for everything you need to know about strata...

"Although not compulsory in NSW, Strata Management by fully qualified, licensed Strata Managers is highly recommended and can prove to be a real lifesaver for you and your Strata Scheme.  For the relatively modest cost involved, they will remove most of the hassles and hard work involved in the running of a scheme - especially for the medium-to-large schemes - saving you a lot of time, frustration, disappointment and heartache.  Below is a snapshot of the things involved in looking after a Strata Scheme, so make sure you go through it carefully to see what a Strata Manager can do for you or what you'll have to do if you don't have one."

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STRATA MANAGEMENT

• Nothing beats experience
• The good, the bad and the ugly
• What a good Strata Manager actually does
• Self-managing a reality?
• Knowledge IS power
• They can't do everything though...
• Strata Management Fees
• How is a Strata Managing Agent appointed?
• Point of contact
• Good relationships
• Good communication
• Extra information resources
• Looking for a GOOD Strata Management company?

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Nothing beats experience

A Strata Managing Agent (commonly known as a Strata Manager) is a licensed, professional specially trained to deal with the everyday needs of a Strata Scheme.  A Strata Title Management company or agency can have one or more Strata Managing Agents (or Strata Managers) who are responsible for the Strata Management of the Strata Scheme.

Usually, a good agency comes with many, many years of experience in handling Strata Schemes of all sizes and complexity and nothing comes as a surprise to these hardened operators.  Such a company has seen it all before - just like an experienced doctor - and knows exactly what to do when some of the more weird and wonderful issues of strata living appear.  This is where a good Strata Manager is invaluable and can save many from having to reinvent the wheel time and time again.

The cost savings of well structured and efficient Strata Management in terms of time, money, heartache, disappointment and frustration for the scheme (and the Strata Committee) can be enormous - thanks mainly to the Strata Manager's vast array of knowledge and experience.  It's very difficult for those not so 'street-wise' to be as efficient and as effective.

The good, the bad and the ugly

Mind you not all Strata Management companies, nor all Strata Managers, are good.  As in all industries, there are the good, the not-so-good and the terrible.  The old adage "you generally get what you pay for" applies to this industry too - so those offering what appears to be fully-featured Strata Management services for a seemingly impossible price would have to be cutting corners to make it financially viable for them - and 'cutting corners' is NEVER good.

Service levels generally tend to suffer in the long term with these 'price-based' operators and, for their customers, it usually ends up being a case of "the squeakiest wheel gets the most oil".  In other words, service is based on a REACTIVE mode of operation rather than the more desirable and much more efficient PROACTIVE method where prevention is better than the quick band-aid fix.  In this reactive mode, something will probably get done eventually if the customer yells loud enough...but I honestly believe no sensible Strata Committee would like to face this on a regular basis just to get things done.

While there are some people living in strata who no doubt like this No-Frills approach to Strata Management, there are many, many others who don't.  They would rather get a superior level of service (and therefore better protection for their asset) for a few extra dollars each week....and that's all it usually comes down to....a few extra dollars on every owner's quarterly levy statement.  When you use the 'better quality' Strata Managers, tasks requested actually get done and no yelling at or constant nagging of the Strata Manager is needed.

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What a good Strata Manager actually does

Many people living in strata are not fully aware of what's actually involved in proper Strata Management, nor do they realise exactly what must be done by their Strata Managers.  I think most people would be quite shocked if they had to spend a month or two in the Strata Manager's shoes.

If people did this, then there would be a lot more understanding and appreciation of just how difficult a job Strata Management can be for the "relatively" small amount of remuneration received.  Most of what is done is all 'behind-the-scenes' work and many owners are totally oblivious to the amount of work actually carried out on what would seem to be quite simple tasks.

I came across a couple of very interesting articles on LookUp Strata  even if they are a couple of years old now.    However, there's some great insight in both of these articles and they might just give you a different perspective on a whole lot of preconceived notions.

One is "Strata Manager Obligations and Work Overload: An Industry Problem?" which shows just how tough a job it can be - both professionally AND personally.  So make sure you have a read of this and the other is "Why are Strata Managers so difficult to get along with?".

OK, let's move on...
Under current legislation, the Owners Corporation is legally responsible for the operation of the scheme but may appoint a licensed Strata Managing Agent to carry out some or all of its functions.

