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Media Releases -
- Abuse of Privacy Act by Strata Managers in SA November 2006
Enquiries into body corporates and their management - UnitCare
Services Submission: November 2003
Media Release (unitcare): 14/2/2004
RecommendationsThe Hon John Rau released his report on problems in the body corporate industry on 13/2/2004
The report is to the Minister of Consumer Affairs.
The report is available as a PDF - see below. 103kb.
The recommendations appear below.
- A code of conduct and range of specific legislative requirements, including appropriate criminal sanctions, should be imposed upon professional Strata Managers modelled on those soon to apply to Real Estate Agents.
- Conflicts of interest can and do arise between Strata Managers, Strata Unit holders, third party suppliers and developers. These conflicts need to be the subject of legislation requiring full disclosure of any such conflicts and providing penalties for breaches.
- Strata Managers should not be permitted to chair Corporation meetings. The actual or potential conflict of interest associated with this behaviour makes it highly undesirable. This may mean that an independent chair person is required from time to time in some Corporations.
- Certain core obligations imposed on Strata Managers are so important, as to require strict observance with appropriate formalities. This is the case irrespective of whether the Corporation is professionally managed or not. These functions include trust account auditing, obtaining and maintenance of appropriate insurance and the maintenance of an appropriate sinking fund.
- In order to insure that adequate insurance is held
and maintained, Strata Managers should be obliged to:
- a) Obtain a professional valuation as to the replacement cost of buildings at least every five (5) years.
- b) Arrange common insurance on behalf of Unit holders for each Unit (not including personal effects, furniture or chattels).
- Irrevocable proxies should be outlawed.
- A maximum term for Management agreements, or at very least a clear power to dispense with the services of a Strata Manager at any time, should be mandated by law.
- Aside from certain specific obligations imposed on all Strata Managers at all levels of sophistication, a practical and legal distinction should be drawn between the simple Strata Corporation and a professionally managed Strata Corporation.
- Professional Managers should be required to hold professional indemnity insurance as against a major default on their part, for example failure to provide adequate insurance cover for the Corporation.
- Mandatory "sinking fund" arrangements should be introduced, with preference being for an insurance based product rather than by direct contribution to a fund (if possible).
- Funding for the Regulatory Scheme may be in part secured from interest on funds held by Managers (currently estimated at $13 million).
- Strata Managers should only be able to exercise powers specifically delegated to them by the Corporation. Such delegation should be in writing to eliminate ambiguity.
- A quick, easy, inexpensive and user-friendly dispute resolution mechanism needs to be developed. (The Victorian V. C.A.T. model seems to work well in other fields but it may not suit local South Australian conditions). In South Australia, the Residential Tenancies Tribunal could perhaps be modified to serve this function.
- Replace the requirement for a unanimous resolution to approve the termination of a freehold Strata Scheme to a requirement that no more than 25% of owners vote against the termination (as currently applies for 'special resolutions').
- Include provisions for dealing on fair terms with the interests of any owners not supporting termination.
- The current segmented approach to legislative schemes
governing Real Estate Agents, Strata Managers and other
associated professional callings should be abandoned in
favour of an holistic approach focusing on the common
themes of accountability, transparency, avoidance of
conflicts of interest and regulation through a licensing
regime capable of imposing standards and regulating
conduct in the industry.
- A property vendor's Section 7 statement should be required to include a copy of the Corporation's most recent accounts. A concise explanation of the difference between Strata Title and Torrens Title should also be provided. Unpaid Strata fees should also be clearly and explicitly disclosed.
- UnitCare Services Submission: November 2003
- (pdf version - 250KB) please Click
Here
Click for a free download of Acrobat Reader - We have provided the AG with a comprehensive series of recommendation and evidence of improper behaviour by some BCMs. Submission is available as a PDF - see below.
- Our recommendations focus on:
- Mangers being obliged to:
- supply quarterly financial reports to all owners
- monthly reports to Treasurers
- invoices to committees/officers for approval
- supplying all owners a copy of the BC's insurance certificate following renewal
- The establishment of an Education and Arbitration system.
- The establishment of an indemnity fund to protect unit owners funds.
- Further we recommended that:
- BCMs need to be scrutinised by Office of Business & Consumer Affairs or equivalent.
- BCMs (individuals & business) need to be licenced in some form to practice
- BCMs need to be required to be transparent with their clients about the handling of their funds
- BCMs need to be required to seek far more participation by their clients in the raising and spending of their funds
- BCMs be required to have no interest in a maintenance firm or vice versa.
- BCMs be required to have no arrangements with developers or the like that may give rise to a conflict of interest.
- Real Estate Agents and Conveyancers be required to hand out approved advice to all unit / lot purchasers on their rights and responsibilities – purchaser must sign contract stating that they have received the advice.
- If you would like a printable copy of our submission (pdf version - 245KB) please Click Here Please note that the appendix is not available.
- Attorney
General's Discussion Paper:
- If you would like a printable copy of the Attorney Generals discussion
document (pdf version - 244KB) please Click
Here
- If you would like a printable copy of the Attorney Generals discussion
document (pdf version - 244KB) please Click
Here
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- Hon John Rau Enquiry
- Call his office on 08 8260 7733 or fax comments to 08 8260 7111
- Note: John Rau challenged many Real Estate practices in his recent report to the Parliament
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Click for a free download of Acrobat Reader
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