Two easy ways to fix strata – and one toughie

I have to admit I am currently obsessed with three ideas that I think could fix many of the issues around strata managers – two of which would only require an emailed fact sheet and a tiny tweak of strata laws to become a reality.

Firstly, the strata manager who sets up a new strata scheme for a developer should never be the same strata manager who then gets hired to manage the scheme for the owners.

Thanks to Macquarie University lecturer in strata law Dr Cathy Sherry for that statement of the bleeding obvious. You can’t deal with conflicts of interest if they are hard-wired into the system.

If a developer has insisted that a strata manager include some dubious conditions or contracts for approval at the schemes’ first AGM, what are the chances that the strata manager will refuse or, even better, stand up at the meeting and say to the owners, “OK, I think you could do better than what’s been offered here?”

They can pretty much guarantee that they will never get another set-up gig from that developer or any other, for that matter.

While we’re on the subject of First AGMs (FAGMs) for new buildings, they should be in two stages. You elect your committee and appoint your strata manager. The SM’s initial contract can only be for a  maximum of one year, by law,  so you can get rid of them if they don’t shape up.

Then the committee goes off and looks at the contracts that were presented at the meeting, and which the owners were expected to rubber stamp, to see what they really mean and if they can get better deals elsewhere.

Alternatives to contracts that could potentially tie owners corps up for years are essential, but the choices are not usually available at FAGMs so you have to find a way of changing the system to get rid of feather-bedding, mateship deals, kickbacks and exploitative embedded networks.

To get around this, new owners should just elect the committee, which reports back two months later and everyone knows exactly what they are voting for.  This concept was first suggested to me by John Minns himself, so it’s far from a crackpot scheme.

And, in fact,  strata owners can do this anyway, if they please, but they’re not getting any encouragement to do so from the strata industry or government, for that matter.

Finally, and this is the tough one, we have to find a way so that strata managers can be properly remunerated for the work they do so that they don’t have to go around hoovering up insurance commissions and inflating ridiculous Schedule B fees just to make a living.

So there you go – strata’s problems solved in three easy moves.  Next week, the Middle East.

(An edited version of this post went out in last week’s Flat Chat Newsletter – you can subscribe below).