In the Lake Macquarie, Newcastle and Hunter area, I constantly hear differences of opinion between owners, committee members, service providers, strata managers and building managers as to what a strata managers role is when there is also a building manager contracted by the owners corporation.
Owners need to be better aware of what they are paying for and whether they are potentially paying for it twice (e.g. building manager should be issuing work orders as part of their fee, however, they ask the strata manager to issue work orders and they charge a fee to do so).
Furthermore, the understanding of what a building manager can and should be doing has changed greatly over the past decade – whereas once they were a cleaner with a tool belt (e.g. caretaker), they are very much now the professional onsite interface between residents, contractors and the strata manager.
We often educate potential and new clients as to who should be doing what. The Strata Schemes Management Act is somewhat vague on the role of a Building Manager and it’s defined as below:
STRATA SCHEMES MANAGEMENT ACT 2015 – SECT 70
Functions of building manager
70 FUNCTIONS OF BUILDING MANAGER
(1) A building manager may, in accordance with the building manager agreement appointing the building manager, assist in exercising one or more of the functions of the owners corporation of managing and controlling the use of common property (otherwise than by the owners or occupiers of lots) and of maintaining and repairing common property.
Noting the above, the scope of what is in the agreement between the owners corporation and building manager is what is important here, however, it’s now better understood what the role of a professional building manager entails:
| Item | Strata Manager | Building Manager |
| Repairs / Maintenance | Administration with strata committee – e.g. approvals | – Issuing work orders – Contractor management (sourcing, insurance, SWMS, Site induction) – Monthly/routine reporting – Arrange quotes for committee review for routine and ad-hoc maintenance |
| Defects | Advisory/escalationManagement via committee/OC | -Processing / administration of in-unit and common property defects with builder – Escalation of common property defects to strata manager/strata committee where not addressed by builder |
| Moving | Collect bond if applicable | – Establish process for moving of goods over common property – Manage bookings/lift covers – Inspect common property for any damage |
| Software / Communications | Use of software for announcements if requiredInvolvement in Whatsapp committee groupIssue communications from owners corporation/strata committeeDeal with owner/committee queries in relation to owners corporation | – Management of Buildinglink or other system – resident database, announcements, – Management internal communications – e.g. Whatsapp cleaning group, committee group – Place signage on site as required – Dealing with all resident queries – e.g. metering, by-laws, approvals |
| AFSS | Approvals via committeeSubmission to council | – Source relevant contractors – Arrange inspections – Coordinate statement requirements |
| Site Inspections | n/a | Weekly inspection all common property areas – ensure proper functioning equipment, by-law breaches |
| Waste | n/a | Ensure functioning of chute/waste room and collection of rubbish with cleaner |
| Meetings | Manage all OC/SC meetings | – Prepare quotes/reports as required – Attend committee meetings – Potential involvement in sub-committees |
| Emergencies/out of hours | Provide out of hours contact service | – Provide 24/7 contact service for onsite issues – Attend site if required |
| By-laws | By-law escalation – e.g. final notice/notice to comply and any formal proceedings – committee action/approval | Manage first action – e.g. direct communication with resident via call/sms/email/in person |
| Bookings – common facilities | Assist in establishing rules/procedure for booking common facilities, including SC approval | Establish and manage the booking of any common facilities – e.g. BBQ area |
| Contracts | Execute and negotiate contracts as instructed | Obtain pricing for R/M OC contracts as required – Fire, lifts, pumps, cleaning, gardening, etc) |
| Budgeting / Finances | Prepare annual budgetsPay all invoicesReport to strata committee | – Assist strata manager with budgeting. – Invoice approval as required |
| Keys | Take deposits as required | – Issue keys – Authorise keys – Maintain key register |
| Community / Place making | Advice (insurance, etc) | Facilitate community events and other placemaking exercises |
| SSMA and other legal requirements | Manage OC compliance with the SSMA and other OC legislation | Be aware of the requirements of the building manager under SSMA and other relevant legislation – e.g. authorisations, timelines, approvals |
NB – if BM fails to perform duties, SM steps in and manages at hourly rate if requested.
