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:
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.
EmbedRead 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.
Looking for strata information concerning your state? For state-specific strata information, take a look here.
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.
After a free PDF of this article? Log into your existing LookUpStrata Account to download the printable file. Not a member? Simple – join for free on our Registration page.