The QLD Strata Magazine | April 2023

Page 1

The QLD STRATA MAGAZINE

APRIL 2023

Can the committee arrange a strata loan without approval?

Page 6 | Lannock Strata Finance

How do we handle troublesome committee members?

Page 22 | Strata Solve

Body corporate managers and insurance commissions

Page 32 | Mahoneys & Tower Body Corporate

About Us

LookUpStrata is Australia’s Top Property Blog Dedicated to Strata Living. The site has been providing reliable strata information to lot owners, strata managers and other strata professionals since 2013.

As well as publishing legislative articles to keep their audience up to date with changes to strata, this family owned business is known for their national Q&A service that provides useful responses to lot owners and members of the strata industry. They have created a national network of leading strata specialists across Australia who assist with 100s of the LookUpStrata audiences’ queries every month.

Strata information is distributed freely to their dedicated audience of readers via regular Webinars, Magazines and Newsletters. The LookUpStrata audience also has free access to The LookUpStrata Directory, showcasing 100s of strata service professionals from across Australia. To take a look at the LookUpStrata Directory, flip to the end of this magazine.

Meet the team

Nikki began building LookUpStrata back in 2012 and officially launched the company early 2013. With a background in Information Management, LookUpStrata has helped Nikki realise her mission of providing detailed, practical, and easy to understand strata information to all Australians.

Nikki shares her time between three companies, including Tower Body Corporate, a body corporate company in SEQ.

Nikki is also known for presenting regular strata webinars, where LookUpStrata hosts a strata expert to cover a specific topic and respond to audience questions.

Liza came on board in early 2020 to bring structure to LookUpStrata. She has a passion for processes, growth and education. This quickly resulted in the creation of The Strata Magazine released monthly in New South Wales and Queensland, and bi-monthly in Western Australia and Victoria. As of 2021, LookUpStrata now produce 33 state based online magazines a year.

Among other daily tasks, Liza is involved in scheduling and liaising with upcoming webinar presenters, sourcing responses to audience questions and assisting strata service professionals who are interested in growing their business.

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Disclaimer: The information contained in this magazine, including the response to submitted questions, is not legal advice and should not be relied upon as legal advice. You should seek independent advice before acting on the information contained in this magazine.

4 Are breach notices about pets reasonable?

William Marquand, Tower Body Corporate

6 Can the committee arrange a strata loan without approval?

Jenine Garcia, Lannock Strata Finance

8 Protection for apartment owners around Australia

Bruce McKenzie and Morris Mellinger, Sedgwick & Corey Nugent, Resilience Insurance

10 Are insurance premiums reduced for well maintained buildings?

Tyrone Shandiman, Strata Insurance Solutions

12 A solution to visitor parking and booking EV chargers

Jake Sharp, MiMOR

14 Is the embedded network seller obliged to advise residents of the rate charged?

Candice Suttor, Altogether Group

16 Are there insurance implications for installing EV chargers in a strata building?

Tyrone Shandiman, Strata Insurance Solutions

18 What if the body corporate refuses to maintain a part of the scheme?

Todd Garsden, Mahoneys

20 Are sinking funds mandatory for a four lot scheme?

Zac Gleeson, GQS

22 How do we handle troublesome committee members?

Chris Irons, Strata Solve

24 How long should a fire door last if properly maintained?

Stefan Bauer, Fire Matters

26 Our car space numbers do not match the strata plan

Michael Kleinschmidt, Bugden Allen Graham Lawyers

28 Reviewing by-laws as motions with alternatives

Frank Higginson, Hynes Legal

30 Workforce Requirements and the Strata Sector

SCA (Qld)

32 Body corporate managers and insurance commissions

Todd Garsden, Mahoneys & William Marquand, Tower Body Corporate

36 The QLD LookUpStrata Directory

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Contents
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STRATA COMPLIANCE REPORT SPECIALISTS SC
Consultants

Are breach notices about pets reasonable?

We moved into our new apartment six months ago with two cats, even though we knew the body corporate had a rule about one pet per apartment. We’ve received a breach notice for not complying with the rules. What do we do now?

We purchased our apartment about six months ago. At the time of purchase, we knew the body corporate had a rule that no more than one pet was allow. We have two cats. One cat is my daughter’s support animal and both cats stay inside the apartment at all times.

When purchasing, the real estate agents assured us that two pets would not be an issue as many other lot owners had more than one pet.

We have received a notice from the body corporate advising us we are not complying with the rules. How do we make this right?