SC – Strata Committee
OC – owners corporation
Hi Andrew,
first let me paint the picture for you. questions will follow.
1) developer retains 52% ownership within a 500 lot, mixed use development.
BMC conisists of 5 members.
2) developer uses majority voting power to minimise maintenance and repairs to shared facilities that does not service their buildings ( plumbing, landscaping, cleaning etc)
3) BMC building manager was terminated by ordinary resolution and the building management contract was tendered, with each member provided the opportunity to source a proposal.
4) 3 of 5 members wished for the incumbent contract to be renewed.
5) developer used their casting vote to engage the company that they had put forward (resolved by ordinary resolution)
6) Developer witheld all information regarding the company, vetting process etc.
7) problems arose quickly as the new ‘building manager’ had terminated all preventative maintenance in areas not supporting the majority owners buildings.
8) hot water system that exclusively supplies three buildings owned by other BMC membors was damaged too extensively to be maintain a $5,000 annual maintenance budget has become an $80,000 repair
9) other costs that are a direct result from the building managers actions have resulted in a $400,000 budget blow out (from $850,000 to $1.2M and counting) HVAC in these three buildings has had NO maintenance since 2017. internal corridors are black, multiple supply fans have failed, irrigations tanks have not been used and domestic water is being consumed, generated a $50k over budget expense.
10) one resident took action and looked into the building manager and company.
11) the building manager was a cleaner previously and does not have any relevant experience, but doesn’t care as the contract protects him.
12) it came to light that the developers accountant (and nominee) had secretly setup the buildng management company, and was given the competing proposals so that they could undercut the price.
13) developer is receiving ‘free’ building management within their buildings in an under the table arrangement. discovered as an outcome of a police matter.
QUESTIONS:
a) in order to recover some of the costs, can individual owners corporations ( members of the BMC) pursue the building manager?
b) the developer has hidden this conflict of interest. what are the penalties for such a blatant act?
c) the members of the BMC are afraid to stand up to the billionaire developer, who has suggested that if she doesn’t get supporting special resolution votes on other matters, she will use her casting vote to propose and approve unnecessary work until the BMC is bankrupt. this understandably is terrifying the home owners. (the matter in question is that the developer wants to terminate the existing strata manager and utilize their accountants firm, who has recently branched out into strata management…)
d) the building managers actions have also put lives at risk. one building had BOTH fire exists jammed shut. poor air quality is affecting peoples health, essential service outages (hot water) are a weekly event. all emergency phone lines for lifts – including the fire indicator panel had no battery backup – batteries were out of date and had failed. the site had NO fire protection on two occassions in 2019. both due to electrical fires in the hot water system. the lack of batter backup meant the MAIN FIP could not dial out an alarm signal.
e) This was conveniently covered up. should the insurers have been notified of the fire?
f) the developers lift lines were not compromised as the building manager upgraded those lifts to dual SIM,
all of the above has been documented, the owners just don’t know where to turn to for help. and as they have been financially ruined they cannot even obtain funds for legal advise.
g) local council, NSW firebrigade also have records of the above events through residents complaints. – one resident was stuck IN the firestairs with a child for 40 mins… council have done nothing.
h) worksafe have been notified about the lack of emergency planning or warden training for almost 3 years – nothing. sydney water were notified of the significant breach of water restrictions…. they sent a letter to the developers property manager as a courtesy…
I) What hope is there for the lot owners, when the government agencies who are supposed to protect them fail to act.
J) what penalties/liabiliy are applicable to the building manager who has not only failed to maintain the site, but generated huge costs?
K) Is this the kind of situation that deserves the media attention of a current affair?
L)Fair trading have said that BMC is out of their jurisdiction, and similarly NCAT have no authority over an SMS or a BMC as the BMC is merely a collaboration for shared facilities and not recognised as a legal entity… where next?
Please circulate the above to colleagues or industry proffessionals who can be of assistance – if only general advise/guidance on where such enquiries should be directed?
how can a developer who will sabbotage the BMC, to manipulate members be allowed to get awasy with such an unconscionable act?
how can their accountant be allowed to manipulate a closed tender without recourse?
again all documented