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Why you don't want your managers to get too cozy
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23/09/2018 - 5:03 pm
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If there was ever proof needed of the naivete of prospective apartment owners – and the expectation of developers that new apartment buyers don’t know their assets from a hole in the ground – it was the concept of the one-stop strata shop.

The idea was that you bought the apartment off the plan or brand new and didn’t have to worry your fluffy little heads about strata managers and building managers because the developer already had that covered.

Signing up with strata and building managers who are owned by your developer is at best lazy and at worst insane, for fairly obvious reasons.

The most glaring of these is that the strata manager is the professional who might reasonably be expected to point you in the right direction, if not take you by the hand and lead you through the maze of defect claims.

You’d hope they wouldn’t be tempted to lead you up the up the garden path to the la-la land where there are no building defects and their boss, the developer, is Santa Claus in a hard hat.

This is not some crazy conspiracy theory. I once lived in a block where the developer-appointed building manager was so incompetent and corrupt that we asked for him to be replaced.  The developer refused, saying he was one of their best people (which may have been true, but that wasn’t saying much).

Our strata manager allowed the developers to add a clause to the contract saying that if we forced the building manager’s dismissal, we would have to pay his wages until another similar position was found for him.

That mess took a whole other battle, including threats and counter-threats of legal action, to finally untangle.

Assuming you want to keep the developer, their mates and subsidiaries well away from the management of your block, what about co-habiting building and strata managers?

To be fair, in Victoria, the strata and building services managers are often connected through the same company.

Whether or not that works depends on the company and the diligence of the strata committee in policing their activities. In many cases, it works seamlessly to everyone’s advantage.  In others, less so.

In Queensland, as we have said many times, you have the legalised corruption of the pre-sale of building management rights.  It’s worth knowing that strata managers in the Sunshine State think this is fine and dandy – unlike their counterparts in every other state. What’s not to love about a contract for 10 or 25 years, the conditions of which you can’t negotiate and which can be sold on without your approval to someone you’ve never met?

In NSW, a few companies offer integrated services covering both building and strata management.  What could possibly go wrong?

I was told of one case recently where the committee wanted to sack the building manager so the strata manager, from the same parent company, contacted absentee investors and organised a coup.  The other owners took over the committee, and the building managers kept their jobs.

All perfectly legal, even if it was as dodgy as hell.

So what do you do if your owners corporation is about to sign or renew a deal where the building and strata managers are joined at the hip or head office?

Firstly, you make sure that either contract can be rescinded, depending on a reasonable set of conditions such as ignorance of the law, incompetence, dishonesty or discriminatory behaviour.

You might also insist that there be a grievance procedure that you could easily access, and that the service provider would always prioritise the strata scheme over their business partners.

Or it might be easier to say no, we’re going to go with someone else – because they’re someone else.

This column previously appeared in the Australian Financial Review. 



Strata Choice

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05/10/2018 - 5:09 pm
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We agree that it would be foolish to sign up a developer-owned or run strata management and building management company!

But the article then goes on to talk about NSW companies that offer integrated services covering both building and strata management services and we have a different view.

There are many strata management companies in NSW that have integrated building management services, most do a great job, and others, like in all industries, don’t do such a great job.

These market forces create competition and competitive advantage for companies that are ethically and customer service minded.

Strata Choice has been appointed as strata & building managers at many first annual general meetings for new developments and having both services deployed by the same company increases communication, lessens finger pointing between the strata manager and building manager if something goes wrong and it proves to be more cost effective to the owners corporation.

I understand that some strata management companies do the wrong thing, however I do believe strata management businesses collectively have increased in their professionalism overall, and I believe owners, committee members, journalists and bloggers have worked more cohesively with strata managers over the past five years.

There has been far less strata manager bashing in the public arena and I think this has been a better outcome to date. I hope we don’t undo the past five years due to a small number of companies doing the wrong thing.

Daniel Linders

Strata Choice


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