I am buying in a strata complex, but it is self-managed
Often buyers who are not familiar with the concept of strata opt for a townhouse, villa or a unit in a self-managed strata complex. They think a small, self-managed strata might not be as overwhelming as buying into a large strata complex comprising of several stratums. The reality is, regulatory compliance applies to small strata complexes in the same way as it does to larger complexes.
The Strata Schemes Management Act requires the Owners’ Corporation to be responsible for the management of any property operating under a strata scheme. This can either be done by appointing a Strata Manager outside of the owners’ corporation or forming a Strata Committee within the owners themselves. The role of the Strata Committee or Strata Manager involves everything from regular maintenance, organising annual meetings to dealing with complaints, breaches of by-laws and keeping records of funds.
Generally, smaller strata schemes opt for a self-management as a cost-effective way to manage the strata. The concept of self-managed strata works out well in a small, harmonious and skilled strata community and a self-managed strata also gives more control to the owners. Instead of reporting a problem to a Strata Manager and waiting for something to be fixed on the property (whilst also paying fees for that management work), owners can directly deal with the Owners’ Corporation. It also offers flexibility to outsource services as they become necessary, such as a bookkeeper, mediator or an insurance broker.
One of the major duties of a Strata Manager is attending to all Strata Hub reporting. Failure to comply with this requirement may result in a fine. Other regulatory responsibilities include Strata Hub reporting, fire safety and AFSS obligations, asbestos registers, window safety compliance and capital works planning. There are also insurance compliance requirements, including annual insurance renewals, valuations, claims and complying with the insurer’s requirements. It is vitally important to maintain adequate insurance cover all the time and to handle claims efficiently to avoid unnecessary expenditure.
There are many benefits to a self-managed committee, however such an arrangement may struggle when there is a dispute between owners as there is no external professional appointed to resolve the dispute. Managing a strata can become difficult if the members don’t have the relevant experience and skill set. Reporting obligations can also become daunting for a small committee. Failure to manage the strata scheme appropriately can significantly devalue the property. Most new purchasers look at how efficiently the strata is managed, including available funds in possession of the strata before buying, as it affects the day to day running of the property.
It might be a good idea to pause and do the necessary research before buying into a self-managed strata or deciding to manage your strata yourself. The Strata Schemes Management Act applies whether the strata is self-managed or professionally managed. The only difference is who has the responsibility for the onerous work of managing the strata.
