- This topic has 14 replies, 7 voices, and was last updated 10 years, 10 months ago by .
-
Topic
-
I have reached the point where I am considering the self managed strata plan option. The management costs are increasing, additional charges multiplying and satisfaction and performance decreasing. However, I am concerned at what level of work is required and the level of responsibility that must be accepted by whoever puts up their hand to run the program – specifically the record keeping and financial requirements.
Is there a type of program that handles the paperwork and allows the other side of the operation to be handled by the owners.
Our plan is small, 4 townhouses, with a very small common area and in excellent condition. The other owners are supportive of the idea but to be honest they would be unwilling or incapable of being involved.
Any suggestion on where to start would be appreciated.
Dudley
-
Replies
-
Basically the only critical item that you need to worry about is the strata Insurance and that it gets paid and so you would have to set up a bank account and make sure all the owners paid their share (25%) of the insurance into it.
Everything else is nice to do (you would have to organise an AGM with a motion to approve the insurance quote as well).
This company
provide an online accounting service that you would update and can carry documents online that owners can access (bylaws, minutes, plans, etc) but I don’t know if they provide a service to self managed but our SM use them.
Hi Dudley, our Strata underwent the change you are considering a while ago and I will outline what we did. Firstly I agree with KiwiPaul in that insurance is the single most important thing. The other thing I would stress is ‘keeping the common property in good order’. Mostly the things paid Strata Managers do are pretty mundane and not near as important as keeping up the insurance and looking after the common property.
The following steps are the main ones we did:
1. hired ourselves and insurance broker;
2. organised our bank accounts so that all owners have access to view and operate them. We neither keep nor operate with any cash. All moneys go into our accounts and all amounts are paid out of our accounts (this makes them very transparent). While all owners can view the accounts, to operate them (ie withdraw or transfer) each transaction is notified to all other owners and each transaction has to be authorised my two owners; and
3. started to use email as the preferred way of information and discussion (all owners have each others email address). With this we often ‘scan’ on papers for others to view.
For paperwork we have drawn up a few Xcel spreadsheets (for our ’10 year sinking fund plan’ and ‘year-end’ accounts) and use a word document for our AGM agenda. So it is handy if you have someone with Xcel and word skills but they are not difficult after a few practices. There are some terrific and easy to follow videos etc on line, eg youtube, on how to do Xcel and word.
Self managing was the one best thing our Strata ever did. We save ourselves $3,000 a year and put this money to maintenance.
Hi again Dudley, Two things I forgot to comment on. You raise ‘time’ and ‘responsibility’.
It will be bit more time consuming in drawing up formal document eg accounts, agm agenda/minutes but I found much of this was negated by not having to constantly contact the Strata Manager. As for responsibility for the OC overall there is no difference although the individual owners who do the paperwork/communication may feel a bit more ‘pressure’ but the OC gets things wrong (with the exception of insurance and keeping the common property in good order) there is no real damage done in my opinion. And of course we have found that, in practical terms, it is a lot more rewarding and cost effective.
With the utmost respect to my fellow posters, that’s an extremely simplistic view of what’s necessary to properly self-manage; something that I’ve been doing for our Owners Corporation since 2006.
The following are but a few of the self-manager’s other duties:
- Ensuring that all contractors are properly licensed, and have the correct insurance coverage.
- Obtaining competitive quotations to regularly “test” the marketplace.
- Issuing detailed Work Orders for all contracted activities including Term Orders for emergency/ after hours activities.
- Inspecting completed works.
- Paying all Invoices on time in order to maintain good contractor relationships (good ones are hard to find).
- Liaising with Owners and their Property Managers regarding the proper responsibility for repairs to Units (they think that the O/C’s responsible for simply every item of maintenance or repair).
- Attending promptly to all Common Property maintenance issues.
- Mediating disputes and other “harmony” issues involving Residents.
- Liaising with Owners who seek consent to renovations (and with those who don’t).
- Ensuring Residents’ compliance with the Plan’s By-Laws and Special by-Laws.
