Frequently Asked Questions
(a) What is a strata managers function?
An Owners Corporation has a range of tasks such as arranging repairs and maintenance, dealing with levy collection and accounts payments and dealing with By-Law breaches which must be carried out for the purpose of compliance with the mandatory requirements of the Strata Schemes Management Act, 1996 and other relevant governing Legislation.
A strata manager is normally engaged for a fee to carry out these functions on behalf of and in consultation with the executive committee so as to alleviate all the day to day management and administrative functions that would otherwise be required to be undertaken by the executive committee members.
(b) What are the advantages of appointing a strata manager?
The engagement of a professionally qualified and experienced strata manager will not only alleviate the day to day tedium which would otherwise be undertaken by untrained executive committee members but will also assist in adding value to the development at the time of sale by ensuring that there are no potential non compliance impediments to property sales which would otherwise result in sales not proceeding or a reduction in the market value of the property
(c) What is the cost of engaging a strata manager?
Fee structures are based upon the number of lots within the development and is detailed in the agency agreement.
(d) Does the strata manager have experience in the management of my type of strata scheme?
Our company has been accumulated wealth of experience in the management of residential, commercial, industrial and mixed strata schemes since 1984.
At present we manage strata schemes throughout the state from Merimbula and Jindabyne in the south to Newcastle in the north and these properties include shopping centres and motels and volumetric subdivisional properties managed under building management statements.
(e) Is the strata manager a member of a professional body?
The Real Estate Institute of New South Wales is recognised as the peak industry body in New South Wales for all real estate matters and our office has been a member of the Institute since 1984.
In addition our Managing Director was Vice Chairman from 1996 to 2005 and has been chairman of the strata management chapter of the Real estate Institute of NSW since 2005 as well as being industry representative on the Strata Industry Working Group with the Office of Fair Trading, NSW Law Society, Land and Property Management.
(f) Does the strata manager have professional indemnity insurance?
The holding of a professional indemnity policy is not a compulsory requirement to hold a license as a strata manager although it is compulsory for members of the Real Estate Institute of NSW.
As a member of the Real Estate Institute of NSW our office holds professional indemnity cover.
(g) Is a strata manager required to be licensed?
All strata managers are required to be licensed or certificates under the Property Stock and Business Agents Act in NSW.
The currency of a license can be checked with the Office of Fair Trading.
(h) Communication with strata manager
When our office is appointed to manage your strata scheme your strata scheme is allocated to a specific experienced senior manager who is responsible to communicate with your executive committee and to respond to owners concerns Our office hours are 9.00am to 5.00pm Monday to Friday.
If the designated manager is not available at the time of your call your call will be returned as soon as the manager returns to the office.
Whilst you are welcome to drop into our office it would be best if you call first to ensure that the designated manager will be available at the time of your attendance to deal with your matter.
In the event of a manager being absent on sick leave or annual leave another manager will be appointed to deal with your strata schemes day to day requirements during the absence.
(i) What are levies and how are they determined?
The term “levies” is used to describe the payments made by lot owners for the administration fund and the sinking fund.
Each year the strata schemes annual accounts are prepared which provides a basis upon which to determine an estimate or “budget” of anticipated expenses for the administration fund for the forthcoming year and the sinking fund budget is based upon an independent ten year sinking fund report which is normally prepared by a professional such as quantity surveyor or a valuer.
The proposed budget each year is presented for consideration to the annual general meeting of proprietors and a majority vote by the proprietors will determine the amount to be raised for the following year to bot funds which in turn forms the basis of determining the proportionate amount of the total budget to be paid by each lot owner.
The proportion paid by each lot owner is based upon the allocation of unit entitlement to each lot as a proportion of the total unit entitlement of the strata scheme.
The allocation of unit entitlement is based upon the market value of lot as a proportion of the total market value of all lots within the development and the market value is or should be determined as at the date of registration of the strata scheme with the NSW Land and Property Management Authority (formerly known as the NSW Land Titles Office).
(j) How are your levies paid?
The payment of your levies has been made easy by enabling payment to be undertaken through the DEFT On Line system (www.deft.com.au), by DEFT Phone Pay by calling 1300 301 090, by BPay or by post BPay over the counter at any post office.
If you wish to take advantage of the DEFT direct debit system you need to register your account with the DEFT Payment system either over the internet www.deft.com.au or by calling 1800 672 162 to obtain a brochure payment by credit card will result in a small charge to your bank account but the amount to be charged will be advised prior to you finalising the payment.
It is also possible for you to arrange with DEFT to pre-schedule automatic Payments.
(k) Where are the strata schemes funds held?
Under the provisions of the Property Stock and Business Agents Act a strata managing agent is required t hold your strata schemes funds in a trust account with a bank in NSW and the account is subject to a compulsory annual audit by an independent registered public auditor.
Our trust accounts are subject to audit by Camphin Boston & Co. Chartered Accountants who are located at 5 Elizabeth Street, Sydney.
(l) How are unpaid levies collected?
Overdue levies can become a problem for any strata scheme when the cash is not available to pay service provider, insurance premiums and utility accounts.
Our office has an active monitoring system which follows up any levies more than a month overdue and, in consultation with the executive committee instigates recovery action and imposes statutory interest at the current prescribed rate of 10% where the matter is not resolved in a timely manner to enable the strata scheme to meet its financial commitments.
