Monthly Archives: March 2012

A Black Boy A Fashion Statement And A Community At Risk

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The Trayvon Martin case has stirred passions all over the world because of its racial undertone but now a US homeowner’s rights advocate wants an investigation of the role of the homeowners association in the slaying.

A black unarmed teenager was shot and killed inside a gated condominium community by a neighborhood watch volunteer who claims to have acted in self-defense. The boy was armed only with a packet of sweets. Following the fashion of the day, he was wearing a hoodie.

No charges have been laid and reactions have varied. One US journalist has written black boys have only themselves to blame if they dress like this and get killed! President Obama has commented, ‘If I had a son, he’d look like Trayvon.’ The Miami Heat basketball team has lent their support to moves for the case to be further investigated by being photographed wearing hoodies.

The home owners association (the US equivalent of our owners corporations and bodies corporate) publicised and supported the neighborhood watch program championed by the killer. He was described in the HOA community newsletter as their ‘Captain’.

The ‘Captain’ should be afforded the presumption of innocence unless and until charges are laid. However, this aspect of this tragic case does raise for consideration the responsibility of strata communities when they allow their organization to become a host forum for activities not directly related to the simple statutory functions for which strata bodies exist.

As I argued recently at the Australian College of Community Association Lawyers conference, owners corporations and bodies corporate have limited powers because they have unlimited liability for members. We should remember this risk when over zealous members push personal agendas too hard.

ACCAL Paper – ‘Are Body Corporate Powers Enough?’

Are Great Mean And Women Almost Always Bad

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The answer is yes according to Lord Acton. He also gave us the line about all power corrupts and absolute power corrupts absolutely.

These quotes came to mind as I prepared for my debate at last week’s Australian College of Community Association Lawyers. I was the sole speaker for the affirmative – that our present strata powers are sufficient.

There was a battalion of lawyers speaking against me – well three anyway. They argued for increased powers for strata entities to accommodate long-term agreements for sustainability infrastructure and other forms of commercial undertakings necessary to meet the demand of our modern market.

The point I developed was a simple one; that strata entities are creatures of limited powers because they are creatures of unlimited liability.

If we want our bodies corporate and owners corporations to step up to providing all sorts of goods and services of the type that the market might want or the planning authorities might desire, then we have to manage risk.

At the moment, membership of a strata bodies brings with it, unlimited liability for the members. In other words if something goes wrong, and there is no insurance to cover the loss, then an administrator will be appointed and a levy struck and collected from each owner to foot the bill. Ultimately homes will be sold to pay the levies if that is what it takes.

This is not the outcome we want. So before everyone gets too carried away with romantic notions of creating community and place, we should think through what happens when bad things happen to the great unpaid men and woman on our committees who are already struggling to keep up with our demands on them.

Three Wise Men And Their Thoughts On The Strata Condition

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Messer’s Rath, Grimes and Moore were smart men. They wrote the first strata title laws in Australia. Some claim these were the first strata laws in the world. Belgium has a claim to this too but whatever the truth, thinking in terms of this form of living over fifty years ago was pretty clever. Fifty years on, their work is up for review, again.

As we approach this round of law reform in NSW, we are using an open forum website for consulting with the public. Skim the website and there are no surprises. It is the usual grab bag of vested interests that you get when you do a daft thing like asking the public how they want to be regulated.

Reading the list of legislative wishes of the interested and the disaffected caused me to wonder what Rath, Grimes and Moore would do, so I went to their slim volume published in 1962 ‘Strata Titles: A handbook Comprising Annotations and Practice Notes on The Conveyancing (Strata Titles) Act 1961 with regulations and Forms’. The title is nearly as long as the entire law that incidentally ran only to an elegant 29 clauses.

Reflecting on their introduction, they commented on the challenges they faced. They explain that their problems fall into two almost self-contained categories. There was the problem of providing conclusive titles for various parts of a building. They thought this comparatively easy, and appeared to have been achieved by the Act.

Then, they said, was the problem of formulating a code for living in close community. That they wrote, was harder by far. They concluded; ‘It is beyond human power (even legislative power) to make neighbours live happily ever after.’ Clever men, indeed.

Great Strata Swindles And The Role Of The Doomed

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It’s always amazed me more strata managers don’t steal from strata schemes. Two recent cases might indicate that’s changing.
One involves a straightforward theft of over $1M from strata administrative and sinking funds. This is an ‘I will put it back Monday when I have won at the track’ type crime. The motives are simple: the temptation too great.
The other case is more sinister. It involves double charging over one hundred thousand dollars by a strata manager for work already done after receiving a notice of termination. Adding insult to injury, the double charged fee for alleged additional work was 5 times the annual base management fee.
The common denominator in these two recent cases is the lack of risk management by the committees. It starts with ‘pick the lowest tenderer’ thinking. The lowest will likely be the newest, the smallest or the nastiest provider without a reputation to protect.
This thinking moves from meanness to neglect when a committee member is not a co-signatory to payments and there is no visibility of the account transactions.
Neglect becomes absurdity when the bank recommended by the strata manager pays an undisclosed commission to the strata manager for the banking business of the scheme and the bank won’t release funds to the scheme when the strata manager is sacked.
Owners should treat scheme money as their own; because it is, and also realise that you get what you pay for, and sometimes even less.

Signs Of Change In Strata

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This week Strata Match was launched (www.stratamatch.com.au).

It’s a free-to-strata-owners service that matches bodies corporate and owners corporations with new strata management service providers. It’s enabled by pretty sophisticated back-end software that enables a client’s needs to be profiled and a selected number of participating strata managers to tender for the work. There is nothing new about that concept (iSelect, Youi, Aussie). What’s new is the application of this type of software to strata services.

This week I have also learned about another new free online service that allows owners to log in and compare levies with other buildings with similar characteristics. I will let you know more about this when I have checked it out in more detail but the concept excites me. I expect however, like Strata Match, the concept might terrify some strata managers. In the case of the levy comparison tool, they will be concerned about inaccurate input and misleading output.

These concerns are valid but they underestimate the growing intelligence of the strata consumer market. With more information than ever at their finger tips, the engaged lot owners of this world will continue to learn more and use new technology applications to improve their lot (pun intended). Whenever, and wherever this has happened in the world standards shift.

Whether profitability goes up or down when this happens is purely a matter for the providers. Time will tell for strata managers but the shift is on.

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