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Vertically integrated strata management companies
Forum Posts: 11
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03/07/2018 - 1:05 pm
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As far as possible strata committees / strata owners MUST avoid taking same strata management’s sister company for building management as strata owners can get caught in a coordinated pincer move, so much so they may act as if they own the strata property.

Even in the banks Chinese walls are not respected ( as they used to in 1980s & 1990s ) ; so what can you expect with a strata management company? 

I tell you how it happened in our own strata. Let’s say a strata management company SMX also owns a building management company (let’s call it BMY). Both SMX and BMY got sweetheart deals with SMX getting a 3 year deal with guaranteed 5% annual fee increase and their sister BMY getting a 5 year deal.

As the end of  5 years approached, we got a lawyer’s opinion and made SMX issue a termination letter to their sister company BMY. Then after a few weeks we wanted SMX to invite new building management bids from pre-identified new companies excluding BMY.

Now SMX wrote to us saying termination of the BMY contract requires AGM approval and then only we can invite new bids for the building management contracts. This was a delaying tactic to cause us maximum inconvenience.

We stood firm, said there is need for AGM approval for appointment of new strata management company, but not for termination of a building management company, at the end of a contract as per its terms earlier approved at an AGM.

SMX finally had to fall in line.

This is what you can face when your strata manager and building manager are both owned by one apex group company.

So beware of vertically integrated companies in strata land. You can be buying trouble.

This post was edited for clarity and legal reasons – JimmyT

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