- Attending the CTTT on behalf of the O/C (an enlightening experience)
- Preparing Agendas & Minutes for Executive Committee and General Meetings.
- Preparing Financial Statements properly reconciled against the Plan’s Chart of Accounts (which also have to be setup in sufficient detail).
- Ensuring legislative compliance with revised requirements including: Environmental Planning & Assessment Regulation (Fire Safety), AS1288/2006 – Glass Safety Audit, Workplace Health & Safety Act (2011) for the Safety Audit, Pesticides Act (2009) for Common Property Inspections & Treatments, Strata Schemes Management Act (1996) & Regulation (2010) and proposed Revisions, plus quite a few more; and….
- Maintaining the relevant records and processes of the Plan, which in 2012/13 for our 27 Lot Plan was summarised as:
E-Mail correspondence sent / received 212 Invoices Received 159 Invoices Paid on-time 159 Invoices Issued (e.g. Levy Contribution Invoices) 114 Quotations Received 13 Work Orders Issued 19 Hardcopy Correspondence Received 5 Correspondence Sent (e.g. Debt Recovery) 61 Telephone Calls Received 35 Telephone Calls Made 92 Facsimiles Sent / Received 14 So Dudley…. would I do it all again?
Absolutely, – as apart from the money saved which we estimated as $15-$20K/a (or ≈30% of our total self-managed budget) when strata management fees, disbursements (Sch B), and the costs of “smarter” repairs are all considered, no Strata Manager could possibly manage a Plan as well as a committed and properly supported Owner or Executive Committee who after all, only has the one property to look after!
The set-up process would have been a whole lot easier for me if there were tools available such as the one you can now find HERE.
Good luck, and don’t be dissuaded from giving it a go by the information that I’ve provided; use it to your Owners Corporation’s advantage!
Hi Whale, I find your posts of great value and agree that ALL those things you listed need to be done. However, on a daily basis there are many things we all do that involve just as many tasks and obligations. The crucial difference with Strata is that any person who does these things is doing them also on behalf of others and for the common good.
If you think about owners of ‘freehold’ properties, car owners and even pet owners, there are numerous and these days onerous obligations on owners.
In most cases we the exception of a few critical things I think common sense and courtesy will ensure that with a few exceptions self managing can be performed and the rewards significant. At this point I realise making an extensive list, as you have done, is a great idea. My reply is only to say there are many things that we all do as part of our normal living that are, in many cases, just as complex as self managing.
It is a bit like doing a job and then reading the job description.
I agree with Whale if you want a rolls royce strata you need to do what Whale suggests but most of that is nice to do not must do.
One way to drastically reduce the Strata admin to virtually zero (except for insurance) would be to pass an exclusive use bylaw transferring the responsibility for each townhouse to the actual owners creating effectively freehold townhouses) and then each owner would organize their own maintenance and repairs.
I’ve lived in townhouses in the UK and this is how they were run and so it works. This would only work for townhouses or free standing villas (not apartments of any description). To do this you would need everyone’s agreement and a bylaw written by a strata lawyer.
If you are all owner occupiers you might succeed but just 1 investor will not like this as it puts extra work on them.
Cosmo said: It is a bit like doing a job and then reading the job description.
Kiwipaul said: most of that is nice to do not must do
I couldn’t agree more; a great analogy! But after getting the job, everything black & white people like me need to either change the job description, or follow it.
For me there’s no other option, particularly as I’ve found that the additional time and effort involved in doing the job properly and doing it half-ar**d is less than 10%.
Oh and KWP….. I think I’d sooner be in a Rolls Royce when the wheels fall off, but it sounds like you need to move south and live in a (NSW) torrens titled property
. @Whale said:
Oh and KWP….. I think I’d sooner be in a Rolls Royce when the wheels fall off, but it sounds like you need to move south and live in a (NSW) torrens titled property
. I’ve spent about half my life living in a townhouse (terrace house) in the UK which was effectively a freehold (same as Torrens in NSW) and so I know the advantages and disadvantages.
