EGM called by uninvolved/cheapskate owners.

@Bennifer said:
We have a new owner who has decided that he doesn’t like paying high strata fees (who does) but he has decided to arrange an EGM and sack our current management company. Given that the owners present at the AGM set the fee structure and not the SM, its strange that some owners think the high fees are somehow the SM’s fault! The new owner has arranged a small band of owners (who do nothing) to support him because they all like the idea of paying less $$$. The company that he has selected have no website and are not a member of SCA and they are not even from our local area but they have promised the world for less money ….

Yes, you must write to all owners and tell them what a HUGE gamble is being taken with their investments and homes.  I would strongly advise anyone not to buy into a property where the Strata Manager is not a member of SCA, so I certainly think you are asking for trouble by changing to one who isn’t.

This is a classic “pig-in-a-poke” situation where you are being asked to gamble the biggest investment in your lives on what? A promise? No guarantees, no track record … just a no-name company that will potentially cause you immense grief, hardship and hassles.

If there are problems, solve the problems – don’t jump into the arms of some unknown and unaccountable business on the say-so of one owner and a few penny-pinching cohorts.

You are right, the owners have to be told that THEY are the ones who set the levies, not the strata manager.  And how exactly does this new person plan to save money anyway?  Cutting services?  OK, take a few percent off the value of your homes and the rent you can charge tenants.

Reducing the amount paid into the sinking fund?  Take another few points off (and get ready for the costs of legal challenges when someone realises you aren’t fulfilling your legal obligations).  Maybe you’re going to get cheaper insurance (although this unregistered Strata Manager will certainly be getting a kickback – and you will probably be getting less coverage than you had before.)

There are two kinds of costs in strata – the ones you can’t legally avoid and the others that you can.  If the latter isn’t excessive – and they can obviously be fixed –  it means the new SMs are planning to either cut services like cleaning or security and/or avoid your legal responsibilities. When potential buyers realise this (as they will through strata searches) they will run to the nearest property where the finances are properly managed, the legal liabilities are met and the Strata Managers are members of the SCA.

By the way, in other cases I know of where Owners Corps have changed to non-SCA strata managers, by the time they realised they had made a mistake, they had often locked themselves into contracts that had no performance guarantees, no legally enforceable liabilities on the Strata Manager and no way out.

If these people are so convinced that there are ways of reducing the levies, why don’t they just raise their plan at the next AGM so everyone can see it and vote on it?  Why shoot the messenger by getting rid of the Strata Manager?  Is it because the SM has enforced the rules and they don’t like it?

It really isn’t that hard to become a member of the SCA – all you have to be is a licensed strata manager.  I’m sure they will have plenty of arguments about why they “choose” not to join. Maybe they are just a small independent (which is another worry if they aren’t based in your area). But, basically, if a strata manager isn’t a member of the SCA, you have to be extremely wary.

My last piece of advice is that if the other side win and sign a contract you haven’t seen to hire a strata manager you don’t know and who isn’t even a member of the SCA, to make cuts that they can’t explain or justify – you have a out a year in which to sell your apartment before the property values and lifestyle start going down the gurgler.

Feel free to copy these comments in a letter to your owners – and you need to get that out ASAP to gather the  proxies. Meanwhile, come up with a plan that shows where costs can be cut – and offer that as a choice that the EGM.

But don’t let the SM take the fall – they can only act as instructed by the Owners … and that means everybody including the CostCutters.

Cosmo, I’d be keen to know more about how you obtained the comparison figures if you can provide that information. I’m on an EC in a complex of 26 townhouses – no lifts or pool, but lots of common gatden areas and walkways. We often receive comments about the levies and it would be great to provide some comparative figures for the non-believers!