What is the best way to manage your strata complex? This is a complex question that will depend on a variety of factors relating to your particular strata property. One of the key factors to consider is strata manager versus self managed strata. What are the pros and cons of each option and which one would ultimately best serve your strata scheme. This article delves into some of the details relating to whether you should self manage your strata, or if you would be better off with a professional strata manager.
What is a Strata Scheme?
A Strata Scheme allows individual ownership of one property which is called a ‘lot’, in a complex of multiple properties. This could be a unit or apartment, villa, townhouse or even a retail or commercial unit. This lot combined with shared ownership of the rest of the areas in the complex, which is called the ‘Common Property’ such as foyers, driveways, gardens, etc make up the entire Strata Scheme. This ownership is managed through a legal entity called the owners corporation or body corporate, also known as a strata company, strata corporation or community association, depending on your state or territory of residence and the type of scheme that you are in. Strata can be applied to residential, commercial, retail and mixed use properties.
What Is A Professional Strata Manager?
Strata managers are professionals who are responsible for the administration of a strata corporate body or owners corporation. They are sometimes referred to with different titles depending on where they are in Australia, such as owners corporation managers, body corporate managers, strata managing agents and agents.
According to the Strata Management Act 2015 in NSW, a strata manager is a person who executes various tasks of an owners corporation for a defined reward. It is the strata managers task to ensure buildings and common areas within a strata or community scheme are properly maintained.
These managers act under instructions from owners corporations. Amongst a wide range of responsibilities, they will ensure the building complies with all state laws, is appropriately insured, has relevant and up-to-date records in place, and has appropriate financial management protocols.
What Are Strata Scheme Management Tasks?
There are many specific tasks required in managing a strata title. Whether you are considering a self managed strata or are hiring a strata manager, these strata title tasks are all required to be done on a regular basis. Strata scheme tasks can include the following:
- Organise and run mandatory and optional meetings, including the Annual General Meeting (AGM).
- Take minutes and ensure the timely distribution of these minutes to all the owners.
- Implement decisions made by owners.
- Impartially handling disputes between lot owners.
- Issuing, tracking and chasing strata levy notices.
- Paying all bills and associated costs relating to the strata scheme.
- Maintain accurate and up-to-date records, including financial records, and ensure lot owners have appropriate access to these records.
- Understand insurance requirements and ensure that all relevant insurances are in place and current.
- Implement appropriate fire safety procedures and protocols throughout the property.
- Manage the maintenance of the property and coordinate all the tradespeople.
- Liaise with property managers where required.
- Maintain all appropriate records for the strata scheme.
What Does a Strata Manager Do?
Strata managers take care of a group of properties that will also include shared, or common property (such as gardens, driveways or a pool). Whether they are units, townhouses, villas, commercial or retail properties, there is much to consider to ensure properties are well maintained and that the strata meets relevant legal requirements.
Can A Strata Be Self Managed?
There is no legal requirement that says you have to employ a strata manager to manage your property. This means, the body corporate or owners corporation takes over the responsibilities of running the strata scheme.
What Does Self-Managed Strata Mean?
Some smaller strata schemes choose to be self-managed. This is where all management is done directly by the property owners who form an owners corporation or strata committee (sometimes called a strata corporation). Before going down the looking to self manage a strata, it’s important to understand a few key rules relating to strata titled properties. A well managed strata scheme takes a lot of time and effort, but is definitely not impossible. Individual property owners on the body corporate need to be clear on their tasks and roles, and also have the time to commit to completing each task. A poorly managed strata scheme can expose the owners corporation to potential legal issues and more. So it’s important to do your homework, understand the complete needs of self managed strata, and ensure the property owners in the strata corporation not only understand what is required of them, but also have the time to complete their allocated roles.
Legal Obligations in Self-Managed Strata
One of the challenges of managing a strata titled property is the many legal obligations involved. Legal and administrative obligations will include holding and running meetings, keeping minutes of meetings and implementing decisions by owners, keeping accurate and up to date financial accounts,setting up the body corporate’s rules and by-laws, levying owners and chasing payments, managing insurances, coordinating work and tradespeople at the property, implementing appropriate safety measures as well as managing disputes. This responsibility can be very time consuming depending on the size, age and complexity of the building.
