EDUCATION & TRAINING
Different roles of real estate managers
The difference between a Strata manager, a Facilities Manager and a Property Manager
If you don’t already know, you’d be surprised like most out there to find out that there is quite a significant difference between a strata manager, a building facilities manager and a property manager. So if you’re an apartment owner or a renter, or intend to be either, then this information is for you.
A vast majority of new lot owners who become owners of a lot within a strata and community titled property find the complexities of Strata to be a new and daunting experience. We have put together some general information for those lot owners who are new and unfamiliar with the strata world. We have listed below a few common strata terms and definitions that we hope will help you along the way.
Please note that this information has been compiled and provided for educational purposes only in order to give a basic understanding and should not be relied upon as professional or legal advice.
Strata managers
Strata managers work for all the owners off site and provide Legislative Compliance advice, Financial management, Administrative and Secretarial Services.
If strata managers were to do both strata and property management, and there was a dispute or issue in the complex then they could find themselves caught in a conflict of interest situation, so the first thing to note is that your strata manager and property manager should not be the same person or the same company.
If you have an apartment, chances are your apartment block has a strata manager. If not then it’s a self-managed block which means all of the owners have agreed do the management themselves.
What most people don’t realise is that a strata apartment block has a lot of legal requirements. This is to protect the investment of the owners and prevent things like underinsurance and poor building maintenance.
A strata manager is appointed by the owners to primarily look after the legal and financial requirements. This means they do things like arrange the proper insurance, provide legislative compliance advice to the committee and the owners, receive and manage the fees or levies and ensure that these funds are not misused or misappropriated and that they are only used for the repair and maintenance of the common and shared property and other administrative operations as legally allowed.
While Strata Managers often organise repairs and maintenance of buildings they manage, they are not responsible for repairs and maintenance but rather they engage qualified contractors on behalf of the committee to make sure the property is maintained.
The Strata manager is also responsible to provide advice to the lot owners and the committee about repair and maintenance responsibility depending of the lot boundaries as required by the legislation. In most cases the owners do not know who is responsible to repair or maintain a water leak for example or what can be claimed under the building insurance or who pays the insurance excess after a claim is lodged.
If a building is not properly maintained and someone is injured as a result, the owners of each apartment can be held legally responsible and be up for thousands of dollars in compensation as well as fines and the strata managers advice in this regard is invaluable.
Strata managers make sure that the correct valuations are done so that the building is insured for the full replacement cost. Again if something were to happen to the building and the insurance was too low, the owners would have to make up the short-fall from their own pockets.
A strata manager also acts as a psychologist, peacemaker and all round problem-solver. Often they are called in when people can’t get along to try and sort out the issues. They also ensure the committee meets regularly to discuss matters affecting the building management and put forward committee resolutions to be passed so the strata manager can act on the committee’s behalf to resolve such matters.
Building Facilities managers
Facility Managers are usually located onsite and they manage the lifecycle of building assets, typically focusing on the long term and preventative maintenance aspects of those assets. These managers are responsible for the day to day operations of the building to ensure that all the assets and facilities are operating the way they should.
Building managers also supervise and manage movement of people in and out of the building like residents moving in or out of the building or contractors engaged to carry out repairs and maintenance within the building.
Property managers
Property managers work for the individual lot owners.
If you’ve ever rented then you have dealt with a property manager. These are the people who usually work in real estate offices and are the liaison between renters and landlords. They negotiate lease agreements and collect the rent for the lot owner and organise repairs and maintenance of the lot on behalf of the lot owner. They regularly inspect the rental property to ensure that it is being kept in good condition and to also ensure that there are no issues.
Of course if you’re a landlord you don’t have to use a property manager but many people find it saves them time and makes having an investment property simpler.
The Strata Title
A strata Title, a Community Title or a Company Title also known as an Owners Corporation or a Body Corporate is a parcel of land with a building or buildings, where individuals each own a portion referred to as a lot or unit. These buildings have common property but are not limited to areas such as driveways, pathways, fences, external walls and roof. A strata scheme can have a minimum of 2 lots and can be used for residential or commercial purpose or a mixture of both. These properties can be vertical block of units (high or low rise buildings) or they can be a row of lots or units across the strata community such as townhouses or commercial offices.
Strata Plan
The plan that subdivides the land and buildings within that common land into individual lots and common property.
Strata Company
A strata company is the individual lot owners who own the lots within the strata plan collectively known along with the Strata Title as the Owners Corporation or the Body Corporate. A strata company comes into effect when the strata plan is registered.
The Owners Corporation or Body Corporate is the property (the building or complex) and the individual owners of that property. The property is the Owners Corporation and the Owners are the members of the Owners Corporation.
GOVERNANCE
In the State of Victoria, An Owners Corporation with 13 or more lots is required under the legislation to have an elected Committee of at least 3 but no more than 12 members who are lot owners or proxy holders for lot owners.
