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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.
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