These duties include (but aren't limited to):

• Maintain the trust account and common seal
• Maintain all the accounting records
• Safely store ALL records and accounts for a minimum of 7 years
• Provide easy access to ALL stored records and accounts
• Prepare and present annual financial budgets and statements
• Provide experience in handling 'difficult' or complex strata issues (like disputes, disasters and emergencies)
• Ensure the scheme complies fully with all Fire Safety regulations
• Ensure the scheme complies with all the Work Health & Safety (WHS) regulations
• Ensure the scheme complies with all other strata laws and regulations
• Monitor, evaluate and implement any changes to the strata management legislation
• Maintain the strata roll and the levy register
• Maintain the key register and all the keys
• Issue levy notices
• Collect and deposit levy contributions
• Monitor levy arrears and liaise with owners to recover payments
• Liaise with lawyers to take legal action on levy defaulters (as required)
• Arrange quotations for all services and remedial works
• Prepare, implement and co-ordinate a Preventative Maintenance Program for the scheme
• Organise and co-ordinate repairs and maintenance of common property
• Check all tradespeople and specialists used for correct licensing and insurances
• Monitor and maintain all tradespeople and specialists on the 'preferred' list
• Engage cleaners & gardeners and other tradespeople and specialists
• Process and pay invoices for work carried out on behalf of the Owners Corporation
• Prepare agendas and notices of all meetings
• Convene, hold and attend meetings
• Take, prepare and dispatch notices and minutes of all meetings
• Maintain the legally required 'minute book'
• Attend to and resolve 'harmony' problems (i.e. disputes) within the scheme
• Liaise with the appropriate authorities (e.g. NCAT or NSW Fair Trading) to resolve ongoing disputes and issues
• Co-ordinate the adding or changing of the scheme's by-laws
• Co-ordinate the processing of strata searches under Section 182 of the act
• Process all Section 184 Strata Information Certificate applications for the scheme
• Ensure the scheme complies with current GST legislation as well as all other tax laws
• Assist auditors and tax agents with the scheme's accounts
• Liaise with the ATO/Tax Agent regarding the tax affairs of the scheme
• Arrange valuations and quotes for insurance
• Renew insurances and get quotes
• Prepare and lodge insurance claims (including building defects claims)
• Attend to and maintain all correspondence of the Owners Corporation
• Advise on all matters involving the need to comply with the NSW Strata Schemes Management Act 2015
• Advise on all matters involving the need to comply with the NSW Strata Schemes Management Regulation 2016

Now, just remember that the above list is NOT a complete list of strata management tasks by any means BUT, you'll get an idea as to what needs to be done (virtually on a daily basis) if you multiply this by the number of Strata Schemes being looked after.

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Self-managing a reality?

Quite a list I'm sure you'll agree...and there are many, many sub-tasks embedded within most of those major topics.

Now I hope you can see why the recommendation is to engage a Strata Manager, especially if the scheme is any bigger than even 3 lots.  Up to that point it's easier to self-manage, as long as those chosen to do the "managing" have the time, the inclination, the drive and the knowledge to tackle what's required.  But the big take-away from all this is that ALL those tasks MUST still be done for EACH lot whether it's 2 or 500.

Unfortunately, many think they have what it takes to get the job done but few do - and regrettably they find out only after some not-so-good decisions have been made.  Or, in a worse-case scenario, either the Owners Corporation or the Strata Committee ends up being sued for not doing what had to be done according to the latest strata legislation and/or the many compliance requirements simply because it had been overlooked or completely missed.  The saying that comes to mind here is: "ignorance of the law is no defence".
A lot of the time, for those doing all the work, the enormity of the job plus the time commitment required along with having to deal with all the 'people' issues simply gets too much to handle and they give it up.

Now, after having said all that, self-management can be done but it's most definitely not for everyone.

Knowledge IS power

With the Strata Management statutory and compliance requirements being as complex and precise as they are today (and getting more so with every passing day), the knowledge of those responsible for the control of a strata scheme must be continually updated and the consequences of not being up-to-date can be far reaching.  This applies equally to strata managers and those looking after a self-managed scheme.

The need to stay abreast of all the latest industry changes shows just how difficult it can be for the average apartment owner wanting to self-manage their scheme as keeping up the required level of legislative and compliance knowledge can be quite a task in itself.  This is especially important when you consider that the self-managers can be held liable for any bad decision they make in the running of the scheme.  Therefore, knowing what you can and can't do - along with what you MUST do - becomes very important.

