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Queensland was one of the first states in Australia to fully embrace strata living and it has, in the past, led the way on many innovations, like secret voting, limits on proxies and split levies based on value and, separately, use of facilities.
However, as I have said many times on this website, the pre-sale by developers of professional caretaker contracts in Queensland is nothing short of legalised corruption.
Why? Because developers are allowed to sell and sign 25-year contracts before they have sold a single apartment. This leaves the eventual apartment owners to pay the fees in contracts that they had no part in negotiating and can’t change. Even worse, those fees are inflated to cover whatever the caretakers had to pay the developers to get the contract in the first place.
It’s a rort, plain and simple, designed with no other purpose than putting more money in developers’ pockets, and it’s against the law everywhere else in Australia. Even in Queensland, no other strata service contract can be pre-sold and pre-signed without the strata owners knowledge and consent.
By the way, why the Queensland strata managers, as represented by the state branch of Strata Community Australia, are in favour of this beggars belief (apart from them knowing what side their bread is buttered on). It’s worth noting that every other state branch of SCA thinks this is a bad idea. Enough said?
This is not saying that all caretakers are bad. Far from it. But not only are owners being ripped off when the contracts are first signed, some caretakers are now asking them to ‘top up” the contracts to make it easier for them to sell to another entity.
They want owners to agree to higher fees so they (caretakers) can benefit, while once again the strata owners are left to foot the bill, according to Wayne Stevens of the Unit Owners Association of Queensland.
“There are many myths surrounding caretakers’ agreements,” writes Wayne. “One such myth is ‘We cannot sell unless you give us a top-up.’ With respect, this is nonsense.
“What they are really saying is they can sell it for a lot more than it currently is worth if you, the owners, gift them a top-up. If you are so foolish to do so, then they can be on their way with a big bag of $$$s in their pockets, while you are left holding the can for [the next] 10 to 25 years.
“More and more owners are saying ‘NO’, and importantly keep on saying ‘NO’ every time a fresh top-up request arrives. Also, there is an ever-increasing number of owners who have seen the ‘NO’ process through to expiration of the old contract and now are experiencing the many benefits of managing their own affairs.
“These benefits include substantial reductions in levies, and substantial increases in the market value of their units.”
Obviously, this only affects Queensland strata owners. But if you live in or invest in strata in the Sunshine State, you need to log on to the UOAQ website pronto, to find out ways of avoiding being ripped off even more than you already have been.
Yes. I’ve heard Queensland strata managers and politicians say that the whole system would collapse without caretakers in place right from the start and developers are the best people to choose them.
The simple fact is that developers choose the caretakers on the basis of who pays them the most and then the caretakers have to claw back the premium they have paid from the owners.
And, yes, by some miracle, all the other strata schemes in other states survive without the pre-sale of management rights. It’s a rort and it’s an embarrassment (or should be) to all Queenslanders.
Surprisingly its often very difficult to explain the problem to lot owners as they just see it as the system & Caretaker solicitors/advocates have a well honed story that opponents are misguided at best and at worst some sort of psychotic monsters who are never satisfied. If top ups are the norm and routine as some suggest, then we have perpetual contracts. Of course some say there is nothing wrong with perpetual contracts because any issues can be resolved by the adjudicators. Sounds like Stalinist Russia? Developers are increasingly retaining Caretaker management rights, I think this has been recently outlawed in NSW.
JimmyT….. many thanks for providing a national profile to the obscenity that we call Management Rights in Queensland. I have rarely found anyone outside our strata world who can accept the logic of QLD’s ong-term management regime, especially when I tell them that our BCCM legislation specifically prohibits the body corporate from asking for any form of compensation from the caretaker when granting a 5-year top-up. Big bucks in their pockets, nothing in ours.
You are right to describe it as ‘legislative corruption’.
The good news is that more and more complexes are saying NO to these top-up requests, and many are already close to expiration of their current management contracts… and counting the days to freedom of choice.
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