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"Although highly recommended, especially for schemes with more than 5 lots, it's not compulsory to appoint a professional Strata Managing Agent to look after a Strata Scheme. You CAN do-it-yourself and there are even a couple of different options open to you to massively help you navigate the DIY minefield. However, if you want "the best of both worlds" then I highly recommend speaking to someone who knows what they're doing and can help you avoid the 'traps' because there is a lot more to running a strata scheme than most people think."

DO-IT-YOURSELF STRATA MANAGEMENT

Know EXACTLY what you're getting yourself into...
Strata Management Types
Full Management
Record Keeping Service

Know EXACTLY what you're getting yourself into...

Due to the increasing complexity of managing Strata Schemes these days, especially the larger ones, most owners choose to engage a professional Strata Manager (SM) - or Strata Managing Agent using 'official' terminology - to save them the hassles of the day-to-day business of running a scheme.

However, there are others who'd prefer to 'Do-it-themselves'. Owners Corporations who decide to do it this way operate what is known as a Self-managed scheme. This type of management is really only suited to the smaller schemes having no more than about 5 lots due mainly to the legal risks involved and the ever-increasing amount of legislative compliance that must be done and monitored. The more lots there are, the more difficult the whole process becomes.

And, since the introduction of the Strata Schemes Management Act 2015 AND the Strata Schemes Management Regulation 2016 on November 30th, 2016, the management of strata schemes has become even more complex. There are now many new compliance requirements, relating to a Capital Works Fund Plan, the management of the Annual Fire Safety Statement, the installation of window safety devices, proxy limitations, voting methods, the various categories of renovations and what is required, as well as the involvement of tenants and, in some cases, tenant representatives, the adoption of the model by-laws contained in the SSMR depending upon when the strata plan was registered, the consolidation of by-laws, just to mention a few...

So, unless someone is well versed on all of this, they're taking on a lot of responsibility if they go down the DIY Strata path. Just remember that, even though the strata scheme might be small, all the same obligations and compliance issues still apply. And, I must add that, if you still are planning to go down the DIY path then considering at least a RECORD KEEPING SERVICE will ensure that all the tedious bookkeeping and compliance requirements are handled for you for much less than the cost of full management. You get the best of both worlds this way and you can read all about it in the next section

Now, for more details on the different types of management read on...

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Strata Management Types

Most SM's offer both Full Management contracts and Record Keeping contracts.

Full Management

Full Management is where the Strata Manager does just about everything on behalf of the Owners Corporation. Most people don't really know exactly WHAT the SM does so here are just the KEY items (which are all done 'behind the scenes'): all aspects of strata legislation, accounting, meetings, levy collection, compliance, service contracts for lifts, pumps,etc, issuing certificates, insurance, capital work fund plans, valuations, managing compliance issues relating to by-laws, renovation approvals, dealing with disputes, safety audits, fire safety inspections, repairs and maintenance, etc, etc. Like I said earlier - these are just the KEY items.
You can read more on what the SM does on my What a good Strata Manager Does fact sheet.

Due to the new Strata Schemes Management Act & Strata Schemes Management Regulation legislation that came into effect on November 30th, 2016,
more knowledge and expertise is required now than ever before.

Under this style of management, the Strata Committee (SC) for the Owners Corporation really only has to work closely with the SM, give approval on a number of issues unless a general meeting is required leaving the rest to the SM.

Using a Strata Manager is sort of similar to the way a lot of people have an accountant (the professional) do their yearly tax returns and their quarterly BAS (if in business) - the accountant does it all for them saving them the effort, hassle, pain (and time) of having to do-it-themselves - and that's the expertise they pay for.

Also, the accountant is always 'up-to-date' with all the latest tax laws - after all, that's his job - while it's relatively easy for you to miss something important if you aren't fully aware of all the latest changes in legislation. With strata, the SM is the professional who can keep you up with the latest legislative changes as well as save you lots of effort, hassle, pain and time.

The main difference is that, with a strata scheme, there are lots of people involved and there are ALWAYS lots of issues - such as repairs that are needed, compliance requirements that need to be attended to, finances that have to be managed, lifestyle issues which have to be addressed, etc, etc, with all these occurring on a daily basis. With lots of people living together in close proximity to one another there is always a lot of activity and communication with the strata manager in order to attend to all the requests and issues.

Record Keeping Service

Record Keeping is where the SM handles all the onerous paperwork and procedures for the records and accounting side of things as well as all legislative issues required under the Strata Schemes Management Act 2015 leaving the co-ordination, control and payment of all day-to-day (and preventative) maintenance and repairs, to the Owners Corporation's Strata Committee.

