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  • #8795
    Whale
    Flatchatter

      I’ve just spent couple of hours looking through a Strata Report that a close friend of mine commissioned prior to making a commitment on the purchase of an investment property in a Plan comprising 35 Villas.

      The Strata Report cost my friend $220, and that’s about all it’s worth in my opinion as it was very light-on, and with few comments or pointers in either the Executive Summary or in the covering letter.

      Anyway, back to the substance of the Report, the Minutes of the 2011/12 AGM revealed:

      • A $17K deficit in the Administrative Fund
      • A Resolution to borrow an equivalent amount from the Sinking Fund in order to repay that
      • A further Resolution to accept the Strata Manager’s proposed budgets to cover both the anticipated expenses of both Funds and the required reimbursement to the Sinking Fund (no timeframe given), and
      • An increase in Levy Contributions in order to fund that.

      The Minutes of a recent Meeting of the new Executive Committee (E/C) expressed its concerns about breaches of By-Laws (a home business and parking), and then very firmly about the then deficit, about the fact that over a six (6) month period the Strata Managers had assigned three (3) different “kids” to assist them in the management of the Plan, that if there was any surplus at the end of the financial year that “it wouldn’t make a dent in the amount borrowed from the Sinking Fund any time soon”, and resolved to ask the Strata Managers about how to arrange another (Extraordinary) General Meeting.

      Smart E/C, because it was immediately clear to me from the Report that on the basis of the Plan’s actual expenditure in 2011/12, that the budgets recommended by the Strata Manager for 2012/13 and accepted by those Owners present at the AGM would indeed be nowhere near enough to even meet that expenditure let alone to reimburse the Sinking Fund, that by the way showed a then balance equivalent to around 25% of the amount recommended in an appended extract from the 2010 Sinking Fund Plan.  

      So as of 29/03/2013 (the date of the Report) the EGM hasn’t occurred, the borrowing / transfer from the Sinking Fund to the Administrative Fund had not occurred,  and the deficit in the latter had grown to $32K, equivalent to an over expenditure on the obviously under resourced budget of almost $2K per month!

      OK, I know that there would have undoubtedly been some debate at the AGM about increasing the Levies but on the basis of the Minutes, the Budgets proposed by the Strata Manager were accepted unamended.  The new “smart” E/C asked about an EGM , and yes I know that the Secretary should have convened it, but the Minutes state that they would ask the Strata Manager about how to do that and two (2) months later no Meeting has apparently occurred.

      I ask myself how these Strata Managers, as one of the largest in NSW, and who have “managed” this Plan for almost four (4) years at least, could possibly allow it to become the financial and operational basket case that it quite obviously is? Furthermore, as Strata Developments spring-up everywhere, what are the chances that those Owners Corporations too will end up down this path? Very likely I’d conclude unless like ours they opt for self-management or at least take a very, very active role in their Plans’ management; here endeth my rant.

      This Plan’s heading for a Special Levy, a Strata Loan, or the appointment of an Administrator (or all of those) so obviously my friend is going to steer clear of investing in this troubled complex.

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    • #18284
      ccbaxter
      Flatchatter

        The big strata managers, the ones you speak of, have gotten very good at taking advantage of ECs who don’t know what they are doing, telling them ‘don’t  worry, we’ll look after it, get yourself on the EC, you won’t have to do anything, just refer everything to us’. Then they take the money and do as little as possible for it. They are very good at swaying with the prevailing breeze and knowing which side their bread is buttered on. Five years ago we had an involved clued-up EC; now we have a bunch of puppets to such a strata manager. Our strata has down hill to a great extent.

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