Property investment tip 32: 10 secrets on why you should not always trust your Body Corporate or Strata Committee

When you buy an apartment or a townhouse, as the owner, you immediately become a member of the Body Corporate, which is also referred to as the Owners Corporation in some countries.

The Body Corporate is a ‘group’ made up of all the landlords who own property in the same building or complex. The Body Corporate is responsible for the daily property management and maintenance of the building and the communal areas.

Some Body Corporates comprise of more landlords than others. In such instances, a Body Corporate Committee (or a Strata Committee) is formed so that a smaller number of elected landlords can represent all the landlords.

You must understand how a Committee works before you buy a property and become part of one. That’s because the Committee has more control on how the funds, collected from the levies paid by all the landlords, are spent.

This means the Committee members can either be your ‘best friend’ or ‘worst enemy’ when a big problem with your property arises.

Power struggles among the Committee members

An elected Body Corporate or Strata Committee, lead by a nominated Chairperson, Secretary and Treasurer, is formed to represent the voices of all the owners. But, the reality is, every landlord has their own agenda.

There more landlords there are, the more conflict of interest there’ll be.

Sometimes all the landlords in the same building or complex have equal voting power on every issue discussed at the Committee meetings.

But often, your voting power depends on the size of your property. The larger your property, the higher your levies are likely to be, so the more voting power you have.

I have an ongoing roof leak in one of my Sydney apartments. I believed, as the Committee had reassured me, the problem would be fixed. Seven years laters, nothing has been repaired so I have filed an official complaint against the Committee members.

I’d mistakenly assumed the roof would be a major concern to everyone. But no one cares about the roof because the leak is not directly damaging their apartments.

When money and (voting) power is involved, everyone looks after their own interests first. That’s why you need to be cautious in your dealings with the Body Corporate or Strata Committee.

Why you should not always trust your Body Corporate or Strata Committee

  1. Every landlord has their own opinion on which problems should be fixed first. Your problem will only be addressed if the Committee, in particularly the Chairperson, believes it’s important too.
  2. The nominated Chairperson, Treasurer, Secretary and the landlords with the largest properties often have the most decision-making powers. Thus, your property or strata manager will always listen to them before you.
  3. Few members of the Committee have property management training. But they’ll always believe they know what’s best for the entire building or complex.
  4. All owners are legally obliged to pay their levies. But the Committee will often approve the budget to fix problems which are important to them first.
  5. Groups of ‘friends’ or ‘good neighbours’ can form alliances to strengthen their combined voting power … without you knowing. This is how the voting system can be ‘fixed’.
  6. A disgruntled Committee member will often speak poorly of their peers to get you to side with them. You never know who is really telling the truth.
  7. A Committee member will be your ‘best friend‘ when you support their leadership. They can also turn into your ‘worst enemy‘ when you do the opposite.
  8. The property or strata manager will always tell you that your problem will be discussed at the next Committee meeting. But if the Chairperson does not think your problem is important, no one will be talking about it.
  9. No one cares if you pay your levies on time so this will not help you get problems with your property fixed any sooner.
  10. The Committee members will always want your proxy (a form which allows them to vote on your behalf). They don’t do this to be nice to you; they do this to increase their own voting power.

Your concerns will only be heard if you attend meetings

The only way to get your voice heard is to actively participate in the Committee meetings. Befriending the other landlords, even those who do not attend the meetings, is another good tactic.

Remember, you need a majority of the landlords to vote in support for your cause before any resolution can be considered.

With the joys of property investing, comes the pain of dealing with the Committee members. To me, it’s ‘survival of the fittest’, whereby the most dominant landlords get what they want, and the weakest landlords are forgotten about.

So, what have been your experiences in dealing with your Body Corporate or Strata Committee?

Sign up for weekly property investment tips.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

Up ↑

%d bloggers like this: