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Topic
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Good Afternoon All,
I recently had work carried out on the roof of our strata property. The work was carried out, after a meeting of all owners approved the work, and the company invoiced me. I sent the invoice to the strata manager for payment.
The invoice was in two parts, part 1 was for materials and was paid before work commenced. and part 2 was the balance to be paid after the work was completed.
Both invoices were addressed to me. The first invoice was paid without comment re the fact it was addressed to me and not the strata plan. The second invoice was paid (albeit after considerable delay and correspondence and ‘phone calls), but I was advised that the correct procedure is that the invoice must be addressed to the strata plan as it is the proper accounting practice and a requirement under the taxation rules.
I have passed invoices to the strata manager for payment many times and have never been advised of this requirement previously. Is this correct or simply a means of “pay-back” for by-passing the strata managers preferred trades people – who are very expensive. We are currently in a less than comfortable relationship with our strata manager.
I am a member of the EC and our plan is 4 townhouses, requiring very limited strata manager involvement.
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@Dudley said:
Both invoices were addressed to me.Not sure exactly what you mean by “addressed”.
It’s always best to get the invoices made out to the strata plan, even if the tradesman gives/posts them to you personally to organise payment.
That way you’ll never be personally liable.
Legally, it’s probably only required if your SP is registered for GST, which 4 lots probably isn’t.
Could be just a tightening of their control procedures.
But amazing how much longer it can take SMs to pay invoices when you organise it yourself and don’t use their approved tradesmen.
Dudley – your Strata Manager is right, as whilst I’m not sure about taxation (ATO) implications, in terms of an audit-trail all Invoices should be made out the to “The Owners SP*****”.
As an aside, enforcement of that requirement has proven useful for our self-managed Plan where local Property Managers would routinely arrange repairs for which the Owners Corporation (O/C) would otherwise be responsible, and then send their Contractor’s invoice as issued to them to me for payment.
Our refusal to routinely pay third-party invoices from Contractors with whom our O/C has no involvement or business relationship quickly put an end to that practice, and re-established our O/C’s ability to properly maintain its Common Property.
It is the Owners Corporation who is entering into the contract for the work, not you. Owners Corporations have a legal personality so they can enter into contracts, that is why they have a seal. Of course you don’t always have to enter into a written agreement, but the principle applies across the board.
So for any work it should be made clear that it is being done for the OC, and that the invoice is issued in the name of the OC as the contracting party. Aside from anything else, that won’t leave you with the debt in the event that the OC refuses to pay (unlikely but going by the stories on here I am sure it happens)
A lot of tradespeople are not clear on the differences between common property and the lot (neither are many owners for that matter!) If you have a managing agent it is best to get them involved in engaging the contractor for any work carried out. The agent should send a numbered order form to the contractor which clearly sets out the work agreed to and the price, and tells the contractor where to submit the account. Make sure though that your managing agent checks with you that the work has been performed properly before he/she pays the account. Unfortunately if owners or an executive committee take it on themselves to order work on common property they can become personally liable in the event of a dispute over payment or the quality of work performed.
Hi All,
In my experience there have been incidences in my plan where perhaps on a weekend or late at night where the strata tradies were not available or even where a home owner has believed a repair to be the owners responsibility, used their own tradies and the issue ends ends up being owners corps responsibility the invoice has been paid by the resident, therefore addressed to them and then forwarded to the SM for reimbursement. No problem.
I feel there is some element as always for abuse.
Cheers CBF
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