An Owners Corporation with fewer than 13 lots is not legally required to formally elect a committee as all lot owners are automatically dimmed to be committee members unless the Owners Corporation decides to formally elect some but not all members to the committee.
The management of an Owners Corporation in Victoria is governed by the Plan of Subdivision Act of 1998, the Owners Corporation Act of 2006 and the Owners Corporation Regulations of 2007. The legislation governing Owners Corporations or Bodies Corporate is different from state to state.
WHAT IS THE COMMITTEE
These are lot owners or representatives of lot owners who are elected to act as the directors of the Owners Corporation. Elections take place at each Annual General Meeting and the powers of the Committee are set out under the Owners Corporation Act 2006 but the Owners Corporation may also impose restrictions or additional powers through an instrument of delegation.
There can be a minimum of 3 and maximum of 12 committee members. From the elected members, two office bearers must be chosen to act as the chairperson and the secretary
WHAT ARE THE FUNCTIONS OF THE COMMITTEE
Chairperson:
Presides at all meetings
Conducts all meetings
Decides on issues relating to voting and procedure
Does have a deciding vote
Secretary:
Convenes the Committee meeting and General Meeting
Receives proxies prior to General Meetings
What does a Committee do?
The Owner’s Corporation Committee is elected to act in good faith and represent the interests of the members of the Owner’s Corporation fairly without prejudice. The committees are voluntary members who are tasked to deal with any issues faced by the Owners Corporation and may be required from time to time to form a sub-committee to investigate complex matters and report back with a recommended course of action.
The Owners Corporation Committee’s primary responsibility is to:
Delegate authority the managers to act on its behalf.
Review and approve a long term maintenance plan.
Review and approve financial statements and annual budgets.
Authorise special levies when required in accordance with the legislation.
Review, negotiate and approve contracts.
Approve the payment of invoices for authorised work.
Approve spending for repairs and maintenance of common and shared property
Approve community and building operations policies and procedures.
Ensure safety and security of all persons and property within the community.
Promote a sense of community and fairness for all residents
Protect the investment of all owners
Control the running costs and fees
Enforce the Owners Corporation Rules
Authorise breach notices when the rules are not being adhered to
Recommend changing the Rules when doing so will improve the community as a whole.
Act in the best interests of the majority taking into account the minority rights.
What does the Chairperson do?
The Chair is responsible for the day to day liaison between the Owners Corporation Manager and the Owners Corporation Committee.
Major grievances against the Owners Corporation Manager or the Facilities Manager are to be addressed to the Chair.
The Chair is not to act unilaterally without the support of the Owners Corporation Committee
The Chair is responsible for keeping the Owners Corporation Committee informed of all matters affecting the Owners Corporation
Communication addressed to the Chair may, at his or her discretion, be released to the Owners Corporation Committee.
How do I become a Committee member?
Every year, a statutory Annual General Meeting legally required to be held where, among other matters, a Committee is legally required to be elected. To be eligible, a member must be a lot owner or proxy holder for a lot owner. To be elected, a committee nominee must be an owner of a lot or a representative of a lot that is financially up to date at the time of the AGM.
Conflict of Interest
Although changes to the Corporations Law 2000 may not have direct applications to the Owners Corporation Committee, it is clear that the duties of Committee Members and Officers are not absolved simply because is a not-for-profit organisation whose Members serve voluntarily.
A wider application of the principle of conflict of interest has meant that the Committee Member has a duty to avoid conflicts of duty and interest both internally and externally, especially when a Committee Member may hold interests in supplier organisations or competing organisations, relates to the new definition of fiduciary duty, now known as “in good faith in the best interests of the corporation”.
Thus, in an Owners Corporation situation, non-executive members of the Committee will frequently have potential conflicts inasmuch as they may hold assets in other buildings or pursue commercial interests where fellow residents are potential or actual clients/customers, or hold investment in supplier companies and so on. In itself there is no difficulty with these relationships provided that the Committee Member acts with the best interests of the whole of the Corporations community in mind (and not simply that part which is relevant to their interests or holdings) and follows an acceptable protocol with regard to any conflicts of interest.
Voting & Proxies
Pursuant to Section 5 of the Act of 2006, the Owners Corporation Committee and its Sub -Committees will decide matters by resolution or by a show of hands if a vote is required. A formal ballot may be conducted. In the event that a vote is tied the Chair will have the right to a second or casting vote. In normal circumstances the Chair’s casting vote will favour the status quo although no regulation or custom prevents the Chair from voting according to his/her personal view.
The Act states under Section 112(11) the Committee may regulate its own procedures and as such this adopted Code allows for a proxy as defined under Section 109(3)(d) be only given to another standing Committee member and not any other third party representative.
It should be noted that, if a Committee Member disagrees with a decision of the Owners Corporation Committee, the Committee Member is nonetheless bound by the Owners Corporation Committee’s decision and, in the best interests of the Corporation, should not share disaffections outside of the meeting. Importantly, the only way for a Committee Member to forego responsibility for an Owners Corporation Committee decision is resignation.
We have included some useful links below for additional reference:
