Strata Managers Authorised work without approval of OC

clement – the bottom line is that the Owners Corporation is responsible for paying the builder, and should do so without delay as they’re the proverbial meat in the sandwich.

Once that’s been done, the Executive Committee needs to ascertain what the problem was, and whether or not the Owners Corporation was actually responsible for the repairs; you’ll find some useful information regarding that as produced by NSW Land & Property Information HERE.

I raise the above issue, as Property Managers (Rental Agents) are adept at ingratiating themselves to their landlord/clients by allocating every conceivable maintenance and repair issue within strata properties to the Owners Corporation, where some Strata Managers aren’t sufficiently skilled to determine who is actually responsible and so take the least line of resistance.  

Then the Executive Committee (E/C) needs to closely examine the Agency Agreement between the Owners Corporation and the Strata Manager, where one of its Schedules will describe the various functions that the Strata Manager is to undertake, and for each of those whether they have full authority or authority with limitations, such as to approve works up to a maximum value and/or to obtain the approval of the E/C before arranging those.

If the Strata Manager is found to have exceeded their authority, then they’re liable to reimburse the Owners Corporation’s payment to the builder, and if they’ve acted within their authority but the E/C is collectively of the opinion that it needs to be tightened-up, then the E/C may on behalf of the Owners Corporation (O/C) formally amend or rescind its delegation to the Strata Manager for specific functions, remembering of course that decisions on rescinded delegations revert to the E/C or the O/C (depending upon the matter at hand) and need to be formally documented in the Agency Agreement at its next nominated review date after vote to do so on a Motion t the Owners at a General Meeting (e.g. an A.G.M.)

clement – YES it does, and the fact that the Strata Manager referred the matter to the Executive Committee (E/C) makes me wonder if that’s actually a requirement under their Agency Agreement with the Owners Corporation (O/C); again, you should check that document and if necessary review the Strata Manager’s authority.

After taking over the management of our Plan after many years of it utilising the services of a Strata Manager I initially found it difficult to find tradespeople who would undertake maintenance and repairs, primarily it eventuated because they hadn’t previously been paid in a timely manner, and had additionally been embroiled in discussions between the O/C and the Strata Manager about what each understood to be the scope-of-work.

The latter is similar to your situation, and that’s why your E/C should in my opinion at least advise the builder about the reasons for its delayed authorisation of their invoice, then if possible quickly ascertain who it was that specified the ineffective scope-of-work, and should ideally then have the Strata Manager, who presumably issued the original Work Order, negotiate and document a solution with the builder that may involve further works, and a reimbursement to the O/C by the Strata Manager for those completed thus far.

The lesson here is for the E/C to in future ensure that quotations from tradespeople specify and price their proposed scope of work, and after the approval of the E/C where required, to ensure that Work Orders then issued by the Strata manager include that same specification or at least include the preamble “in accordance with your quoted scope of work ….”.

Good luck with sorting this out, and remember that bad news among the trades community travels fast and that future quotations for works at your Plan my include a hidden loading to account for possible “contingencies”.

clement – I know that I’ve twice suggested paying the builder but I wouldn’t suggest doing so and then taking the matter to the Department of Fair Trading (DOFT), as on the basis of my past experience they’re under resourced to do anything other than conduct a desk-top investigation of the matter in dispute, whereupon it becomes an unprovable they said / we said situation where as the work’s been completed, apparently in accordance with the Strata Manager’s scope-of-work (?), the O/C would likely loose.

At the end of the day it was the Strata Manager who engaged the builder and apparently on some basis defined their scope-of-work, and it’s their responsibility to pay their invoice from your O/C’s funds with its prior authorisation which was as you’ve advised, in the absence of further information, formally refused before any works were even commenced.

Furthermore, was the $4.5K investigation either approved by the E/C or a function under which the Strata Manager had full authority under the terms of their Agency Agreement with the O/C?

It’s almost time to try the shock-and-awe approach with your Strata Manager, where despite the backside covering terms of Strata Management Agency Agreements whereby to the best of my recollection the Strata Manager is indemnified (my term) from fault except in the case of fraud, I’d still be inclined to inform them that in the absence of a brokered solution that’s acceptable to the E/C, then the O/C will:

1) Lodge an Application for Mediation of the matter by a Community Justice Centre

2) Ascertain whether they’re members of Strata Community Australia (SCA) as the peak industry body, and that if they are members (most reputable Agents are) then it will lodge a Complaint with the SCA.

3) Lodge a Complaint against them with the DOFT under the provisions of the NSW Property, Stock, and Business Agents’ Act (2002) by completing THIS.

Again, as a matter of interest what was the nature of the problem and its consequences in the rental unit?

PS – I just thought of a last resort approach (#4), where Strata Management Agency Agreements typically include termination provisions, that from the O/C’s perspective my be formally initiated where the Strata Manager is considered to be in breach of their obligations, and fails to remedy that within with 30 days. Your O/C would however need to carefully read its copy of the Agreement and have a new Strata Manager on standby just in case.

Whale, 1415hrs 11/06

clement – when advertisements for Strata Management Positions typically include words like “$xxxxx Salary plus Schedule B’s ” it makes me wonder!!

Regarding the Strata Manager’s attendance at a meeting, I’d adopt the option of the Community Justice Centre and see how they react.

Finally, if you’ve been dealing with a Strata Manager who’s not also the Principal of the Agency, then I’d suggest that your E/C approaches the latter regarding the issues.

Good luck, and perhaps post again when you have a result.