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We have a current issue with our Strata Manager (part of a larger national operation) relating to the collection and refunding of deposits from residents. Our by-laws require a deposit to be paid by residents moving in or out of our building.
The Strata Manager won’t collect and refund the deposit directly from the resident (in this case a tenant). They require a very tortuous and time consuming route involving invoicing the owner – who instructs the agent who then invoices the tenant.
The collection of deposits is a basic requirement and I wonder if other Strata Committees have a workable solution for this – or maybe just a more helpful Strata Manager?
Any advise or experience would be appreciated
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Is this a rule or is there a bylaw for this deposit?
If its a rule then you can change it at any time with or without the approval of the OC. (but thats being a bit cheeky)
If its a bylaw, then look at the bylaw carefully. It will say who has to pay the deposit – owner, tenant, property manager. Then instruct your strata manager to collect from the nominated party.
The difficulty whether thi is a bylaw or a rule is that the tenant is unknown to you and MAY only become known if the property manager actually notifies the OC. Its an offence to not notify the OC of a tenant, but the common practice is non compliance.
Perhaps change the rule/bylaw to make the owner pay (They can then get reimbursement from the tenant). This is also a good strategy )owner paying) as they will be more vigilent in getting tenants to dispose of their unwanted chattels at the end of the tenancy. The OC withholds the owner s money and then its the owners problem to either return only part of the rental bond or chase the tenant for the withheld deposit.
I am not saying that it is just or proper, but it is common for the strata committee or managing agent to deal (on the matter or bonds) with the owner of a premises rather than a tenant, for the simple reasons that the owner can easily be billed by the strata, whereas a tenant (i) may or may not have departed by the time the bill is processed; (ii) the tenant may receive the bill and choose not to pay and it is doubtful that a strata committee will hound a debt into the courts if the legal costs exceed the debt and (iii) the tenant has no direct relationship with the strata.
I do however see two options you could take to the strata committee:
(a) The by law refers to “residents”. One could argue that term refers to tenants when the owner lives elsewhere and that imposing a bond on an owner who lives elsewhere (and the bureaucratic nightmare that is associated with that) is unjust and could be challenged at NCAT; or
(b) Remove the by law and adopt an “understanding” amongst the owners that no bond will be taken when folk (owners or tenants) move into or out of a premises, but what will happen is that (i) the strata manager will arrange for before and after (the move) photos to be taken of common areas and if damage was caused, then the owner will be billed. How he/she deals with the tenant that caused the damage is his/her business. And in the event that no damage is sustained, then there is no need for any money to change hands b/w the any of the parties.
I am familiar with strata plans adopting option (b) and in my experience (b) and it works well.
It may be that the strata manager has their own internal processes for the handling of deposits and refunds that they have to follow (especially since this is a large company).
Wouldn’t it just be easier to establish a by-law that says for tenants:
a) all deposits for tenancies should be covered by the lot owner, with payments for damage or loss of to come from the owner as a debt to the owners corp, and
b) the lot owner is responsible for all damage and loss of keys incurred by the tenants.
That would shift the reponsibility back to owner and agent to collect the deposit (or quarantine part of the rental bond) and pay for the losses and damage.
For owners, the process would have to be handled by the strata manager but since the lot owner is engaged in transactions running to hundreds of thousands of dollars, a couple of hundred bucks is unlikely to be an urgent concern and can wait until the strata management wheels have turned.
The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
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