If you haven’t made an application, submit one.

All purchasers should check the by-laws before moving in. It is not sufficient to rely on information from your sales agent.

Had you done so, you would presumably have seen a by-law around the housing of pets at the property and could have made an application in advance.

If you haven’t made an application or the body corporate has a by-law that states only one pet is allowed, it is not strange that the body corporate is enforcing its by-laws. That is what it is supposed to do.

If you haven’t made an application, submit one. If you have made an application and it was denied, you might ask whether the grounds for denying the application are reasonable and valid.

Generally, the law has been in favour of allowing pets in body corporates and most take the view that it is difficult to deny reasonable pet applications. The Queensland Government has recently announced that it plans to introduce reforms to make it easier to allow pet ownership, so the general tide of opinion is that pets are permitted. We don’t have the full details of the government’s plans yet, but it is possible that any legislation they bring in could make the arguments here moot in a fairly short period of time.

In this case, it seems that the body corporate would permit you to have one cat but not two. Is that reasonable? It may be a stretch, especially if you can show the cats are indoors only. You might want to refer to your local council rules. Here on the Gold Coast, the council require you to get a permit for more than two cats. You might want to review what your council says and cite that as a standard of reasonability.

After that, you could challenge any decision of the body corporate via the Commissioner’s Office. Or wait until the body corporate takes you to court and respond then. Either way, seeking mediation and outside adjudication on the situation seems sensible.

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READ MORE HERE

Can the committee arrange a strata loan without approval?

Can the committee proceed with a strata loan without lot owner approval?

Can the committee proceed with a strata loan without lot owner approval? How do owners ensure all options have been explored prior to considering the strata loan? How can we be confident the cost of the required works is the body corporate’s and not the lot owner’s responsibility?

The committee cannot proceed with a strata loan without owner’s approval.

The committee cannot proceed with a strata loan without owner’s approval. In Queensland, it depends on the module your

building is under, but it is at least a majority vote at a general meeting. The body corporate would need to proceed to a general meeting and owners would vote on a motion on the agenda.

For owners to ensure all options have been explored prior to considering a strata loan, that’s really one for your committee or your strata manager. We generally find there has been quite a lot of research done into the most viable options for your body corporate before they proceed into a general meeting.

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READ MORE HERE

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Protection for apartment owners around Australia

What is happening to improve consumer protection for owners and purchasers around Australia? Do you have any timelines for owners located outside of NSW?

what we already see in New South Wales. We are speaking with governments extensively. Hopefully, we’ll see some advancement in other states at that level.

Bruce McKenzie, Sedgwick:

We’d like to think that the examples in NSW at the moment will create a standard that other states will start to look to and meet.

What’s critical in states outside of NSW, however, is the advocacy required from the strata community and from owners.

Corey Nugent, Resilience Insurance:

Many states are working through the regulatory reform process. New South Wales is probably the most exciting and potentially quite a long way down that road with Project Intervene and the Construct NSW platform.

However, iCIRT and Resilience Insurance offer products on a national basis already. A builder developer in Queensland, Victoria, Western Australia etc can access those products. What’s critical in states outside of NSW, however, is the advocacy required from the strata community and owners to ensure governments expand on the reform programme and ensure consumers are protected through similar mechanisms to

Morris Mellinger, Sedgwick:

In the coming months, there will be more activity around the country. As builders take up iCIRT and more happens within the development space, and the public begin to demand change, developers will get that message. People will start talking with their feet and move to products that have these stricter processes in place. Governments around the country are working towards something similar to New South Wales. I think, over the next 12 months, we should start to see some action around Australia.

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Corey Nugent | Resilience Insurance CNugent@resilienceinsurance.com.au
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Are insurance premiums reduced for well maintained buildings?

If body corporate owners actively maintain and manage their buildings, should they have access to better priced strata insurance?

Instead, insurers impose higher premiums, excesses or policy conditions on buildings with a poor claims history or that disclose issues and defects.

Body corporate owners who actively maintain and manage their building benefit from not having adverse conditions imposed on their insurance policy.

Insurers typically do not provide discounts for buildings that demonstrate maintenance or risk management. It is implied by insurers that this is an expectation.

Body corporates that actively maintain and manage their building benefit from not having adverse conditions imposed on their insurance policy.

Therefore, to ensure penalties are not imposed by insurers, buildings should always take a proactive approach to maintenance and risk management.

