assumes repayment over the maximum term of 15 years. The OC’s other expenses (optimistically) forecast by the Strata Manager are $660,000 per annum.
The first motion provided for negotiation of the purchase of the developer’s lot to be undertaken by the Strata Manager with little oversight by the owners.
Is this proposed arrangement legally valid? Does it require only a simple majority? There were only a handful of owners present and proxies if any are unknown. The papers for the meeting were in English but the meeting was conducted in a foreign language.
Any advice or assistance that anyone can provide would be greatly appreciated.
Regards
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Replies
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This stinks to high heaven. Do you need an on-site manager, for a start? And is the manager connected to the developer (they shouldn’t be)? And as for conducting the meeting in a foreign language? Wow!
Start proceedings at Fair Trading to have a mediation with a view to having all the desisions made at the AGM declared invalid at NCAT. You and your fellow owners are being ripped off and not just once – this is gouging of owners corp funds planned to continue for the next 10 years.
The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
On re-reading this, you need to get on to this immediately. I think there’s a very strong chance and your fellow owners are being conned by the developers and their cronies. This is what I would do (as a matter of urgency).
- Call Fair Trading (13 32 20) and ask for their advice.
- Call a lawyer (there are a couple of good ones at the top of this page).
- Request a mediation at Fair Trading with a view to rescinding the decisions (under section 232) (a) the operation, administration or management of a strata scheme under this Act, and (b) the appointment of a building manager.
- Apply for interim orders to halt the purchase of the strata manager’s office under section 231.
- If you need immediate assistance with this, call our sponsors StrataAnswers.
- Consider applying for the appointment of a compulsory strata manager to sort this whole mess out before the issues become embedded.
By the way, you need to take a long hard look at your defects inspections as that’s the next area where you are likely to be ripped off.
My last piece of advice – get cracking on this now!
The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
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