This reduced service is ideal for smaller schemes and allows the SC to be in total control of this vital part of scheme management knowing the other important (and always difficult and complex) tasks of running a scheme are being looked after by the SM.

Some SC's have reported good savings in both time and money due to the greater level of control they can exercise, not to mention the reduction in the SM's fees due to the reduced workload. These savings can make it worth the effort but it does require quite an extra time commitment from the SC members. Always keep in mind though that this style of management does NOT suit everyone.

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Do-It-Yourself (Self-Management)

The last option is where YOU take on the role of a Strata Managing Agent and do it ALL yourself (DIY).

It's sort of like setting up your own superannuation fund where you have to comply with all the laws, rules, conditions and regulations, report annually to the authorities, select and manage the investments, manage the portfolio's risk profile, pay any taxes and statutory fees and so on. Just as doing your own super is not for everyone, running a Strata Scheme is also not for everyone.

However, having said that, some schemes are very successful at managing themselves. And yet, others fail miserably – usually because of the self interest of those owners elected to the Strata Committee, a lack of the necessary skills and/or a general lack of support from the scheme. The decision to self-manage should not be taken lightly and the following questions must be asked.

Are there sufficient owners with the required time and interest to undertake the tasks?
Are these people sufficiently skilled?
Are these people likely to loose interest in a year or two?
Do these people truly have the best intentions for the scheme in mind or is there another agenda?
Is the state of harmony within the scheme such that self-management will be supported?
Is the complexity of strata management fully appreciated and understood?
Is the responsibility (legal and otherwise) of strata management (which would fall upon the Strata Committee and/or owners) fully appreciated and understood?

If you can get over all these hurdles then the right 'equipment' needs to be assembled including publications, copies of legislation, computer facilities and suitable software as well as all the 'legally required' books and paperwork. To do this you'll more than likely need some assistance getting started unless, of course, you've done it before and know what's required.

These are just some of the pieces of legislation you need to be aware of, monitor (for changes) and understand that cover the Owners Corporaton's responsibilities:

Strata Schemes Management Act 2015
Strata Schemes Management Regulation 2016
Environment Planning & Assessment Act 1979
Environment Planning & Assessment Regulation 2000
Home Building Act 2014
Home Building Regulation 2014
Dividing Fences Act 1991
Work Health & Safety 2011

On top of this, there's the interpretation and application of the legal requirements. Legislation changes from time to time, so you would need to be aware of any changes that impact the Owners Corporation as they come up and then determine the best and safest course of action to implement the changes. Someone needs to take the legal responsibility for all this and, without an appointed strata manager, this would fall squarely on the Strata Committee and/or all the owners.

So, for DIY management you'll specifically need to:

know what existing rules and regulations to follow AND KEEP UP WITH ANY CHANGES
learn all about insurances, fire safety and WorkHealth&Safety requirements
learn what other legal and legislative obligations you have
interpret and apply all new legislative and compliance requirements
set up and maintain the Records and Accounts required by legislation
know how to convene and run the mandatory meetings
produce and process financial statements and budgets
produce, issue and collect quarterly levies
know how to deal with tradespeople from a legislative as well as operational standpoint
put an appropriate preventative maintenance program in place for the scheme
keep the scheme's insurances current and correct
ensure all the scheme's bills are paid and on time
manage the scheme's RISK environments for WorkHealth&Safety and Fire Safety
handle all owner disputes no matter what the problem

Obviously, having to do all the above will require a fair amount of time and effort (as well as knowledge) and it's definitely not a simple 'one or two hours per week' job.

Warning - Just keeping up with all the compliance requirements and legislative changes can be quite a complicated and involved task so, if you aren't prepared to 'put in the effort required' AND take on the legal responsibility, don't head down this path. If all this seems a bit daunting then Record Keeping might be a better option as it effectively gives you the 'best of both worlds'.

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DISCLAIMER: All information on this website is of a general nature and is intended as a guide only. Readers should check all information obtained from this website for accuracy from other sources and seek professional legal advice before taking any action based on any information obtained from this website. Information on this website should not be substituted for proper legal advice. The owners of this website will not be held responsible for any action taken as a consequence of same.

EXTERNAL SOURCES: The owners of this website do not make any warranty or representations regarding the information, products, services provided by or qualifications of any external sources listed on this website. Readers should make their own appropriate enquiries regarding accuracy, qualifications, licences, etc. The owners of this website will not be responsible or liable in any way for any representations made by any external sources listed on this website.

IMPORTANT NOTE: This website deals with strata matters in NSW, Australia only. Legislation varies in different states and territories and in other countries. For information pertaining to places outside of NSW, Australia please refer to the appropriate legislation for your region.

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