Tyrone Shandiman | Strata Insurance Solutions

tshandiman@iaa.net.au

READ MORE HERE

10 www.lookupstrata.com.au

A solution to visitor parking and booking EV chargers

Residents in our building regularly use our visitor parking. There is no fairness in the system. Is there a way to restrict access to visitor parking? Is there a similar system that controls access to common area EV chargers?

Residents can book a visitor parking spot. It’s the same as booking a common area such as the theatre room or rooftop BBQ area.

When the person with the booking approaches the visitor parking during their booked time, an app will show which space is booked and the driver needs only press a button to activate the removal of the bollard.

You can solve access to visitor parking spot and EV charging station easily by using software in conjunction with digital bollards.

For visitor spots and EV charging stations, you can solve this problem easily using a platform such as MiMOR in conjunction with digital bollards. There are quite a few companies supplying digital bollards.

The process works the same for EV charging stations. If you install bollards in the EV charging station spots, a resident can book an EV charging station for a set time and, via an app, deactivate the bollard to gain access to the charger.

READ MORE HERE

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Is

the rate charged?

Is

Yes, as well as other information.

Yes, the embedded network seller or exempt network seller of an apartment block must advise residents of the rate charged on the application/contract.

The seller must provide you with all information as per condition 2 of the exempt selling guidelines on page 40 of this document: Retail Exempt Selling Guideline. This includes:

• their legal name and trading name (if relevant)

• the contact details of the exempt seller

• information about the resident’s right to elect to purchase energy from a retailer of their choice and options for metering that would allow this choice

• an electronic link or hardcopy of the AER customer factsheet: How to Access an Authorised Retailer of Your Choice If You Live in an Embedded Network

• information regarding the exempt seller’s lack of obligations as an authorised retailer

• the exempt customer’s rights concerning dispute resolution

• the conditions applicable to the exemption

• any relevant government or non-government energy rebates, concessions and relief schemes

• the availability of forms of assistance if the exempt customer is experiencing payment difficulties

• details of the energy tariffs and associated fees and chargesflexible payment options

• contact numbers in the event of a gas or electricity fault or emergency

The exempt seller must provide any or all of this information as soon as practicable upon request by the exempt customer or the AER.

Candice Suttor | Altogether Group eaustin@altogethergroup.com.au

READ MORE HERE

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the embedded network seller or exempt network seller of an apartment block obliged to advise residents of the rate charged on the application/contract? the embedded network seller obliged to advise residents of

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Are there insurance implications for installing EV chargers in a strata building?

Will EV vehicles and charging stations in an underground car park impact our strata insurance policy and pricing?

If we install EV charges, should we let our insurance broker know?

Electric Vehicles are an emerging risk in that currently, we don’t have any direction from insurers around loading premiums or special conditions for electric vehicles.

Right now, EVs or electric vehicles are not impacting insurance. It is similar to the cladding issue where, once there’s a major claim, insurers might start to take action.

Electric Vehicles are an emerging risk in that currently, we don’t have any direction from insurers around loading premiums or special conditions for electric vehicles.

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We are getting a lot of inquiries from people looking at installing electric vehicle charging stations in their buildings, asking about the insurance impact. Right now, there is no impact but that’s not to say the situation won’t change if electric vehicle charging stations cause a number of claims for insurers.

I would recommend committee approach this with a bit of caution. Of course, if you have a major claim, that’s going to affect your five-year claims history and that will result in higher premiums.

If you install EV chargers in your building, definitely let your broker know.

MORE HERE
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What if the body corporate refuses to maintain a part of the scheme?

A support pole needs replacing on my very unsafe verandah. After back and forward emails, the body corporate admits responsibility but will not take action. How do I make the body corporate fix the beam?

My first floor unit has a veranda that provides a shaded area for the resident below. It has a beam that needs replacing.

The body corporate has been aware of the safety issue for five years. They finally accepted responsibility a year ago and have done nothing other than obtain an engineer’s report. Due to safety concerns, I am banned from using my veranda.

The body corporate claim they can’t get anyone to do the job. I’ve sent many emails. On many occasions, they didn’t respond. On another occasion, they told me it was my responsibility and when I asked for permission to have

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support poles installed, they acknowledged it was common property, and the body corporate’s responsibility.

I am at my wits end. How do I make the body corporate fix the beam?