Property Maintenance Requirements
Property maintenance is an ongoing task in any strata property. Whether it be regular tasks such as lawn mowing, cleaning and general maintenance around the common property, conducting required repairs and maintenance duties, or dealing with urgent property issues, these are things that require relevantly skilled and reliable tradespeople. If you’re running a self managed strata, then you will not only need to coordinate each of these services, you will also need to get multiple quotes, record these before making choices so that you can justify why any particular tradesperson was chosen, ensure adequate insurances are in place, and hope that the job gets done correctly and on time. Strata managers will typically have a list of trusted, cost effective and reliable tradespeople that they can call on. Whether it be a regular property maintenance task such as lawn mowing and cleaning, through to a priority task such as a burst water pipe, they will be able to quickly and effectively access the right people to do the job.
Pros and Cons of Self-Managed Strata Properties
When considering whether to self manage a strata titled property, or to hire a strata manager, you should consider the following pros and cons of self-managed strata properties.
Pros:
- Can potentially save money if volunteers on the body corporate or strata corporation are willing to put in the time and effort required to manage the strata scheme.
- Can quickly and personally deal with problems in the strata.
- Can get personally involved in disputes between owners to resolve challenges.
- Sometimes have quite close communication with the strata secretary with the potential to get things done quickly.
Cons:
- Strata management can be time consuming.
- Difficult to keep abreast of the complex legal requirements of strata if you’re not working in this industry full time.
- Requirement to find and manage quality trades to service the needs of the buildings? Strata managers will often have a list of appropriately qualified, and reliable trades that they can work with.
- Need to keep comprehensive records including financial records.
- Need to chase owners for strata fees.
- Can get personally involved in disputes between owners to resolve challenges.
- Can be difficult to get hold of the right people on the owners corporation when decisions need to be made.
- Challenges of replacing property owners on the body corporate who sell and/or leave active duty in the strata corporation.
Strata Managers And Owners Corporations
The owners corporation of strata titled properties will establish a contractual relationship with the strata manager to set clear duties and responsibilities. The strata manager’s responsibilities need to be clearly outlined to all the individual property owners to avoid confusion, shifting blame, or cause disputes. It’s important to note that the role of the strata manager is very different to a real estate agent, resident manager, property manager or building manager.
Strata Managers and Dispute Resolution
Being independent of the strata property, a professional strata manager can more easily work towards achieving a consensus amongst owners whenever decisions are needed. This is important when action needs to be taken faster than by going through owners corporations, or if there are potential conflicts of interest within the strata committee as to how to spend the strata properties funds. Strata managers can prioritise the spending and take responsibility which can avoid the perception of conflicts of interest in financial decision making. This independence from strata corporations is vital if differences of opinion amongst strata owners escalate into personal disputes. A professional strata manager can assist either in helping to resolve the dispute, or to coordinate a professional mediator to get involved.
Strata Scheme Finance Management
Finance within a strata property is always an area of sensitivity. The strata committee needs to be careful and uniformly agree on how all finances are managed with detailed records of all decisions kept. Strata managers provide a great deal of expertise in helping to create and manage budgets, prioritise spending, and maintain the appropriate records to ensure all strata property owners can be satisfied.
What Does A Strata Manager Cost?
Strata fees will vary considerably from property to property. Some of the factors that are taken into account when calculating what the strata manager costs will be, or what the strata fee is, will depend on the type of property, number of units included, the age, location, size, and condition of the property, as well as the value of the property.
What Is A Strata Management Fee?
If a professional strata management company is engaged, then the Owners Corporation will be required to pay an agreed monthly management fee. This monthly fee will be determined based on the specific details of the property and will cover the services of the appointed strata manager. Some of the costs that are covered by these fees include salaries, telephone, printing, postage and archiving. These monthly expenses are commonly known as disbursements.
Factors To Consider When Choosing Between Self-Management Or Professional Strata Management
There are many things to consider when deciding whether your own strata complex should be self managed, or if you should engage a strata manager. Some of these include:
How large is your strata complex? Larger complexes will typically have more owners to deal with which means many more personalities with different viewpoints.
How Many People On The Body Corporate Committee? Do you have a large enough group of property owners on the body corporate with the necessary skills to take on all the duties needed?
Do You Have Enough Time? Managing a strata can often be quite time consuming. Ensuring all volunteers are willing and able to commit to what can sometimes be quite a demanding job is important to clarify.
Understand Your Obligations: There are many requirements involved in managing a strata which include a range of legal obligations. It is important to understand all of these legal needs before making your decision to proceed either way.
