Lowering strata levy

As to raising the matter before the AGM in a timely manner, the horse has well and truly bolted. Certainly in the case of large stratas. The usual procedure is for either

(a) the Secretary or Managing Agent well in advance of an AGM to ask owners if they have motions to list on the AGM agenda OR

(b) as the above rarely takes place, an owner could write to the Secretary or Managing Agent well in advance of an AGM to establish the deadline for them to accept motions for consideration at an AGM and supply the motion in time

As you have 10 days before the AGM, time is a bit tight. I suggest you now write to the Managing agent/Exec Committee listing the reasons you have for a decrease in the levy, what levy you are promoting be struck and for what time frame?

Equally important, offer a solution that (a) does not bind the Exec Committee for say more than one year (this will raise the probability that your suggestion will receive support as the Exec Committee, if they agree to you, are only binding themselves at most to one year) and that (b) saves the committee “face”.

Committees will often reply that they need time to study any proposal and that your views were sent late in the day and may ignore it altogether.

Writing as a former Treasurer of a large (70 unit scheme), while I convinced the Exec Committee not to raise levies for 9 years, this took some effort on my part. I can say that the following option would have a greater chance of success ESPECIALLY coming from outside the Exec Committee.

Say you pay $2,000 p.q. being $8,000 p.a. and you think, with evidence, that $1,500 p.q or $6,000 p.a. is reasonable given your reasons. As I don’t know your strata’s levy contributions in aggregate, taking your levy situation as my focus, rather than push for say your $2,000 p.q. be replaced with $1,500 p.q, you should, when communicating with the exec committee, agent and the rest of the owners

(i) Make clear WHY $6,000 p.a is fair and reasonable;

(ii) You acknowledge this issue is being raised by you late in the day (you should have done so ahead of the agenda being issued);

(iii) While you believe your suggestion has merit, you agree not to bind the hands of the Exec Committee unnecessarily;

(iv) Push for $6,000 p.a. to be struck this year, you may couch it in the form of assistance to owners during the corona virus epidemic, making clear the $6,000will be reviewed over the coming year, well before the next AGM; and

(v) Don’t change to $1,500 p.q. Push to keep to a quarterly levy of $2,000 for each of the first three quarters with $0 being the levy for the last quarter. That will aid the Exec C;ttee in the event that they will return to the $8,000

By the time the last quarter comes around either your views would have been vindicated, in which case the 2022/23 proposed levies will reflect them OR your views will be refuted and you’ll presumably return to $2,000 p.q for each of the next 4 quarters, with the levy holiday in the last quarter of 2021/22 providing a saving to owners, albeit a one off saving.

• This reply was modified 2 years, 9 months ago by .

It appears that budgets do not have to be provided to owners prior to an AGM (from DoFT):

Levies are calculated at the annual general meeting (AGM) by the owners corporation. To set the levies, a budget must be given which shows the current financial situation and any estimates of payments to be made and received. The budget must be:

• distributed with the notice of the AGM, or
• tabled at the meeting before voting on the levy motion.

Many SMs seem to follow the second alternative which does not give owners any time to effectively review and  assess implications.

Jimmy wrote:

Fruitzebra doesn’t need to raise an item on the agenda – it’s already there, in the discussion about and approval (or otherwise) of the budget.

What they really need to do is examine the budget in detail before the meeting and then propose amendments at the meeting, as they are perfectly entitled to do.

True, the item is on the agenda and a discussion can be had if someone speaks up at the AGM. However, in my experience, owners who may agree with the fundamental point of a lower levy that fruitzebra makes, are unlikely to support it at an AGM without having enough time to consider it before the AGM. Fence sitters will most likely be swayed by the Exec C’tee. Also promoting a lower levy may be met with resistance by the exec c’tee to the extent that not only, as Jimmy writes

My experience of committees is that they are more likely to batten down the hatches and justify their desisions than undertake a review of their plans at this late stage

but they could scare owners into falsely concluding that future capital works will be in jeopardy if the funds are not in the kitty, even if they will not be used for a while.

TrulEConcerned wrote:

Say you pay $2,000 p.q. being $8,000 p.a. and you think, with evidence, that $1,500 p.q or $6,000 p.a. is reasonable given your reasons. As I don’t know your strata’s levy contributions in aggregate, taking your levy situation as my focus, rather than push for say your $2,000 p.q. be replaced with $1,500 p.q, you should, when communicating with the exec committee, agent and the rest of the owners

I have a major problem with the notion that you can arbitrarily cut a budget by 25 percent

We all have to accept that our buildings need a certain amount to run. If you want to cut the levies, you have to cut the spending.  So where do you find the cuts?

You can’t cut spending without cutting services or spending less on the services you have (except in discretionary areas like sinking fund contributions – and that is poor short-term thinking).

To find out where you might cut spending, you have to know what is being spent.  Then you have to decide whether you want to cut the services or find cheaper providers (good luck with that!)

I honestly think the best that fruitzebra can do is stand up at the AGM and ask if there are any areas where savings can be made and, if the notice of the meeting hasn’t been issued yet, propose that before next year the strata committee goes through every item of expenditure and finds potential savings for the future.

FYI, you can ask for an agenda item to that effect to be included up until the official notice of the meeting is issued.  That’s the law.  Get an agenda item in now and ask for it to be included.

You probably won’t be able to effect change this year unless there are significant areas of optional expenditure that are easily identifiable and which could be removed without harming the building or its residents.

If you spot them and bring them to the other owners’ attention then you have a chance of having them knocked off the budget.

