|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stories of mismanagement in the SA Body
Corporate Industry
We are currently receiving many calls from managed groups who are dissatisfied with their current manager. The following are some of the cases that have come to our attention. We suggest you use the following as cautionary tales when considering appointing a new manager or renewing a management contract. See our Management Checklist for help protecting your assets and peace of mind.
- Story: Manager's advice puts lives at risk
- At an AGM in 2006 some owners in a multi storey group of units considered allowing unit owners on each floor to construct lockers on the common property about the lifts. Their manager advised the chair and owners 'that only a simple majority was required' .
- The meeting moved that 'the common area on each floor be under the control and responsibility of the owners of the units of that floor. Any work performed on each floor must have unanimous approval of all units on that floor. Any construction made on the common area will be subject to subsequent unanimous agreement by units of the floor. If one person objects on the respective floor the construction must be removed'. This motion is recorded as carried with 15 votes for and 7 against.
- This motion clearly breaches Section 26 of the Strata Titles Act in permitting common property to be alienated for the benefit of individual unit owners without the required unanimous resolution or regard to local fire and planning regulations.
- Section 26(4) The strata corporation may, if authorized to do so by unanimous resolution of the corporation, grant to a unit holder an exclusive right to occupy part of the common property for a specified period.
- Some owners have already undertaken works This is a breach of Article 5 of the Corporation's Articles as follows…
- 5) The registered proprietor of a unit and every occupier thereof
shall not:a) Use the common property or permit the same to be used in
such a manner as unreasonable to interfere with the use and enjoyment
thereof of other members of the corporation or occupiers of units or
their families or visitors;
- The Fallout: We are acting for an elderly owner who has grave concerns for issues of fire safety and the use of common property without addressing leases, public liability, maintenance and changes of ownership. The manager has refused to reply to our request to rectify the situation. Our client is now being blamed for tensions at the group. We believe the manager has failed in their duty to the Corporation and our client. At this time the matter is going to Court.
- You have to wonder what unit owners get when they pay and pay every year for a strata manager !
- Story: Owners denied their democratic rights
- The developer of a community titled group of apartments sells their
interest in the property to a related company to circumvent the law.
The law on developers of community titles is:
- Section 87 (3) If the developer owns one or more, but not all, of the community lots in a community parcel he or she is entitled to the aggregate of the votes determined in accordance with subsection (1) in respect of those lots or to a number of votes equivalent to the aggregate of the votes determined in accordance with that subsection that may be exercised by all the other members of the corporation, whichever is the lesser.
The effect of this provision is that the voting power of the developer can never be greater than the combined voting power of the other members of the corporation.
- In this case the developer's related company had a meeting without
inviting the owners who had paid deposits on the apartments. At this
meeting it was agreed to bind the group and its future owners to:
- 15 years with a body corporate manager
- 25 years with a firm supplying cleaning and caretaker related services
- an in house letting agent
We understand that none of these contracts went to tender. The new apartment owners are now faced with substantial ongoing costs with contractors not of their choosing. We hope the owners can get some relief by taking the matter to Court.
- Story: Records of wrong group handed over
- In the transfer of records from another manager to UnitCare we were surprised to discover archives from two other groups. The outgoing manager had charged exit fees of $99 that included the cost of checking the records for transfer. That manager refused to refund the charges despite admitting the error stating that they had 'done the work' and so should be paid for it!
- Story: Refusal to provide owner list to Presiding Officer ( Privacy Act )
- A Presiding Officer in a group rang us seeking advice regarding his body corporate manager's refusal to supply him with a list of owners at his group and their contact details. The manager stated that they could not do so as the Privacy Act prohibited it.
- We have received legal advice that this is hogwash. The Privacy Act deals with the release of such information to a 3rd party. For example the Act makes it an offence for a manager to supply a Real Estate Salesperson with a list of owners at a group. The owners are the group and are entitled to this information.
- We suspect that in this case the manager's refusal was to thwart owners talking to one another and perhaps sacking the manager. Link to more details.
- Story: Manager charges for services not delivered
- Manager charged the strata corporation for preparing their income tax return however upon enquiry the new manager finds that the Tax Office has no record of the strata. The new manager applied for and received a Tax File Number & Australian Business Number after the change of management.
- Story: Refusal to hand over ledgers - funds short:
- Manager refuses to supply the strata corporation's financial ledgers when the Corporation transfers to a new manager. They deny that these are the property of the strata corporation.
- Following a number of challenges the outgoing manager handed over the ledgers.
- Since receiving the ledgers the manager has been asked to explain why the balance handed over is short of the final balance on the ledgers.
- Story: Fees drawn 1 year in advance – funds taken from sink fund:
- Manager drew their fees 1 year in advance and before the AGM approved the management fees.
- They then used the strata corporation's sinking fund to prop up the recurrent funds to enable daily bills to be paid.
- The records show that the manager took the fee each year on the 1st business day of the new financial year.
- The manager does not report the totals for the Admin & Sinking Funds separately so the transfers were not revealed to owners.
- Story 7: Manager keeps bank interest:
- Manager charges a fee that equals the interest the group earns during the year. The minutes refer to this however owners are clear that they never agreed to the manager keeping their interest.
- The outgoing manager refunded the fee.
- We often come across minutes that bear little relation to the meeting when it come to the managers fees and rights.
- Story 8: Group left uninsured by manager?
- Recently a two year old Community Titled group sacked their manager and appointed UnitCare. On inspection of the group’s insurance records it appears that the outgoing manager left the Corporation uninsured for some six weeks last year. We are also concerned at what appears to be no written authority to drop their cover by over $100,000. We have put these matters to the outgoing manager and asked for an explanation and for cover for the six weeks just in case a public liability claim comes to light. At the time of writing we have had no reply. Insurance is one of the most important services body corporate managers undertake, we are surprised at what appears to be a failure of the duty of care in this case.