You may like to read the Do-it-yourself Strata information page to learn more on this topic.  You might find that one of the other options discussed on that page may be more appropriate for your scheme.

TIP - If you ARE considering self-management, have a close look at the Record Keeping Service option before making a final decision.  It could provide you with the best of both worlds.

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They can't do everything though...

According to legislation, there are certain powers an Owners Corporation cannot delegate to a Strata Managing Agent.  These certain powers include NOT being able to:

• delegate already delegated tasks
• make a decision on a matter that's required to be decided on by the Owners Corporation
• determine the amount of the levy payments

Other than that, the Strata manager is empowered to pretty much do it all, depending on the limitations in the Strata Management Agency Agreement.
See Secton 13: Functions that may be delegated to a Strata Managing Agent AND Secton 52: OC may delegate functions to Strata Managing Agent

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Strata Management Fees

There are a lot of people out there in Strataland who seem to think that Strata Management fees are always too high for the work done.  This could NOT be further from the truth when you look at the reality of it all.  It's just that most of the work and effort put in by a Strata Manager is mainly behind-the-scenes and goes mostly unnoticed.  They're like little 'strata elves' working away silently yet effectively - in the background - for the good of the Owners Corporation and the scheme.

Consider this......

There aren't many professional businesses around these days that charge their customers less than $9 per week (or $470 per year) to do some sort of task or job - especially if it's on a regular basis.

Generally ANY advice or service you get from a professional will set you back many hundreds (if not thousands) of dollars so the bottom-line is "Expertise and Experience costs money".  Dentists, lawyers, tax accountants, electricians, plumbers, cleaners, gardeners, lawn mowing services, car washes, personal trainers, life coaches, business consultants, etc, etc.  The list is endless and here are just a few examples to help put this in perspective:

• It can cost you at least $70 just to get a plumber or electrician through the door (i.e. the call-out fee) and that's before they do anything!
  And we all know how expensive their bill can be when they've finished the job.
• Even a decent handyman can cost between $55 and $80 per hour and less than a day's work means $400
• You'd be hard-pressed trying to find someone to mow your lawns for under $25 per week! (unless it's a really tiny bit of grass)
  That translates to around $500 per year based on 20 visits over the year.
• If your tax return is anything more than just a basic return most good accountants will charge between $200 and $300 just to do the return (along with all the preparatory work)!  Much more if it's a business return or if it's at all complicated.
• Having your house cleaned monthly will cost anywhere between $30 and $80 per clean (depending on what you need done)
  That works out to between $360 and $960 each year and all you get is a clean house!
• What about having your car washed?  $30 is pretty close to the mark - so do that 12 times a year and you've shelled out $360...
  and all you get is a clean car (which doesn't even stay clean for very long)!
• A gym membership sets most people back at least $1,000 each year
• What about a personal trainer at $40 per half hour just once a week?  That's over $2,000 per year!
• Ever tried to have your computer problems fixed for under $100 an hour??  $500 doesn't go very far.
• Business consultants?....let's not even go there
• And finally, for those of you with investment properties - your real estate agent probably charges you between 5% and 10% to manage your rental property and tenants.  On a weekly rental of $400, that equates to $20 per week at 5% and $40 per week at 10%!
  Yearly, this is $1,040 at 5% and $2,080 at 10%.

So, let's put all this into context with what a Strata Manager does.....
they look after the co-ordination of everything at your scheme giving their professional experience, expertise and advice covering a very wide range of services on pretty much a daily basis - week after week, month after month, year after year as well as looking after a very expensive asset - YOUR property.
If you need to, have another look at the duties listed above...

And it isn't for just ONE single task either but a whole range of different and diversified tasks all requiring a different skill set and knowledge base.  Remember too there's multiple owners involved, each with their own issues and problems that occur on a regular basis and that all need solving or fixing.

Now, after all that, can you honestly say that a fee of around $9 per week (or $1.29 per day) per lot owner is so much to ask considering the amount of expertise, experience and hand-holding you actually get?.  Anything less than that and you are heading squarely into the 'corner-cutting' arena - which is never good in the long run.

Even having a cup of coffee (for $2.50) every day, 5 days per week, will set you back $12.50 each week or around $600 over a 48 week year!!  So, I honestly believe that Strata Management Fees would still be cheap at double the level they currently are.