If the body corporate is refusing to actively take steps to maintain a part of the scheme that it is responsible for, the owner can:

1. Write to the body corporate formally (through a lawyer if required) demanding that the maintenance obligation is complied with;

2. Obtain quotations for the required works and submit them to the body corporate for approval; and

I presume that the beam is an essential supporting framework, the lot is created in a building format plan and there are no exclusive use conditions compelling the owner to maintain the beam. If this is not the case (and the body corporate is now disputing its responsibility over the beam) it would first be a question as to whether the owner or body corporate is responsible. To confirm this, you need to have the survey plan, engineer report and CMS reviewed.

3. Make a dispute resolution application in the Commissioner’s Office seeking an outcome that the body corporate be required to carry out the required works.

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If the body corporate refuses to actively maintain a part of the scheme that it is responsible for, follow these steps.

Are sinking

funds

mandatory for a four lot scheme?

We are a four lot body corporate and some residents believe that a sinking fund is not mandatory. If sinking funds are not mandatory, why should we have one?

A sinking fund forecast is mandatory.

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A sinking fund forecast is mandatory to the extent the legislation states the following;

A Sinking Fund budget must allow for raising a reasonable capital amount from contributions to provide for necessary and reasonable spending for the current financial year, and also to reserve an amount to meet likely spending for at least the next nine [9] years after the current financial year, having regard to:

• likely spending of a capital or non-recurrent nature.

• replacement of major capital items.

• other costs that should reasonably be met from capital.

The legislation does not specifically state who must compile this forecast/budget, however, Quantity Surveyors, as construction cost experts, are the most relied upon professionals in the market to assist with these lifecycle type budgeting estimates. Sinking fund forecasts, when compiled correctly, can help reduce the need for special levies regarding unplanned

expenditure. They can also assist the committee when planning maintenance so that funds are available when the work is required. This also goes a long way to ensuring the enduring value of your property investment.

It is typical in the market to provide the body corporate with a 15 year forecast so that the body corporate gets a five year shelf life from the report, all whilst still complying with the legislation. However, the best managed sinking funds are updated annually to ensure levies are raised appropriately (neither too high nor too low) when considering the current financial position of the body corporate, recent works undertaken, upcoming works and current market fluctuations.

READ MORE HERE

How do we handle troublesome committee members?

How do we handle troublesome owners? The chair holds a grudge against a committee member, causing scheduling conflicts and ignoring their input. The problematic owner has abused their position to act as a complex coporate.

Facilitate a discussion addressing specific issues rather than just having a general chat.

Unfortunately, that’s a common situation. I suspect this is a small scheme. My experience is that with smaller schemes, you find much more of this sort of thing happening because there is a higher tendency for owners to be residents.

The first question is why do we think this is happening? What did/do they do for a living? The conflict may be due to the nature of the individual’s job, which may be methodical and forensic in nature. If this is how they’re approaching strata, strata doesn’t work that way.

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Does the owner have a valid point? It sounds like a few things are not going according to plan in this scheme. It may well be that one small thing is happening in the scheme and it’s causing a problem for this owner.

By asking these types of exploratory questions, you get down to the nuts and bolts of the situation. It is important to consider whether the individual is fulfilling their responsibilities appropriately, and if not, to address the specific problems and work towards resolving them. Facilitate a discussion addressing specific issues rather than just having a general chat.

READ MORE HERE

Strata Solve helps people untangle and resolve their strata issues. Sounds simple when you put it like that, doesn’t it?

Director Chris Irons (pictured, with his strata-approved greyhound Ernest) has an unrivalled strata perspective. As Queensland’s former Body Corporate Commissioner, Chris has seen and heard virtually every strata situation and nuance. He knows that while legislation provides a framework, there are many ambiguities to navigate through and in which pragmatism, commonsense and effective communication are vital.

As an independent strata consultant, Chris provides services which are all about empowering owners, committees, managers, caretakers, and others, to protect their strata interests. With a high-profile media and online presence, and as an accredited mediator, Chris is also able to carefully ‘read the room’ and craft the right narratives in even the most complex strata situation. Strata Solve is not a law firm. Chris instead thinks of steps you can take before you embark on lengthy, costly, and stressful legal proceedings. Regardless of the client, all people in strata have one thing in common: their substantial investment in the strata scheme. Strata Solve prioritises that investment in each tailored solution we provide.

Get in touch to find out more.

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How long should a fire door last if properly maintained?

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The fire doors in our 3 year old complex are not complaint and must be replaced. How long should fire doors last without being replaced if properly maintained? What action can we take?

I live in a three year old complex of 63 units. We have been advised some of the fire doors are not compliant and have to be replaced at a cost of $60,000. Is this cost the responsibility of the Body Corporate or individual property owners?