But at this stage the strata manager is likely to resist any changes as they will then have to go away and recalculate everyone’s levies.

One other thing, the coronavirus has had an effect on strata levies. Increasing numbers of owners – especially investors – have been having trouble paying them.

But the strata scheme’s bills still need to be paid so this is probably the worst possible time to be asking for a levies reduction as your scheme may have lost the financial buffer it needs to ensure it can keep paying its bills at a time when its income has been reduced.

fruitzebra wrote:

Thanks a lot for all your comments! I want to ask another question RE the AGM itself. Usually it is conducted late in the year, but this year, under such circumstances (lockdown, etc), it was scheduled way ahead of time, in less than 10 days’ time.

AGMs can be conducted at any time provided there is one every financial year.  I wouldn’t read too much into the timing.

Today the owners received an email from the strata manager asking us to update our contact details according to The Public Health (COVID-19 Self-Isolation) Order (No 3) 2021, commenced on 28/09:

https://legislation.nsw.gov.au/information/covid19-legislation/self-isolation

That order applies to strata schemes that have been identified as high risk or at risk from covid infection.  Your strata manager was entitled to ask for contact details but under  the Strata Act Section 178 – which applies at any time.

The confusion may arise from a letter sent out by Chief Medical Officer Kerry Chant a couple of weeks ago, telling strata managers to update their records and close down strata gyms.  This was well-intentioned but a bit off the beam.  The idea was so that the authorities would know who was in any building that had a covid break-out … but then didn’t really address the buildings that don’t have strata managers.

The simple fact is that you are supposed to keep your strata roll up to date anyway, and if asked to do so by the committee, the strata manager is entitled to ask for the details.  There’s nothing sinister in any of this (apart from your strata manager citing  an irrelevant Public Health Order instead of the strata Act).

Currently there are only 2 members in the committee. We are a small scheme, fewer than 15 owners. Most owners are investors and usually don’t attend AGM. So basically they decide everything. I tried to join the committee last year, but the committee and the strata manager used some excuse to exclude out of it, since I was new to the strata and strata rules. I want to talk to other owners, but it was nearly impossible to obtain other owners’ contact details.

You are entitled to see all documents held by the strata manager on behalf of the scheme, this includes the names, addresses and email addresses of the other owners.  They will try to cite privacy which is utter BS.  Privacy laws don’t apply to small strata schemes (even fairly big ones).

I would also be very interested in who nominated the incumbent members to the committee.  If they are co-owners they can’t self-nominate.

According to the above Public Health (COVID-19 Self-Isolation) Order (No 3) 2021, it seems that every owner should have each other’s contact details during the pandemic. Am I right?

No. You’re wrong.  This has nothing to do with that PHO. However owners have the right to ask for and receive each other’s contact details if they want them at nay time, covid or not.

But we haven’t been told to update contact details during the worst time of the pandemic. Now we were asked to do so, and in such a short notice to have our AGM.

I live by the maxim that you should never ascribe to malice anything that can just as easily be explained by incompetence.

The government has dragged its feet in dealing with strata as a special (and highly vulnerable) case.  They are just playing catch-up. I would guess this may be no more than your strata manager trying to get the small schemes out of the way before the big ones start rolling in and everyone is able to attend them.

So now I want to request the AGM to be scheduled at a later date, since the notice is very short as I mentioned above. I want to ask how to deal with this urgent issue. I will email to request rescheduling, but my guess is they will ignore my request and just go ahead.

Ask for the AGM to be delayed until such times as owners can attend – which will be reasonably soon – or, failing that, repeat your request for the email addresses of the other owners as a matter of urgency.  If they cite privacy, tell them this is nonsense.  The Privacy Act doesn’t apply to corproations with a turnover of less the $3 million a year. You are entitles to the name, addresses and email addrss of anyone and everyone on the strata roll.

Since this is planned as a virtual AGM, there is no cost attached to postponing it as there is no requirement to hire a room.

• This reply was modified 2 years, 9 months ago by .

Write to them and tell them that you have had advice that you are legally entitled to all the contact details on the strata roll, including email addresses and other relevant records that they may have.  There is no privacy issue here.

Becasue you have asked for and paid for them some time ago, failure to provide them again could lead to action at NCAT to have the strata manager and/or committee removed and replaced by a statutory manager under Section 237 of the Strata Schemes Management Act (2015).

Failure to provide the information immediately will also result in a complaint to Fair Trading about the strata manager, seeking disciplinary action under Section 191(c) of the Property and Stock Agents Act in that they have “in the course of carrying on business acted unlawfully, improperly, unfairly or incompetently.”

You can do this online using the Fair Trading online complaint form: https://www.fairtrading.nsw.gov.au/help-centre/online-tools/make-a-complaint.

Be polite but firm.  Don’t engage in wild accusations or conspiracy theories. They have duties and responsibilites and they have simply failed to comply.  The next move is up to them.

Jimmy’s suggestion of filing a

complaint to Fair Trading about the strata manager, seeking disciplinary action under Section 191(c) of the Property and Stock Agents Act in that they have “in the course of carrying on business acted unlawfully, improperly, unfairly or incompetently.”

is vert good.

I did just this a month ago, but so far heard nothing back from FT.

This type of complaint targets the agent himself (not the strata committee or OC) and should, when confronted by FT, focus the agent’s attention on what you consider to be his bad behaviour. As Jimmy writes, the compliant mechanism is online. It is also simple and costs nothing. What I found interesting is that at the end of the form the complainant is asked “what do you want to happen to the agent”. Here you can reply “fine him; strip him of his licence etc”