Strata and Community titles are the largest growing type of development across Australia. All States & Territories are experiencing growth in most sectors of the market (residential, industrial, commercial, retail and mixed use). In addition, most States and Territories are also reviewing legislation to keep up with the ever changing shift into strata.
Some time ago I had the privilege to share the stage with Bernard Salt, the world renowned author and demographer, at the Strata Community Association National conference. In that presentation, Bernard shared his insights into the increasing challenges of the growing strata market and the management of strata schemes generally.
One theme that came throughout the presentation was education of strata managers, executive committees and owners on how schemes and associations function. This is something that has always sat at the back of my mind and with more and more responsibilities being laid on strata schemes and those that manage them, in this article I tackle what an executive committee should be thinking about but above all else everyone needs to increase their knowledge and skill development no matter whether you live, work, invest or manage a strata or body corporate building.
The Committee (Strata Committee or Executive Committee) is a small representative group of owners or owners’ nominees elected at a general meeting. Its basic function is to administer the day to day running of the strata scheme with, on some occasions, the assistance of managers and/or caretakers. Before determining the responsibilities, you first must consider how to get onto the Committee, its role, the roles of its members, the limitations and then what things the Committee has to contend with.
Before even getting onto a Committee, you should have some basic grounding in strata schemes and their management. Owners need to know:
- What people own in a scheme – in each state the ownership (or title) varies from cubic airspace (internal walls, floors and ceilings etc) or centre line rules (ie the centre of a wall is shared ownership) or external walls boundaries. If you are an owner across various borders, you need to be mindful of the differences.
- How to get elected properly. Each piece of legislation has a process of election. If you do it right, there is little difficulty defending an election.
- Understand what your role is on the Committee. As a member of the Committee your primary role is to act in the best interests of all owners; not your own interests (a fiduciary relationship). The Committee also has various positions, Chairperson, Secretary and Treasurer. These are honorary positions; not a position of power or overlord. In most instances their roles are defined and should be followed.
- Follow the proper procedures and limits when making decisions. All legislation has procedures to follow when holding meetings. approving works, maintenance, court action etc. These must be followed as decisions can be challenged and, in some instances, action taken against the scheme (or owners) for improper decisions. A Committee does not have an unlimited power to make decisions. Decisions on some issues need to be referred to a general meeting for all owners to vote on.
ISSUES FOR COMMITTEES
Repairs and maintenance
The Committee must be mindful that its obligations are to be strictly adhered too. In carrying out any repairs, the Committee should consider:
- Using licensed, qualified and insured persons;
- Entering into proper contractual relationships;
- Having major works projects supervised;
- Reviewing WH&S requirements; and
- Considering the funding of the works.
Flowing from repairs and maintenance is building defects. The Committee should notify any and all defective construction work to the builder and insurer (so that the rights under the relevant legislation are kept in tact).
If the work relates to remedial works, there will be a dispute resolution process in the contract and if not, the relevant legislation will provide a process (especially in residential schemes).
One of the most difficult issues for a Committee to deal with are ownership issues (lots and common property). Clear determinations are required so that repairs and maintenance and works by owners can be defined and responsibilities clearly set out. There is a proliferation of would be “renovators” out there so it is extremely important for the Committee to manage renovations, repairs and works properly and one of the major issues that arises is working out what someone can do and where they can do it.
In some cases, the strata community will be responsible for parts of the building that are within a lot, such maintaining load-bearing walls in a structurally sound condition.
So unless you know “who owns what” and who is responsible for what part of the building, the decision making process may be flawed.
A major task/challenge for Committees is by-law enforcement. Understanding the by-laws applicable to the scheme and how to enforce them is critical.
- Notice to comply
- Other options (ie Council involvement)
Owners works in lots
As an adjunct to the problems with determining lot and common property, when owners wish to undertake works there will be further challenges. In these instances:
- Consider the work and its impact on common property;
- What type of consent is required (special resolutions, ordinary resolutions, resolutions without dissent);
- What conditions are relevant;
- What warranties and indemnities are appropriate;
- What costs are involved (and who pays for it); and
- What experts are required.
WH&S, lift registration, Annual Fire Safety statements
In the life of the scheme different requirements will be placed on the owners corporation to deal with fire certification/registration, annual fire safety statements, WH&S audits (or included in work schedules), or Council orders.
In all of these instances, the owners corporation (and its Committee) must carry out the task in compliance with the appropriate laws and at the proper times.
Being on the Committee is a thankless task, one shrouded in mystery (some say misery) and one that carries with it responsibility for actions taken. Being on the Committee requires commitment to gaining knowledge, using skills in negotiation, project management and accounting. You will be called upon at all hours to do things that you did not think were part of the “job”.
This is why many governments, strata organisations and strata managers create and deliver training for Committees (including ourselves at various public seminars). Committee members must keep current and with all of this to consider, in my view Committee members should undertake a recognised course to be on a Committee to help them undertake the tasks required to be a good Committee member. Lets’ just see if anyone takes up on the idea………….
By Colin Grace, Partner