Interest charge

What can NSW strata management companies reasonably charge?

Welcome to Sisters In Law, news.com.au’s weekly column solving all your legal problems. This week, our Resident Lawyers and Real Sisters Alison and Jillian Barrett of Maurice Blackburn advise on landlord rights in strata management.

Question:

I’m having a nightmare with my strata management company. I live in a 15 apartment building in Sydney and there is $230,000 in debt related to the building due to emergency work that had to be done in the last three years.

These loans were approved by the condominium committee but seem to have gotten out of hand. The debt comes in the form of 10 separate high-interest loans that were taken out whenever work was needed.

We have a payment plan in place to clear this debt, but recently discovered that management company Strata charges thousands of dollars a year in administration fees for these debts. Basically, they charge $55 to $100 per debt each month to pay the monthly fee, even though it’s just an automatic debit system that they don’t really need to work on.

They also charge $1800 each time we need an emergency meeting to discuss debts, and we’ve had two already this year.

They basically profit from the mess, which they cause by not being aware of things. I recently discovered that our administration fund is in debt of $21,000, even though this is intended to cover foreseeable costs expected for the year.

They did not provide any explanation of how this happened. Are their exorbitant and greedy fees even legal? – Layla, New South Wales

Answer:

It appears that the conduct of the condo management company and the agreement with them needs to be looked at very carefully before the debts and associated expenses escalate further.

The management agreement will describe the responsibilities and fees of the condominium manager.

Their responsibilities will typically include financial matters such as collecting and tracking levies, estimating all services and maintenance work, maintaining accounting records, and preparing and presenting all budgets and financial statements. to the condominium committee or the owners’ company.

As far as condominium management fees are concerned, these are deducted from the cumulative levies paid by all owners each quarter.

The fees charged by strata management companies vary. The fine print of the agreement will outline the method of billing, what is included in their ongoing charges, and what work is not included and therefore will incur additional charges.

Generally, the fees to be paid reflect the number of apartments in the complex and the common areas and assets (such as a swimming pool, gardens or gym).

You will need to check the agreement specifically for additional fees associated with debt administration.

We expect you to find that the agreement allows the strata manager to charge additional fees to manage debts and hold emergency meetings.

Other examples of additional fees commonly charged are insurance commissions and insurance claim fees.

These additional fees are intended to reflect the time stratum managers spend doing their due diligence when obtaining loans and insurance and managing these expenses.

It would be useful if you first shared your concerns with the condominium committee and suggested that a meeting be organized to discuss them.

We expect others to be concerned about these costs as well and want to investigate further.

The strata committee can vote to change the strata managers. Once this is agreed and a new manager is selected, a special general meeting must be called and the new managers will help prepare all the necessary documentation to terminate the previous agreement.

At the meeting, a majority vote of the unit owners at the meeting is required to change the manager.

The Owners Company also has the right to have the Management Agreement amended, declared invalid or terminated through the NSW Civil and Administrative Court.

With respect to the administrative fund being indebted, you should request a copy of the most recent financial statements.

The condominium manager has a duty of care to the owners company, which includes making sure they are spending money on the right job and acting reasonably when making spending decisions.

Anything that doesn’t comply with this could be a violation of their agreement, which could initiate a process to have them removed.

If there has been misappropriation of funds, this would constitute grounds for termination of the management contract.

Complaints about Strata Managers can be made to NSW Fair Trading and also to the Strata Community Association (NSW).

This legal information is general in nature and should not be considered or relied upon as specific legal advice. Persons requiring specific legal advice should consult a lawyer.

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