New Charges in Cash Managemnent Account

Dudley – in general terms, some Strata Managers routinely add charges that may be relatively small in the context of a Plan’s overall expenses and therefore often slip-through unchallenged, but when taken in the context of the numbers of Plans under their management, those charges can be a quite lucrative income stream.

So good on you for getting into the detail!

Specifically, the charge that you refer to for “secure records destruction” is probably, as the title suggests, a fee for the proper disposal of the Owners Corporation’s records that exceeds the period that the Regulation requires that they be kept/archived (typically 5 years). Whilst I never cease to be amazed by the amount of hardcopy records that Strata Manager’s still generate and must therefore keep in this digital age, depending upon the amount of “paper” involved the Fee’s probably reasonable.

The charge for a “window safety compliance check” is interesting, as the Section of the Act that mandates that “compliance” doesn’t require child-proof window locks to be in place until March 2018. So whilst some checking of compliance after that date may be justifiable, a Fee 3 years out is probably just for income generation purposes.

Strata Managers can generate significant “supplementary income” from additional fees of the types that you’ve mentioned, but in fairness all such items and their applicable fees are required to be included in the Schedules (I think “D”) to the Strata Management Agency Agreement that the Strata Manager has with the Owners Corporation, so obtain a copy of that from them or from your Secretary and have a close look; you may be surprised!

Dudley – the provisions relating to Owners Corporations and their obligations regarding window safety devices can be found in the NSW Strata Schemes Management Act (1996) at Sect 64A and the phasing-in provisions are shown at Schedule 4 Pt 8.

As for the form of the standard Strata Management Agency Agreement, that document “template” in its latest form is provided to Strata Managers by their peak industry group, Strata Community Australia (NSW), and whilst it’s not available to non-members it can be quite easily found via an internet search, and its essential terms can be found HERE and YES, its entirely appropriate for you / your Owners Corporation to ask your Strata Manager for a copy of the latest version.

Dudley – as usual I’m picking up on unanswered posts before they drop off the list of “recents”.

It’s interesting that your Strata Manager hasn’t as yet responded to your correspondence. Perhaps that’s because there’s so much new strata development going on (or up actually) that some are of the opinion that they can afford to be non-responsive, even if that results in them loosing a client here and there.

If that’s your Strata Manager’s attitude, real or implied, then maybe you should assist them to loose your Plan’s business by placing a Motion in those terms on the Agenda for your next General Meeting.

You only need a simple majority in favour to achieve that end, so with one no-show, one against, and two in favour, your Motion would pass. As as safety net, check the units of entitlement (UOE) for each of the 4 lots, as if they’re unequal and that apportionment favours your lot and/or that of your like-minded neighbour, then a poll-vote (calculated on UOE instead of a show of hands) may work in your favour.

You need to do some homework in advance though, and as I mentioned before that involves obtaining a copy of your Owners Corporation’s Agency Agreement with the current Strata Manager and (at least) checking its termination provisions and whether or not the Strata Manager has breached any term/s; have you done that yet?

You also need to find a possible replacement Strata Manager; have you done any work on that, and about one who offers your preferred Record-Keeping Agreement and who may be prepared to assist you with the process of removing the incumbent?

I know that all this involves more work for you, but that’s one of the things that less than efficient Strata Manager’s rely upon, that being that nobody will be bothered to put in the effort!

Just a few things for you and your neighbour to consider:

About half the strata schemes in NSW are self-managed (although how efficiently, is another matter).

Strata Res (our sponsors) offer a half-and-half service which suits schemes that want to do most of the stuff themselves but also want advice and support on the tricky stuff.

Large  strata firms tend to shy away from small schemes because their involvement isn’t worth the money they get.  If you take an average of $250 per lot per year, and then consider that one problem resident or one major maintenance issue can take up days or even weeks of their time, regardless of the size of the building, you are not going to be as high on their priorities as a building of 100 units or more.

If you do go for a full-service strata manager, go for a contract that charges less up-front but then adds on costs on a user-pays basis.  That way you only pay for the service you get and there is an incentive for them to do more for you, if you need it.

More expensive all-in services have the opposite effect.  The strata firm has made its money so every time they make a phone call or write a letter for you, it’s a cost to them. These contracts are better suited to large schemes where you know there is going to be work for the SM and they want to hang on to the income.

Strata managers are human but they are also businesses.  Don’t expect to get something for nothing.