How long should fire doors last without being replaced if properly maintained? The warranty on the doors was for only 12 months.

We understand that if they are not replaced and a fire does occur, we will not be covered by the insurance. What action can we take?

The expected life of a fire door is around 10-15 years provided no damage or unauthorised alterations have been made.

The expected life of a fire door is around 10-15 years provided no damage or unauthorised alterations have been made. In saying this, I am aware of units complexes with fire doors in excess of 20 years. For a complex less than 3 years old, it would be quite unexpected for fire doors to be noncompliant. Without any detailed knowledge of the defects, it is hard to comment, however, if these doors have been incorrectly installed during the initial install it could well be the responsibility of the builder to rectify any issues. Additionally it is important that the correct performance requirements have been assessed.

MORE HERE
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The car parks allocated on the strata plan do not match the painted numbers on the parking spaces. How serious is this? What action do you recommend?

I am an owner occupier and ordinary member of the body corporate. One of the buildings in the complex is a 2-storey building with 5 units on each floor. There are ten covered car parking spots on the ground level with individually painted numbers.

The first-floor unit markings are in accordance with the strata plan. However, the ground floor units are reversed marked North to South (e.g unit 11 on the plan is marked as unit 15 etc.). Similarly, the car spots have painted marking numbers which have been reversed from North to South.

How serious is this? What action do you recommend?

When it comes to car parks in community title schemes, the lines on the ground mean pretty much nothing.

Paint has lifesaving superpowers, which can be observed in action every day - it can stop us from driving into each other at stop lines, or from smashing into each other at high speed on the motorway. As a society we are (thankfully) inculcated with a respect for painted lines on roads and access ways. When that superpower is used for good, we are happier and safer. Sometimes however, it can be used for evil.

Our car space numbers do not match the strata plan

I have personally seen lot owners engage in sneaky land grabs using nothing more than a pot of line marking paint and a brush. In Queensland, when it comes to car parks in community title schemes, the lines on the ground mean pretty much nothing. What matters is the survey plan (for car parks on title) and the exclusive use plan (for exclusive use car parks).

Paint can never trump a survey plan. Paint could trump an exclusive use plan, but only in very rare situations; for example, where under a (very) old grant of exclusive use the paint on the ground was used to define the exclusive use car park. While that is theoretically possible, I’ve never seen it. Generally speaking, it does not matter how long the paint has been on the ground, and whether it defines an area with lines or numbers. A useful, recent example of this principle is in Osprey Mooloolaba [2022] QBCCMCmr 459 (It was a nice win for my client!).

As for what to do? Raise the apparent error with your committee, and recommend that they conduct an audit – ‘map to ground’ –by comparing the plan/s with the painted numbering. The results will inform the next steps. If the parks are ‘on title’, then things could be very difficult to resolve (but conversely, the law should be quite clear!). If the parks are exclusive use, then if there is a consistent error, the lot owners can agree to ‘swap’ their areas, so they can keep parking where they have become accustomed to parking.

READ MORE HERE

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Reviewing by-laws as motions with alternatives

In the event that an owner wishes to vary the wording of one or more of the individual by-laws, can this be done as a motion with alternatives prior to voting on the by-laws as a whole?

It seems to be the norm to replace by-laws as a whole rather than deal with each by-law separately. As a result, there is simply one motion to adopt all by-laws.

If an owner wishes to vary the wording of one or more of the individual by-laws, can this be done as a motion with alternatives prior to voting on the by-laws as a whole? If not, what options are there?

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The right way to do that would be to throw up, in one motion, all of the uncontested by-laws. Then make the one(s) under consideration, motions with alternatives.

If you aren’t on the committee, I would suggest engaging with the committee about the issues concerning you in a wholesale review.

Otherwise, you could fire in the motion that you want with respect to the by-law in issue and then the committee would have to make sure they structure that in the right way with alternatives. I think the right way to do that would be to throw up, in one motion, all the uncontested by-laws and then make the one(s) in issue, motions with alternatives.

READ MORE HERE

29 NOW IS A GOOD TIME TO... UPDATE YOUR BY-LAWS FREE BY-LAW ASSESSMENT hyneslegal.com.au/by-laws

Workforce Requirements and the Strata Sector

Unemployment in Australia has teetered at 50 years lows for about a year now. Participation rates have been at or near record highs for the same period. This is good news. As much as people may complain of the drudgery, for most of us productive, meaningful work as part of a balanced lifestyle is key to human flourishing.

