Management Options for your Owners Corporation
There are two subjects for consideration here –
- Use of a registered External Manager or,
- Internal Management (or self management)
We are going to discuss the options, the pitfalls and the traps in coming months ….This is not intended as a forum for horror stories, however due notice of experiences will be noted without identifying parties so that we can discuss the ways to resolve the many issues that come up and move forward.
Over the years I have seen many OC Committees from long established developments get hung up on the past were the focus must be in moving forward. Often a commercial resolution may be required to move forward as often the cost of pursuing righteous causes or attempting to be punitive can in fact be more regressive with many undesirable outcomes (my apologies for my diplomatic words, but I think you know what I mean) . Owners Corporation management by it’s very nature can be a very political animal and can quickly get out of control when you are trying to get even some of the most basic tasks achieved, let alone the difficult challenges addressed.
Of note also is that many OC’s may have the form of management dictated to some extent by the nature of the development in which they exist. Just as the size and location of a nation can dictate it’s form of government.
Large multiple Owners Corporations (this is where many OC’s exist in a development) can become an administration nightmare unless all parties are on the same tram, so to speak. A case in point where many OC’s in one development share services. Large single and multiple OC’s can be run just like a small business with great success from within and have very few issues, also saving considerable sums in administration costs. The consideration of internal management is often driven by a real or perceived lack of service by external OC Managers. Some OC’s are constantly changing external OC Managers in the quest for quality of service and many find an OC Manager and run with them. A lot is perception by the various parties, however there are external OC managers out there that are a cause of concern.
You as a lot owner or Owners Corporation Committee member must also shoulder some responsibility for the management of your OC. This includes asking questions and being active in your committee. In effect you ensure that either your external OC Manager or internal management team is doing their job. You are entitled to ask questions.
OC Manager Shopping? My own experience in consulting to Owners Corporations and having actually prepared or assisted in tenders for developers for Owners Corporation management has often given me some cause for concern due to the fact that the Owners Corporation Act for Victoria does spell out the need for there to be no conflict of interest.
Experience here indicates that often OC Committees or developers will shop around in an effort to find a ‘Compliant’ OC Manager, especially where say a developer is trying to dictate the opening years budget for OC Fees in an attempt to make sales of apartments/lots more attractive or the OC Committees are unwilling to address pressing maintenance/cost issues and increase budgets. These issues can even be seen as political in nature. The incoming OC Manager then has to make a decision based on complying with the Act and not about how much in fees they can make from your property. This raises the ‘integrity’ issue. A good manager will hold the line and insist on correct process.
If your OC Manager tells your committee or you how it is, you should not immediately try to rush them out the door. Sometimes the truth hurts and if you need an OC Fee increase for example, removing the manager doesn’t make the need to increase fees go away.
The lesson here is all parties and this includes you and your committee of management have to deal with the reality of situations or you could burn a good manager.