This post, including an article and Q&As, is about self managed strata schemes in NSW. What are the advantages and challenges of self managing your strata building? Is it better to be a self managed strata or to engage a strata manager?
Table of Contents:
- QUESTION: A lot owner in my Mum’s small unit block self manages the scheme. He collects levies, but isn’t doing the best job prioritising maintenance or paperwork. How do we get things back on track?
- QUESTION: We would like to self manage our strata building rather than engage a strata manager. Is this possible? And if so, how do we go about this?
- QUESTION: We live in a small strata scheme of 6 lots. Can 3 lots be self managed and the remaining 3 lots appoint a strata manager?
- ARTICLE: Switching from Being a Self-Managed Strata Scheme: First-Hand Experience
Question: A lot owner in my Mum’s small unit block self manages the scheme. He collects levies, but isn’t doing the best job prioritising maintenance or paperwork. How do we get things back on track?
My Mum owns a lot in a 7 unit block of villas. It is self managed by one of the owners. He collects the strata fees and isn’t doing the best job prioritising maintenance or paperwork.
He organised the eaves to get painted but only half of Mum’s and other lot’s property was painted 12 months ago. Recently, he allowed another committee member to get a new fence and strata contributed half of the cost.
Can my mother demand he finishes painting her villa and withhold her fees until this work has been completed?
Answer: It might be time to start getting affairs at your mum’s building in order. That might mean getting professional help.
First up, I empathise with the situation you and your mum are in. While it is great when strata schemes are able to manage themselves, this is an example of what can happen when it goes wrong and the regular checks and balances aren’t happening.
One way of answering your question is by saying, well, your mum can do what she wants, given everyone else is seemingly doing that as well!
I don’t think that’s helpful or useful though. While I know you’re focussed on this particular issue, you need to start thinking long-term. If this happens now, chances are it will repeat itself – maybe in a slightly different form – in the future. It might be time to start getting affairs at your mum’s building in order. That might mean getting professional help, such as from a strata manager, or starting off by getting some legal advice. As a minimum, your mum might want to start with a discussion with the other owners. That discussion might be focused on your mum asking to see the paperwork to get a picture on the state of fees and any plans for maintenance.
This might sound like a bit of effort, and it is, frankly. Then again, think about the flipside: this is probably your mum’s biggest investment and it needs to be protected. At the moment, it doesn’t look like that is happening. So some effort will be worth it.
Chris Irons
Strata Solve
E: chris@stratasolve.com.au
P: 0419 805 898
This post appears in Strata News #562.
Question: We would like to self manage our strata building rather than engage a strata manager. Is this possible? And if so, how do we go about this?
Answer: The owners are ultimately responsible for ensuring the strata scheme meets its obligations but strata managers often provide very important support.
It is possible for buildings to become self-managed. In reality, strata managers provide administrative and compliance support to an owners corporation. The owners are ultimately responsible for ensuring the strata scheme meets its obligations but strata managers often provide very important support. Often buildings become self-managed to avoid the cost of strata management and it can work well. However there are a few things to consider before you take this step.
The owners need to understand their legal and administrative obligations. These include, but aren’t limited to, holding and running meetings, keeping minutes of meetings and implementing decisions by owners, keeping financial accounts, levying owners and chasing payments, managing insurances, co-ordinating works at the property and managing disputes. Usually, one owner takes on the bulk of this responsibility and it can be time consuming, depending on the size of the building and ongoing issues in the building. If that owner decides to sell or no longer wishes to have this responsibility it can cause issues.
In our experience, self-managed buildings generally do not keep records nearly as well as strata managers. This is not a surprise as strata managers specialise n this area. Poor records can cause issues on the sale of a unit because buyers might view a building as a higher risk if it is unclear from the records what has been happening in the building.
If you are just looking to save some money then think carefully before making this decision. If there are other reasons, like a very small scheme with few owners who all get on well, then it might be a sensible and straightforward decision. I hope that helps.
Michael Ferrier
Eyeon Property Inspections
E: michael.ferrier@eyeon.com.au
P: 02 9260 5510
This post appears in the April 2021 edition of The NSW Strata Magazine.
Question: We live in a small strata scheme of 6 lots. Can 3 lots be self managed and the remaining 3 lots appoint a strata manager?
We live in 6 unit townhouse divided into 2 buildings. Each building has 3 units attached.
3 units are unhappy with our Strata Manager and want to get a new contract with a new company, but the other 3 units do not want to change.
I read that small building like ours are usually Self Managed Schemes. Can 3 units be Self Managed and can we get a new contract with another Strata Manager to manage the other 3 units?
OR can 3 units be managed by the current strata manager and the other 3 units be managed by another Strata Company?
