Management changes missing from strata legislation

| February 28, 2012

Colin Grace identifies a number of crucial management changes he believes should have been included in the 1995-96 strata legislative review, and they go to the heart of daily strata management.

There are a number of management changes that seem to be missed or omitted from time to time since the legislative review in 1995-6 that lead to the 1997 Amendment legislation. Whilst some may appear minor they go to the heart of management on a day to day basis that I see as the Director of the largest strata/community law firm in Australia in this area:

  • Debt Collection.  Owners Corporations need to raise funds to manage themselves.  The Management Act provides a regime for collecting those levies. Whilst the Act has gone some way to allowing recovery of those amounts recalcitrant lot owner (and their lawyers) use any means to delay and prevent those payments being made. They complain about meeting procedures, powers to commence action, cross-claims for defects in common property and a myriad of other defences.  What needs to occur is amendments that make it that once an OC passes the budget and raises the levies at the general meeting, NO defence can be lodged or cross-claim made against any action taken to recover that debt.  The costs incurred in recovery should be 100% recoverable regardless of amount (acting reasonably). If this power was given the general argument about costs will go away as the cost will be substantially reduced due to no legal defence being available. This will stop recalcitrant lot owners from delaying tactics.
  • Changing address for service of notices.  The current system is a general meeting resolution.  This should be passed to the executive committee as it is a basic administrative function.
  • Mediation should be optional, not mandatory for applicants.  There are many instances where the OC passes (or refuses) resolutions at a general meeting and then the Executive is requested to attend mediation.  The Executive has no power to overturn a general resolution decision.  Mediation in those instances is fruitless and should be dispensed with.
  • Sinking Fund forecasting needs to be reconsidered.  The decision to be made is whether it is compulsory (to raise the money) or not.  There is confusion in the industry and consumers about the system to be undertaken.
  • Lots v Common Property.  The definitions of Lots and common property are antiquated and need amendment.  One simple way to deal with the ever growing problem of who owns what in a strata scheme is to make the registration of strata plans contain a schedule of lots and common property.  In this way things such as tiles on walls and floors can be easily described and ownership determined.
  • Power should be given to Owners Corporation’s to deal with abandoned goods (including cars) on common property.  At present the system is impossible to enforce.
  • The prohibition on wheel clamping should be removed from the Local government Act (S651) as it applies to strata schemes. Owners Corporations should be able to clamp cars and require payment for their removal provided a system of notification and signage is completed. Without this process the current dispute provisions are meaningless and at a practical level totally unenforceable.
  • Sections dealing with an engagement of layers needs to include an emergency provision for the engagement of legal representation (in such cases as defences, urgent injunctions etc).  At present schemes are making decisions in urgent circumstances and then dispute arises on the legality of the commencement of that action.
  • Conflict of interest provisions needs to be included in any redrafting of legislation (similar to ACT legislation). Building managers and strata managers should be prohibited from being on executive committees (except where they are owners and are appointed as owners representatives).
  • Proxy voting by building managers/caretakers etc should be restricted to a maximum of 5 votes to ANY person associated with the building manager. The power in the hands of the building manager should be restricted as I have seen proxies obtained for one purpose and used for another.
  • There should be provisions for “paper” voting general meetings where owners are given the opportunity to send in a voting paper. The only problem is where motions are amended.  In those cases, the proxy could be given the power to vote in those instances.
  • More use of web-based technology should be considered.
  • All notices should be by email as a statutory amendment, not a by-law amendment.
  • Notices sent by post should not include a number of attachments that are required at present.  They should be made available on web sites for schemes or upon request from owners.  For example, quotations, contracts, leases (where independent advice is obtained on it), management agreements or any other matter where the Executive Committee has reviewed the matter previously. All accounts, audits etc should be included.
  • Webcam meetings for the executive committee should be available.
  • Owners should be able to log in to a teleconference if they are unable to attend meetings (not entitled to vote but to listen).

Strata Consultation Questions:

Q1. What are the main areas of the existing strata and community scheme laws you would like to see changed?
Q2. Can you see any future issues that need to be addressed in the legislation?
Q3. How could the management of strata and community schemes be improved?
Q4. Are there any changes needed to the way disputes in strata and community schemes are resolved?