If you ask many rental residents who manages their building, the answer is often immediate: “the strata manager.” It is an understandable assumption. They send the emails, issue meeting notices, arrange the repairs, issue breach notices and often appear to be the only consistent point of contact. Their address, email and phone number will be on every strata-connected notice they receive. There is also, on strata buildings in some states, a prominent notice at the entrances to their buildings, displaying the managing agent’s contact details.
Some strata management companies also use the words “Owners Corporation” or “Body Corporate” somewhere in their business names, which may reinforce the perception that they are the building’s owners corporation itself. That is one common misunderstanding in the strata world.
The reality is that no single person manages the building. Instead, there are three overlapping roles that share responsibility in different ways.
(1) At the top sits the owners corporation. This is not a company in the traditional sense. It is simply all of the lot owners collectively. It is the legal entity that owns and is responsible for the common property. When major decisions are made, such as approving a special levy, authorising significant works, authorizing new contracts for maintenance or managment, or setting the annual budget, they are made on behalf of this group.
Because it is not practical for all lot owners to manage day-to-day decisions, a committee is elected at every AGM. The committee is where most of the practical governance happens. It reviews budgets, signs contracts, considers maintenance issues and oversees expenditure within its delegated authority.
(2) Then there is the strata manager. This is the role most people interact with directly, and for that reason it is often assumed to be the “control centre” of the building. In reality, the strata manager is an external contractor delegated by the owners corporation to carry out administrative and coordination tasks. They implement decisions, manage records, hire contractors, prepare financial reports, and assist with compliance processes.
Over the past decade, much of the day-to-day administration in the larger strata management companies is handled by office staff and accountants through software systems tailored for strata management. The software can assist in or take over many management chores. This includes generating financial reports and AGM documentation, issuing minutes of meetings, collecting levies and quickly dealing with unpaid levies.
I am a partial fan of strata management software. I have found that overall, if it is used to its full potential, it can greatly improve the level of transparency between managers and strata committees. The downside is that all those charts and summaries can be used as a substitute for the actual fully-detailed documents that committees need to examine in their governance role.
If you have the original bank statements for the strata account, for example, it is easy to check if the summaries have diverged from what appears to be the reality. This does not necessarily mean that there is something wrong with the summaries or graphs, but it does mean that a follow-up question is necessary.
(3) The next role worth considering is that of onsite managers. They should be hired after consultation with the strata committee. Because they are “at the coalface” they handle many common problems and requests, such as lost keys and noisy neighbours. They also regularly inspect the building for any urgent or developing maintenance problems.
This is where a grey area emerges, because in smaller apartment buildings (between four and 50 lots for example) there is rarely enough levy income to afford a fulltime or part-time onsite manager. The contracted cleaners, who are usually onsite for only a few hours a week, are not engaged to act as de facto caretakers or onsite managers.
In Australia, strata managers are not onsite managers, as they may be in other countries. They can’t be. Most of them handle a number and variety of buildings. Further, under the terms of their contract, they may not be required to regularly or occasionally visit the building, although many do. There is a reason for this reluctance.
Since Covid 19, there has be a drift away from strata management staff working in large head offices and many managers now work from home. Commercially, this is a universal trend and it’s potentially a good one since it should reduce overheads. In theory at least, strata managers could live anywhere, including interstate, and stay in touch by phone and email, so long as they are registered with the state and meet its additional insurance indemnity, character and financial requirements.
In practice, strata managers working interstate and familiar with their own state’s strata regulations and Act, will discover that each state has its own Act and regulations and they can be remarkably different, often crucially so.
So who, then, is going to do those regular inspections around the smaller buildings that in larger buildings are done by onsite managers? The residents usually, including not only onsite owners and committee members but also the tenants. The communication between tenants/lot owners and managers often forms an informal reporting network, of which the committee may not always be fully aware.
This is where the committee’s role becomes important, even if it is not always visible to residents. The committee is meant to ensure that decisions are not simply being implemented efficiently but were appropriate in the first place and not just a knee-jerk reaction to an aggressive resident.
It also means asking whether budgets are realistic and whether the information being presented truly reflects the actual condition of the building, particularly as it ages. All too often its maintenance is portrayed by the manager as up-to-date until suddenly it isn’t.
Information often arrives in processed form, such as summaries and reports, rather than raw data. So much so that by the time a decision request reaches the committee, it can seem that there is nothing left to do except “rubber stamp” it.
This is not necessarily a problem. Most strata systems rely on this structure to get things done in a timely manner. But it does mean that good governance depends on the willingness to ask what lies behind the information being presented.
Who recommended this contractor? What were the alternatives? What actually happened in the incident that is being described in vague terms? These are not confrontational questions. They are what separates passive approval from active oversight. And that is why understanding the management structure matters.
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This blog is fully independent and self-funded. It doesn’t offer legal or financial advice. When such advice is needed, always consult a professional in those disciplines. Use the links provided here as a starting point. The author resided in Victoria and is most familiar with Victoria’s strata legislation. Always check and use the current legislation governing your own state. State legislations vary and are state-specific. Links to each state’s own strata-title Act are provided on the “Introduction” page.