Answer: This would add unnecessary complexity and would also add costs to the management of the complex.
Based on the information you’ve provided it seems most likely that, although there are two buildings, all six units are part of one Strata Plan. In that case, it would not be feasible to split the management of the plan. Each unit is part of the plan and one set of records for the plan.
It would be important to keep the records together as the complex shares one owners corporation. The best solution is to come to an agreement among the owners about the best way to manage the strata plan. Whether that is with the current strata manager, a new strata manager or to convert to self-management.
If each building was to be set up as a separate strata plan it might be possible to split the management, but there would be some work involved in splitting the records and setting up new financials etc. One area that could make this option complicated would be common areas shared by the two buildings (such as gardens, driveways or a pool). If the management of the two buildings was split, you would still need to jointly manage the community property. This can be done by establishing a community association to manage the shared facilities. In my view, this would add unnecessary complexity and would also add costs to the management of the complex as the community association would also have to be managed and be funded to maintain the community property.
We are not legal advisers so we do not have any experience in setting up these structures. Our comments are based on our experience gained from seeing the circumstances in many strata plans. If we can be of any further assistance please don’t hesitate to contact us directly.
Michael Ferrier
Eyeon Property Inspections
E: michael.ferrier@eyeon.com.au
P: 02 9260 5510
This post appears in Strata News #405.
Switching from Being a Self-Managed Strata Scheme: First-Hand Experience
Currently, there is no legal requirement for a strata scheme in NSW to engage the services of a professional strata management company.
As a result, many small buildings choose to be self-managed, where all management is done directly by the owners. And with strata records inspections being one of our core services, we come across such schemes quite regularly.
While in many cases self-managed plans are doing quite well, we have also seen cases where basic obligations and compliance requirements have not been met. And arranging a strata inspection can be a daunting task too, as often record holders have a full-time job, etc.
The above made us wonder why some owners choose to go self-managed when there is an opportunity to engage a professional strata management company for a relatively small fee who will do all the stressful work for them?
Turns out one of our colleagues, Sue, owns an apartment in a complex in Ramsgate in which owners have recently switched from being self-managed for more than 12 years to a professional strata management company. They have been professionally managed for over a year now and she shared some of her insights.
Strata Committee:
The main drive behind switching from being self-managed in Sue’s building was the fact that when the time came, no one wanted to be the Secretary or the Treasurer of the Owners Corporation. To put it simply, managing the strata scheme was too time-consuming and nobody wanted to have this responsibility. As a result, management of the building was always left to the same people who did it reluctantly.
Sue further notes that there were cases where the Secretary made decisions without the knowledge of the Owners Corporation, making management less about communal good and more about what is in one person’s interests.
Strata Levies:
While being self-managed, Sue used to be able to pay her levies monthly, making financial planning easier. With the new strata management company, she pays her levies quarterly, which is a lot less convenient for her. And when she approached the strata company, she was advised that quarterly payments are the only option.
We know that some strata management companies have flexible payment plans for their clients, so if you are looking to switch from being self-managed and this is a “biggie”, make sure to include this item on your criteria list.
One thing that caused issues for Sue and other owners when they were self-managed was chasing late Strata Fees. Now, this is the Strata Manager’s problem.
Management of Issues:
What Sue and the rest of the owners really liked about being self-managed is being able to go straight to the Secretary of the Owners Corporation if a problem arose. Decisions were made straight away if needed, resulting in a faster resolution of the problem.
However, Sue also notes that the Secretary wasn’t always available when problems happened and both the Secretary and the Treasurer didn’t appreciate people knocking on their doors all the time.
Industry Knowledge:
One of the big issues for self-managed plans, including Sue’s building, is that there are a lot of regulations to be aware of. Neither the Secretary nor the Treasurer were industry professionals so they didn’t have a good understanding of the legislation. While more generic items such as Insurance and Fire Safety Compliance have been arranged, some other decisions have been made without knowing if they were legislatively correct, exposing the Owners Corporation to more risk.
The Strata Manager is now able to provide Sue and other owners with necessary advice where required and organise all necessary compliance documents on behalf of the owners.
Record Keeping:
Management of a strata scheme is very time consuming. In Sue’s building, the Secretary and the Treasurer had to set up their own templates, type up minutes after meetings, do accounts and so on. Combined with the lack of time, this has resulted in inadequate record keeping making it hard to keep track of what has been happening in the building.
And from our experience, poor records and compliance issues may also make it harder to sell a property or result in a lower price because of the uncertainty about the current circumstances in the building.
Meetings:
When being self-managed, Sue says it was easier to arrange meetings at a day and time that suited everyone. Being managed by a strata management company, all meetings need to take place prior to 5:30 or else the Owners Corporation must pay extra and, of course, this is not something owners in Sue’s building are happy with.