(m) What is the money raised through levies used for?
Administration fund levies are used to pay all recurrent accounts for services that are provided every year such as insurances, electricity and water usage, common property maintenance such as cleaning and gardening, and management fees.
Whilst there will invariably be some cash flow timing differences, theoretically, if the budget is accurate, all the funds raised to the administration fund will be spent by the end of the budgetary period.
Sinking fund levies are used for maintenance to the building structure and other capital works such as painting, window guttering and fencing repairs and common property carpet replacement.
The purpose of having a ten year sinking fund budget is to enable the sinking fund account balance to build up over a period of years to be used when required. The purpose of the Law requiring strata schemes to raise a ten year sinking fund budget is to ensure that proprietors contribute to the deterioration of the building over the period of their tenure as an owner rather than the former situation before the 2005 Legislative amendment where many lot owners would purposely keep the sinking funds artificially low and sell their property before major works were ready to be undertaken and leave the unsuspecting new owner with a large special levy to pay to make up for the deterioration not budgeted for during the tenure of ownership of the firmer lot owner from whom the lot was purchased.
(n) How do I know what my levies are spent on?
Each year at the annual general meeting the executive committee is elected from the proprietors present or represented by a majority vote of proprietors and from the elected executive committee the chairman, secretary and treasurer is appointed.
The treasurer is provided with a detailed quarterly financial report which is prepared on the last day of each quarterly levy period and provided to the treasurer for review by the treasurer and the committee members.
The annual accounts, which are a summary form of the detailed quarterly reports, are prepared and circulated to all owners with the notice of the annual general meeting.
(o) When and where is the annual meeting held?
The annual general meeting is held one calendar month either side of the first annual general meeting and, depending upon the size of the development can be held in the strata managers office, on site at the property or at an alternate venue to be arranged with the strata manager.
The notice of the meeting is normally issued at least two weeks before the meeting is to be convened.
(p) What happens if I have a maintenance problem?
In the first instance you should contact the strata manager with a view to determining whether the problem is a repair to which the strata scheme should attend, whether the matter is a warranty matter, an insurance matter or whether the repair is a private matter.
Once the responsibility for the repair has been determined the strata manager will act in consultation with the executive committee to effect a common property repair or alternatively can refer the lot owner to a suitable contractor to attend to the private repair.
(q) Can we keep our current service contractors?
When appointed as strata managers of an existing strata schemes we usually find that the strata scheme has pre-existing contractors that they wish to retain.
As a matter of office policy we will not make any changes to the strata schemes service contractors unless specifically instructed by the executive committee.
(r) Who is responsible for repairs inside my unit?
The owners of a lot owns all the fixtures and fittings which are not “structural cubic air space” such as the piers supporting a high rise unit.
The owner is responsible for the repair and maintenance of any fixtures and fittings inside their unit “air space”. The air space, in the absence of the registered strata plan designating otherwise, generally extends from the upper surface area of the floor to the lower surface area of the roof and the inner surface area of the perimeter walls. Items which generate queries for responsibility include toilet bowls, plumbing and wiring located in internal walls, power points, aerial connection points, shoer screens, internal walls and in the case of properties saving courtyard areas such as villas, townhouses and factories the dividing fences between the lot and an adjoining lot are all the responsibility of the lot owner.
Depending upon when and how the strata scheme was registered it may also be that the windows and doors on the balcony area are also private the private property of the lot owner and therefore not the responsibility of the strata scheme to repair or maintain.
(s) What happens if I have a dispute with a neighbour?
Disputes can invariably arise between for a range of reasons in communal living situations.
The most common cause of complaints are excessive noise and vehicle parking although there can be a whole range of issues that arise from time to time.
One of the roles of the strata manager is to try to resolve these disputes before the matter goes to a tribunal hearing for resolution.
(t) How can the strata schemes behavioural By-Laws be enforced?
By Laws are established at the time of registration of your strata scheme but can be changed by special resolution at a general meeting.
Whilst most matters can be resolved quickly where there is a breach of the By-Laws due to the offending party not being aware of the relevant. By-Law or that they were breaching the By-Law there are some circumstances where a simple reminder is ignored.
Where a resident who suffering as a result of the actions of another resident or residents the party suffering can seek an order for compliance with the strata schemes registered By-Laws from the Consumer Trader and Tenancy Tribunal (the Tribunal) or alternatively the strata manager can, with the express authority of the executive committee, take action on behalf of the Owners Corporation by servings a notice on the offender to comply with the By-Laws.
In the event a notice to comply with the By-Laws is ignored by the offender the matter can, with the authority of the executive committee, be referred to the Tribunal for an Order to comply. In the event of failure to comply an order from the Tribunal, a further application can be made for the Tribunal to impose a fine upon the perpetrator.
(u) How can an Owners Corporation appoint a strata manager?
A strata manager can be appointed by a majority vote of owners at either the annual general meeting or an extraordinary general meeting by simply listing the motion for consideration on the meeting agenda.
Once a resolution has been passed two members of the executive committee should sign the agency agreement to confirm the appointment.
It should be noted that a strata manager can be fined up to $4400 for acting without a managing agency agreement as it is illegal for a strata manager to act in their professional capacity on behalf of a strata scheme unless the strata manager holds a completed agency agreement.
For more information on our Strata Management phone (02) 9523 0466 or visit the website: http://strata-management.ljhooker.com.au