Australia’s unemployment rate has sat at low levels for a very long time, though the labour market was not exceptionally tight, and it was reasonably difficult for people to change jobs or get a big pay rise without gaining significant experience. COVID-19 stimulus has, in the medium term set off a bit of an economic boom, which coupled with a virtual end to migration for two and a half years has led to a labour shortage no one could have possibly predicted.

What does this mean for strata? A whole lot.

Strata has suffered a labour shortage since time immemorial (or at least since strata title as a concept existed in the early 1960’s).

Strata has pleasingly (or unfortunately depending on your worldview) grown solidly since inception, but over the past twenty years it has quadrupled in size. This has obviously meant the growth in need for strata managers has outpaced the growth in population, and so here we find ourselves. Pundits also suggest the projections are for this growth to be dwarfed by the next decade’s growth.

The 2023 Strata Management Benchmarking Report (“the Report”) published by our Platinum Partners Macquarie Bank showed just how the interconnected problems of the chronic deficit of good quality strata managers, the growth of lots and the overarching labour shortage are interacting to create a “perfect storm” for our industry.

According to the Report, one full-time employee is needed for every 365 lots built. Given about 70,000 (and growing) lots are built across the country annually, the nation (assuming no retirements or career changes) needs about 200 new skilled managers every year. The report also indicates that there is about a one-third attrition rate amongst firms. You can see where we are going with this… We need to attract and retain many more talented individuals who are suited to a career in strata management than we are currently.

How do we do this? Well, there has to be a multifaceted approach and we also need to recognise that there isn’t one silver bullet on this issue. When we seek to attract talent, we need to aim at quality career changers, university graduates and school leavers. There are people in all these cohorts who would no doubt make great strata managers and as a peak body we will seek to unearth them all.

What’s clear is that we cannot wait for the issue to solve itself before the consequences become disastrous. Strata managers may be overworked and burnt out now, I cannot imagine the pressure facing them in managing twice as many lots!

As an organisation which represents the sector broadly, it is incumbent on SCA (Qld) to work with all stakeholders in industry development - our member businesses, Government and the education and training sector – and quite frankly anyone else we need to; to make sure that this chronic problem has an end in sight.

Plus, strata management is an exciting, emerging professional sector and a wonderful career opportunity for many.

We are already moving behind the scenes on workforce planning and talking openly about the need to professionalise and regulate the sector - a move we hope will make it more attractive to ambitious and energetic people looking for a professional career. In terms of creating appropriate training and learning pathways, we believe there is a lot which can be done, but we are hopeful that we can create a broad and sustainable pathway which will be welcomed by all and ensure businesses have a steady flow of well-trained staff.

www.qld.strata.community

Body corporate managers and insurance commissions

If the body corporate manager does not arrange the insurance for the scheme, should they still be entitled to the commission? This clause is regularly included in management contracts.

A lot of body corporate contracts include a clause that says if the body corporate manager doesn’t arrange the insurance for the scheme, the body corporate manager is entitled to claim back from the scheme any potential commission that they might have received as a result of not doing the work. It’s quite a controversial cause. What is your opinion on this clause?

Is the insurer going to pay and subsidise the performance of the manager or is the management company going to have to increase the fees to make it commercial to operate?

Todd Garsden, Mahoneys:

This very controversial clause causes a lot of discussion, particularly with the recent reforms to the modules that required the dollar amount of commissions to be disclosed.

It does seem extraordinary that a manager can charge a fee for effectively, missing out on an opportunity of an insurance commission. However, sometimes insurance commission’s are up to a third of the revenue of managing a contract. That’s important because we want

32 www.lookupstrata.com.au

our body corporate managers to be able to make a fair profit. If you’re cutting a third of their revenue out, they’ve got to make that up somewhere else and it’s only going to come back to the agreed fixed fee services, because they’re probably undercutting on those fees knowing they’ll make some money back from an insurer.

So is the insurer going to pay and subsidise the performance of the manager or is the management company going to have to increase the fees to make it commercial to operate? It’s a very loaded question and there’s no right or wrong answer. You can see it from both sides.

William Marquand, Tower Body Corporate:

Any body corporate that is activating that cause is probably doing so knowing the relationship with the body corporate they’re representing is going to end fairly soon. I can’t imagine any body corporate would be happy with the body corporate manager

using that cause. They would see it as taking money without doing any work.

It effectively works as an exclusivity clause, which you can’t really have, to force the body corporate to get insurance through the body corporate manager.

33
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Humenergy

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Groundfloor™

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