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Written by Jamie Horner
Co-written: Donna Gordin, Ashleigh Goodchild, Leah Johnson and Jamie Horner
There is always a degree of risk associated with outsourcing the management of an asset—and selecting a strata management company to take on your scheme is no different. When signing over the management of your strata scheme, it is critical that you minimise the risk by doing your research and asking the right questions –for example:
WHO exactly are the people managing your strata, and WHAT makes them qualified to do so?
In Western Australia, strata law does not require a strata manager to be registered, nor do they have to hold a relevant licence. While the newly amended Strata Titles Act 1985 governs that they must hold qualifications, most Strata managers are only required to have completed specific units of the strata community management course, and not the course in its entirety.
This is in contrast to real estate, where there are a number of requirements for agents (sales, strata or property management). Real estate agents are beholden to a large number of laws, regulations, legislation and must be qualified, registered, and undertake compulsory professional strata development every 12 months. Any trust accounts used by a Real Estate Agency must be audited annually, and at a cost to the agency.
Considering real estate is so tightly regulated…strata management can seem like a bit of a free-for-all, with anyone able to anoint themselves a Strata Manager. But the truth is, you CAN expect that same level of accountability, security and regulation from your strata manager. The way to do this? Simple: choose a strata management company that is also a licenced real estate agency. For example Empire Estate Agents.
We strongly believe this is the best choice for any strata, and we’re going to tell you exactly why… Your manager will be licenced, trained, qualified and must abide by the laws governing licenced agents
There is a plethora of benefits to choosing a licensed real estate agent to manage your strata scheme, but ultimately, it’s for the best protection of your asset. This option will give you better protection, improved security, and greater accountability from the manager. This is because, while regulation for strata management is lax, your Strata manager will be held to the standards of the Real Estate industry.
The Real Estate and Business Agents Act, and the Real Estate and Business Agents and Sales Representatives Code of Conduct 2016, govern the appropriate conduct for an agent. These dictate that an agent be qualified, registered, conduct annual training, be licenced and uphold a high standard of behaviour.
The Fidelity Fund Guarantee This is huge. A Fidelity Fund Guarantee offers peace of mind, but only if you are with a licenced Real estate agency. If an agency is fraudulent, this fund enables the owners to receive financial reimbursement. This fund is financed through contributions from agents and sales reps, and interest generated through this account, trust accounts and others. Plain ol’ Strata Managers do not have the Fidelity Fund Guarantee. A strata management company could have millions of dollars in their trust accounts at any time, with any number of staff authorised to access the funds. This is the money for levies, fees, reserve funds, etc. If a rogue strata manager were to dip into the account, or the company were to fold, the owners in your scheme are vulnerable to a huge loss, with minimal chance of recompense.
Independent Trust Account Audits Required by law, licenced Real Estate Agents must have their trust accounts audited by an independent and qualified auditor. This cost is worn by the agency, and the results must be reported to the Department of Mines, Industry Regulation and Safety. An independent audit ensures transparency and accountability, which is particularly important when dealing in Strata Trust Funds, with significant sums coming in from multiple sources at different times. Not to frighten you, but strata accounts are among the easiest to misappropriate. You need to know your money is in safe hands.
Other things to look for…
1. Reviews and Reputation… Reputation is important. Glowing reviews on a company’s website are great…but not if you’re looking for an unbiased evaluation. Find real reviews on their Google business page or relevant independent industry sites.
2. A no-lock-in / no-fuss contract This is a big win for you. This says that a company is making big promises, and is prepared to deliver…or risk losing your business. If you’re unhappy with the service, you are able to withdraw. It’s also how we operate at Empire Estate Agents. We will give you premium management, or you’re free to go elsewhere.
3. Fees The biggest game-changer regarding fee structure is two keywords:
ALL. INCLUSIVE.
It might seem like the more expensive option initially, but believe us, it offers maximum value for money. Every correspondence, call-out, work order and meeting attendance, plus administration are included in your Annual Strata Management Fee. Makes sense, right?
Schemes running on a ‘PLUS FEES’ structure are prone to hefty additional costs, like paying every time their manager picks up the phone, writes an email or handles an insurance claim. You’d think paying a Strata Management Fee would cover all that. Not with the Plus Fee structure.
When it comes to strata management, it’s often a case of ‘you get what you pay for’, and the cheapest option isn’t always the best.
Price is important. But don’t get it confused with value.
With so many things to wrap your head around, deciding on a strata management company can feel overwhelming. The best thing for your scheme is to do the research, find a strata management company that is experienced, in good repute, and ultimately: a licenced Real Estate Agency. It’s the safest way to protect the interests of scheme owners and the best way to find the right strata management for the job.
Written By This article was written in conjunction by Donna Gordin of Home 2 Home Realty, Ashleigh Goodchild of SOCO Realty, Leah Johnson of O’Neill Real Estate and Jamie Horner of Empire Estate Agents. Empire Estate Agents are the specialist strata management team. Not only are we Perth’s strata experts, we’re your Everyday Heroes, going beyond for all of our clients. Our agency is comprised of Property management, Sales and Strata Management, meaning we are compliant to a range of laws, legislation and regulatory bodies. At Empire, we have a proactive approach to communication, manage efficiently with a financial focus, and have the licences and qualifications to guarantee your strata is in the best hands possible.
“Everyday heroes…going beyond”