EXTRA NOTE - Many owners think that Strata Managers take ALL of the quarterly levy contribution as payment for their services.  This is not correct!  The Strata Management company usually receives somewhere between 10% and 15% of the levy payment while the remainder goes into a trust account for the scheme.  This trust money is then used to pay for the scheme's other running costs (like cleaning and gardening, insurance, repairs, capital works, etc) as and when required.

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How is a Strata Managing Agent appointed?

The appointing of a Strata Managing Agent can only be done at a general meeting of the Owners Corporation where the Strata Managing Agent is appointed and functions are delegated.  A Strata Management Agency Agreement is presented and must be authorised by at least two members of the Strata Committee AND the Strata Managing Agent.  The Strata Managing Agent must return a signed and dated copy of the agreement to the Owners Corporation within 48 hours of its execution.

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Point of contact

The Strata Committee (SC) is the main point of contact between the Strata Management company and the Owners Corporation and, even if the SC delegates some or all of its functions to a Strata Managing Agent, the SC may still continue to exercise all or any of those functions as required.

In most Strata Committees, particularly if there are more than a couple of members, a liaison person is nominated as the voice of the SC.  This way, there's a reduced chance of any miscommunication occurring between the Strata Manager and the SC.

Good relationships

One of THE most critical components for the successful running of any Strata Scheme is for the SC and the Strata Manager to work together as a team.  If the relationship is based on a 'them-against-us' mentality then the scheme will struggle right from the beginning.

From the outset, it's a good idea to be very clear of the expectations of the Strata Committee in relation to the Management Agreement signed with the Strata Manager.  Sometimes there can be the thought that "the Strata Manager does everything", which can sometimes be incorrect depending upon what has been agreed upon in the Management Agreement.  To avoid any disappointment and unrealistic expectations, it's better to have this conversation right at the beginning of the relationship.

Co-operation from both sides at all levels is critical for success and a Strata Manager relies on the Strata Committee being honest, open, frank and very willing to participate to ensure the scheme runs as smoothly as possible.  The SC always has an extremely important role and effectively becomes the Strata Manager's 'eyes and ears' - as they are there, onsite, 24/7.  Without that valuable assistance, running the scheme properly and efficiently becomes a very difficult thing.

Good communication

The success (or failure) of the relationship between the Strata Management Company and the Strata Committee is determined by the level of communication exercised by both parties.  The lines of communication must always remain open so make sure you discuss any issues that arise with the Strata Manager to ensure the problem is not due to a simple misunderstanding because of bad communication.

From experience, most problems seem to stem from one party or the other failing to communicate properly or from one party having unrealistic expectations of the other thus creating a misunderstanding of some sort.  When things like this occur (and they will) make sure both parties get together and discuss all the issues to clear the air.  Solve the disputes just as you would solve a dispute between owners - it's no different.  And it's amazing what a little common sense, patience and maturity (from both sides) can do.

Successful Strata Management of a Strata Scheme can easily be achieved if both sides are willing to participate honestly and openly and be totally clear about the rules and responsibilities of the parties involved.

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Extra information resources

Here are a few extra resources to help you understand and learn some more about Strata Management & Strata Managers.

NSW Fair Trading

• Strata Managing Agents
• Building Managers
• Strata Living (PDF booklet)
  (See the small section on Strata Managing Agents on Page 10 & Building Managers on Page 13)

Strata Managers references in the NSW SSMA 2015

There's quite a few larger blocks so strap yourself in...but I'll keep it just to the main ones

• Strata Managing Agents (Sections 49 thru 65)
• Building Managers (Sections 66 thru 70)
• Functions that may be delegated to a Strata Managing Agent (Section 13)
• Interests must be disclosed by a Strata Managing Agent (Section 71)
• Strata Managing Agent agreements may be terminated or varied by Tribunal (Section 72)

Strata Managers references in the NSW SSMR 2016

• Functions that may only be delegated to Strata Managing Agent (Regulation 4)
• Limit for gifts to Strata Managing Agents (Regulation 63)

Strata Title Terms and Jargon

• Strata Terms and Jargon (to find out what everything means)

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Looking for a GOOD Strata Management company?

All Strata Managers are definitely NOT the same - contrary to popular 'misguided' opinion.  In every industry you get the good ones...the not-so-good ones...and the downright terrible ones.  O'Connors is in the GOOD category.  Give them a call or drop them an email to discuss your scheme.    Alternatively click on the Experience the O'Connors Difference link at the bottom of this page to visit their website.

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