When I bought my current townhouse I expected it to be similiar with the strata just looking after the driveways and a few other items and I was gobsmacked when I found out how needlessly complicate it is.
Townhouses don’t need the strata overhead which they have been lumbered with IMHO and I strongly suspect it is because investors like strata because it removes the need to maintain the property from them and dumps it onto the Strata.
@kiwipaul said:
I’ve spent about half my life living in a townhouse (terrace house) in the UK which was effectively a freehold (same as Torrens in NSW) and so I know the advantages and disadvantages.…
Townhouses don’t need the strata overhead which they have been lumbered with IMHO and I strongly suspect it is because investors like strata because it removes the need to maintain the property from them and dumps it onto the Strata.
I wondered how other countries do it.
And I totally agree with you about terraces/townhouses.
They should be taken out of strata title and put back on Torrens Title with covenants or easements concerning common walls.
A comprehensive review of the Strata Act would have differentiated between types of scheme. Therefore this is not a comprehensive review.
@Kangaroo said:
They should be taken out of strata title and put back on Torrens Title with covenants or easements concerning common walls.The infurating thing is in QLD the Strata act allows for townhouses under a seperate set of rules (as opposed to appartments) which make perfect sense when applied to townhouses (effectively Torrens) but allows for common areas.
Problem is developers don’t use it (I’ve been unable to find any defined this way anywere in Brisbane) and so just creating the regulation is not enough you have to force the developers to use it.
Building format = appartments
Standard format = townhouses
I believe the same split applies to ACT as well
After self-managing my small scheme (8 lots) for many years now I have seen us go from needing special levies regularly to make necessary repairs and maintenance (when we had Strata Managers who we THOUGHT would have budgeted effectively) to a position now where we are actually looking for things to spend our levies on. In the past 15 years our levies have risen by less than 50% in total which is negligible considering the inflation of costs over that period.
The time and effort involved is not the only thing to consider (not that it really takes up that much time or effort). What should also be considered is the increased level of “friendliness” between owners because work is done when needed (or sometimes even before) rather than conflicts arising because someone has their problem addressed but others don’t.
Since we started self-managing I have found that owners are more receptive to what is needed because they are more mindful of the fact that their property is an investment in their future and it needs to be properly protected and maintained. Their interest is therefore much greater and they are also more willing to help (both the Strata and their fellow residents) when needed. We are now a much friendlier and co-operative community.
Dudley – YES, Our Body Corp is entirely suitable for NSW, and as I said I only wish it was available when our Plan moved to self-management.
By all means research other self-management options, and include speaking with your current Strata Managers and/or others about a Record Keeping Agency Agreement, where as the name implies the Strata Manager looks after your Plan’s administration incl. invoicing/collecting the levy contributions, issuing work orders, paying contractors post E/C authorisation, preparing financial statements, insurance, convening meetings, agendas/minutes etc etc and leaves the day-to-day operations and maintenance coordination to the Owners Corporation.
All that requires close liaison with the Strata Manager so “both hands clap”, but it’s a possible half-way step if you and the other Owners aren’t yet sure about moving entirely to self-management.
I wholeheartedly agree with Whale – self management is not a simplistic way of management and you really need a strong exec committee. We have always self-managed (block of 12) with only one unit tenanted at the moment. however it seems that as units change hands from long-term nearly original owners who looked after everything from gardening, garbage, changing light globes etc themselves but are now older and physically unable to, the newer young family owners are much more selfish and don’t seem to understand the obligations of everyone living in a community situation.
Self management is a big responsibility but also gives everyone more control and ‘closer to home’ ability to maintain the property. However, you must be aware of all obligations under the ‘Act’, prepared to enforce by-laws, and have the time and energy to liaise with, check, pay and follow up contractors, prepare budgets, financial reports etc. it is certainly not a ‘one-off’ insurance obligation.
- You must be logged in to reply to this topic.