Article: is your strata scheme dysfunctional?

You may have heard of the television sitcom Arrested Development. It’s about a man called Michael Bluth who tries to do the right thing and strives to keep his family together, despite his highly manipulative and materialistic parents, attention seeking twin sister, socially inept little brother and highly unreliable older brother. And how could we forget Tobias Fünke, his brother-in-law who is a self-diagnosed ‘never-nude’ (which is ‘exactly what it sounds like’).

The Bluths are not the only ones with the capacity for dysfunction. It is possible for a strata scheme to be also considered ‘dysfunctional.’

So what makes a strata scheme dysfunctional? [Hint: it’s not the gymnophobe on your Executive Committee.] If an Owners Corporation is not being properly managed or is no longer functional, then an application can be made to the NSW Civil and Administrative Tribunal under section 162 of theStrata Schemes Management Act 1996, seeking the compulsory appointment of a strata managing agent.

Examples of circumstances in which the Tribunal has made such orders include:

  • the owners corporation owes a judgment debt;
  • there is unreasonable delay in maintaining the common property which triggers serious safety risks to its residents;
  • the owners corporation is dominated by a minority;
  • the owners corporation is unable to raise levies;
  • the owners corporation is unable to make decisions.

A compulsorily appointed managing agent may be ordered to:-

  1. (a)   exercise all the functions of an owners corporation; or
  2. (b)   exercise specified functions of an owners corporation; or
  3. (c)   exercise all the functions other than specified functions of an owners corporation.

An applicant for an order under section 162 must:

  • be a person who obtained an order under the Strata Schemes Management Act that imposed a duty on the owners corporation or office holder of executive committee that has not been complied with; or
  • be a person having estate or interest in lot or, in the case of leasehold strata scheme, lease of lot; or
  • be the authority having the benefit of positive covenant that imposes a duty on the owners corporation; or
  • be a judgment creditor to whom the owners corporation owes a judgment debt.

It is crucial that the applicant describes how the management structure is not functioning satisfactorily or provides evidence of the Owners Corporation’s failure to comply with a Tribunal order, or failure to perform one or more of its duties.

The applicant should also list the functions that they want the compulsorily appointed managing agent to have and exercise. The application must also attach the written consent from a nominated managing agent, listing their terms, conditions, fee and license under the Property, Stock and Business Agents Act 2002.

For a copy of the relevant application form, please click here  [Last accessed 28 March 2016]

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