- This topic has 5 replies, 4 voices, and was last updated 12 years, 2 months ago by .
-
Topic
-
The EC instructed our SM to change our sinking funding term deposit from a long term to a monthly investment due to expected large expenditure. This was not done and we now face a penalty for breaking the term deposit. Do we have any recourse against the SM?
-
Replies
-
Willie, be afraid, be very afraid. Write a formal letter fast, asking pertinent questions such as: why the strata manager didn’t do as requested; are there any commissions associated with the investment; exactly how and where the money is invested; does the owners corporation have insurance against negligence and fraud; can you be provided with a full set of accounts for the investment etc.etc.
Are there agenda items and minutes and / or correspondence about your investments.
Is there any chance your ‘term deposit’ is with one of the… err… big merchant banks and your strata manager is one of the… err… big strata managers? Do you pay your quarterly levies ‘indirectly’ through a type of credit system with an acronym name?
If you don’t get direct answers fast ask for the money to be put back into your strata’s account.
Our Executive Committee is in a similar position to Willie. Looking at Les’s checklist of indicators of a conflict of a conflict interest we tick all the boxes except our strata manager is not a big one. Is it common practice for strata mangers to receive commissions for the placement of the trust accounts under their management?
Can anyone else provide more information on this situation?
Willie has said that they had their sinking fund money in a long term deposit account, which is most likely to be with a bank, because banks are authorised deposit taking institutions. They instructed the strata manager to move it to a shorter term deposit, and he didn’t do it so now they will incur a penalty. A similar thing happened to us a few years ago, we instructed the strata manager to invest the money and he didn’t, so we lost out on the interest. I don’t think Willie is suggesting the money is gone, just that it is still in a long term deposit and they are going to incur a penalty for breaking the term. The penalty is usually not that high, depending on how much is in the deposit, it is usually $150 or so.
Strata managers don’t get commissions from banks for putting money in term deposit accounts. Strata managers don’t have free rein to invest money wherever they like, unless they are given free rein (which would be very stupid), it is up to the EC and/or OC to decide if and how money is invested. As a matter of course you would instruct the manager to provide regular reports.
Strata Managers are bound by the Property Stock and Business Agents Act 2002. Part 7 deals with trust accounts in detail.
There are two things Willie/the EC could do:
1. write to the strata manager and say because you didn’t follow our instructions we have incurred the break fee and we expect you to pay that break fee.
2. if the strata manager doesn’t play ball, tell them you will make a complaint to Fair Trading. But query whether you want to do that over a few hundred dollars.
Investing the money is different from managing the funds and books of account. Investment of strata funds is dealt with in a separate section of the Act. The strata manager doesn’t have carte blanche to invest the strata funds, unless you have specifically delegated that function.
Have you written to the strata manager? If you are that worried and he isn’t giving satisfactory answers, ring Fair Trading.
- You must be logged in to reply to this topic.