Stamping out Conflict of Interest Within a Strata Scheme

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Unfortunately, there are occasionally cases of people and groups looking after their own interests rather than working within the fair and democratic system of a strata scheme. If you’re experiencing unfair decisions that you feel might be unduly influenced, then these are the initial steps to take.

What to do if you suspect a conflict of interest

The first thing to do is determine whether or not the decisions are complying with the by-laws of your strata scheme and the Strata Schemes Management Act 2015. The Act requires that members of the strata committee must carry out their functions without favour and to the benefit of all owners, and if you believe there may be favouritism occurring or dodgy deals outside of this rule then you may have grounds to escalate the issue.

It’s a good idea to compile and prepare any evidence you may have of the decisions made, which might include meeting minutes, invoices or work orders. You will next need to write to or email your strata manager to explain why you or other members have experienced unfair treatment and how the regulations have been breached. The next step will likely be to convene a general meeting of the strata committee, to put forward a motion for a change to the scheme’s by-laws in order to resolve the issue.

How the new NSW strata law reforms minimise conflicts of interest

The great news for many owners and tenants is that the new NSW strata regulations brought in on 30 November last year have put in place a number of measures to help stamp out conflicts of interest.

Anyone holding a proxy vote is now limited to either one vote if your scheme has fewer than 20 lots, and limited to 5% of the votes if the scheme has over 20 lots. The NSW Civil and Administrative Tribunal now holds more power to resolve disputes within a scheme, with the ability to remove members of the strata committee or the strata managing agent as well as forcing elections of office holders.

Strata managers are required to announce any conflicts of interest to the owners corporation, and have a contract limit of one year for new strata schemes and three years for existing schemes. If your strata manager is not performing as well as they should be, your scheme has the opportunity to appeal to the Tribunal to change or terminate the contract or to be compensated appropriately.

Developers now have a string of limitations restricting any undue influence, from providing mandatory defect inspection reports and a building bond for new buildings to being prohibited from acting as a strata management firm for any building they have owned in the last ten years.

Strata Scheme

Changing strata managers

If you find that the problem lies with your strata manager, then you have the option of providing a motion at your Annual General Meeting to change your body corporate management services at the end of a contract, or to appeal to the Tribunal to replace or terminate a contract if the problem is pressing. Changing strata managers could be easier than you think, so talk to the team at Jamesons Strata Management for further details.

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If you would like any of this information explained in further detail or are looking for personal advice, please feel free to email our strata specialist Taylah who will be happy to answer your questions.

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