So, is it better to be self-managed or managed by a strata management company?
If you have time and knowledge to pull-off being self-managed, you can certainly enjoy some benefits such as reduced cost, more flexibility and faster decision-making process. But there are a lot of cons too and removing all this unnecessary stress for a small fee by being managed by a company may be worth it.
Ultimately, it’s your call.
Michael Ferrier
Eyeon Property Inspections
E: michael.ferrier@eyeon.com.au
P: 02 9260 5510
This post appears in Strata News #275.
Have a question about self managed strata schemes or something to add to the article? Leave a comment below.
Read next:
This article has been republished with permission from the author and first appeared on the Eyeon Property Inspections website.
Visit our Strata Committee Concerns, Strata Managers OR NSW Strata Legislation.
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Are you not sure about some of the strata terms used in this article? Take a look at our NSW Strata Glossary to help with your understanding.
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We Self manged in our 8 units complex previously was really well managed, allowed older residents good quality of life, best practice, no stress. We were moved to a strata company, without any consultations with owners. Now Strata does not include all the owners in yearly AGM they implement plans and increase fees without consultations of owners, they provide no budgets about works. Presently they have gone ahead with 10 year plan and paid for this plan, without consultation with the owners. Strata Fees have doubled plus, nothing is been done, we fix all out own units, because they refuse to fix in-between plumbing, fix our own leaking roofs, owners fixed water damaged ceilings because they refuse to fix anything. We were self managed very well , all gardens looked amazing, now everything is in disrepair. With the 10 year plan, most owners will be bankrupt at this speed and less valued units. We as owners did great together, now some of us have no attended AGM in many years because of screaming in meetings, they are not sending any invites or pre-meeting agendas or minutes.
Hi Kingie
I believe you placed a similar comment on Chris Irons’ recording of this webinar:
NAT: Self Managed Strata – How it works… and how it doesn’t
You can access Chris’ response to your question in the comment section of the video.
What does that mean? My Mums place is self managed she pays her fees and expects the common gardens to be maintained, eaves to be painted, security gates to be operational. Self management doesn’t mean an 88 year does the common gardens outside her property or paint does it?
No, the eaves, etc should be painted and if the by-laws relating to your mum’s particular strata scheme class her garden as common property, there should be some arrangement in place for that. It may be that a gardener is employed and paid (from the levies) by the body corporate to do all the gardens or perhaps there is an agreement in place where individual owners do their own garden. You would have to ask someone on the council.
However, the person who is responsible for collecting levies and making sure all the bills are paid on time and accounts are in order may not be the person who is solely responsible for organising all of that. They may only be the secretary/treasurer (not a strata manager). The best thing you and your mum could do is to familiarise yourself with the by-laws that apply to your particular strata scheme, attend meetings and find out who the Council of Owners are. This is a group of owners, voted in at the AGM, who are able to make decisions on behalf of the other owners. They should also be able to assist in following up on matters pertaining to common property. In a self-managed strata it is not just the responsibility of the person who does the paperwork. It is supposed to be a team effort. No decision can be made by just one person.
If you go down the path of engaging a strata management company, it will cost a lot more and there will still be the need for a council of owners who make final decisions. As outlined above, there are pros and cons, but in my experience, if you don’t have an effective and functioning council of owners, you will continue to have the problems you have mentioned, either way.
Regarding self-managed strata. It is imperative that there is a supportive and knowledgeable Council of Owners. I, myself am the secretary/treasurer in the strata where I live (8 villas). Levies and paperwork in themselves are a lot of work, which I do voluntarily. Unfortunately, none of the other owners seem to think they have any responsibility towards the upkeep of their property on a whole or individually. They think that is my job alone. They also have no idea about strata title or strata bylaws. We have a council of owners who think they don’t have to do anything. Should we employ a strata manager, nothing would change. They don’t realise that the council of owners have the first and last say on what happens within their strata. They all seem to think they live in some kind of resort, where everything is done for them.
Strata managers cost thousands of dollars each year. Their main responsibility is the financial side of things and arranging the AGM. Anything outside of that costs extra and can only be carried out at the request of the owners. Yes, they will manage maintenance, etc, under instruction from the council of owners, usually at additional cost.
I guess, my gripe is that people buy strata titled property with no idea what strata living entails. They have never picked up a copy of the bylaws, let alone read any of them and they get confused with what their responsibilities are within a self-managed strata as opposed to a professionally managed strata. Strata managers don’t do the thinking on your behalf.
People need to realise that their property is their home and their responsibility, just the same as if they bought a free standing property on green title. Buying strata property does not mean someone else looks after everything for you and you can do whatever you want!