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  • #50149
    AvatarFromthenorth
    Flatchatter

    The saga at an 8 unit strata in Armadale, Melbourne continues.

    We are looking at a strata manager to be our new manager.

    The manager has provided a blurb.

    I am going to ring him to ask some questions.

    What are the critical questions I should ask ?

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  • #52587
    AvatarSMG
    Flatchatter

    We managed to sack our Strata Manager after 22 years and the benefits have been huge  It was a huge effort and many people were convinced that the world would fall apart if we messed with this admin function. Breaking up the cozy little set-up was the goal and amazingly we finally did it.

    We had a big barrier to convince the majority of our 137 lots and the worries of the sister SP as there is a lot of shared common property and there was a misconception there were benefits to having the same SM Company and Manager, we are no seeing how wrong they were.

    We managed this by using a Strata Manager Broker out of Melbourne. He provided us with the base questionnaire of 130 questions and we added 50+ of our own, this template and knowing we had all the basics covered was really useful. He also provided a spreadsheet to compare the costs/inclusions of the final three we considered, which gave us a one-page overview everybody could understand).

    The benefits of using a SM Broker included him providing 5 qualified contenders (we approached 3 others independently), a 3-month waiver of strata fees with the new SM (if provided by the broker), and a lot of support and advice about the process and dealing with the desperate misinformation coming from the soon-to-be-outed SM when they realized they were indeed losing a cash cow into the future.

    Once we decided on the new SM we had a committed team member who knew the ropes and got us over the line and the vast majority of the owners voted for the change.

     

     

     

     

     

     

    #50228
    Avatartina
    Flatchatter

    You should ask for a copy of the proposed strata management agreement and read it carefully.  You can ask them to change the terms of the agreement.

    I recently went through the process of seeking a new strata manager.  I received about 8 quotes.  There was a big price difference between them.  I used a spreadsheet to compare them.  Some have a management fee plus disbursements (postage, calls, photocopying etc) plus GST.  With a spreadsheet, I could add all these costs.

    Check your state’s licensing authority to make sure they are a licensed strata manager.

    Some of the strata managers use a template strata management agreement.  That template had an annual increase of 5% p.a. and a minimum term of two or three years.

    Ask about exit conditions.  If you are not happy with the new manager after six months, and the contract says you have a term of three years, you may struggle to get the strata manager to agree to an earlier termination.

    Some contracts allow the strata manager to incur expenditure up to $500 or $1,000 without notifying the owners corporation.  Make sure you are comfortable with that idea.  I’ve seen a lot of invoices for $495 – intended to avoid the attention of the owners corporation.

    Also, they almost always want to have unlimited spending for an emergency situation.  I think you should find out what they consider an emergency situation to be or work out a plan that does not leave you in bill shock.

    Ask them about their debt collection process:  how they handle non-payment of levies.

    See if the strata manager expects to do all or most of your communications via email / SMS / phone call instead of paper mail.  This would help reduce costs and be faster.

    Be clear about what is included and what is NOT included in the basic management fee.  There may be a long list of tasks which incur extra costs.

    The cost of holding the annual general meeting should be included in the basic management fee.  Some strata managers allow one extraordinary general meeting at no extra cost.

    How much does an extraordinary general meeting (EGM) cost?  Is it cheaper if electronic pre-voting is allowed?

    Check the cost of updating your by-laws.  My previous strata manager charged $550 for adding a by-law change to an EGM agenda.  Even though I wrote the by-law myself, they wanted to charge $550 plus the cost of registering it ($141).

    #50197
    AvatarFrank
    Flatchatter

    Do they have any experience or aprehension pursuing issues via NCAT? (or applicable body for your state).

    Some strata managers can’t be bothered with any enforcement/confrontation which allows some residents to run wild.

    #50161
    Jimmy-TJimmy-T
    Keymaster

    Is there a catch I should be looking for or beware of ? For example are future management fees going to be much higher ?

    As I wrote previously, ask about schedule B or ancillary fees.  Are you going to be slugged for every phone call and email?

    If you are being offered a discount for the first year, then you should expect to pay full fare thereafter, otherwise it wouldn’t be a discount.

    How long is the term of the full contract on offer (I’m not sure if Vic has the same limit on strata management terms as NSW).

    • This reply was modified 5 months ago by .
    #50156
    AvatarFromthenorth
    Flatchatter
    Chat-starter

    Thanks for this.

    The manager we are considering is offering a discount of the first year’s management fee, with management fee about $450 below other managers. Is there a catch I should be looking for or beware of ? For example are future management fees going to be much higher ?

    #50152
    Jimmy-TJimmy-T
    Keymaster

    Excellent question:

    Ask them about …

    • Schedule B or ancillary charges on top of the fee?
    • How much contact they expect to have with owners
    • Names of current or previous chair who will vouch for them.

    … anyone else?

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