Publications

Protecting Your Investment
Author: Col Myers
Date: September,2009


1. Treat your owners as your partners
Never, never, never take your owners for granted! They are your life-blood.

By looking after your owners you are securing your goodwill.

Your goodwill = your sale price (plus real estate and plant and equipment)

Most owners don’t want much. The key is communication. Don’t rely on your end of month newsletter. Set a program to ring your owners on a reasonably regular basis. There is nothing like personal contact. This makes them feel comfortable enough to pick up the phone and call you if and when they have a concern about something.

If you have a slow rental month, explain to them why. If money needs to be spent on the unit, sell them the benefits of the expenditure. If your lines of communication are good, they will support you when you may need their help (like extending your term!).

2. Develop your people skills
The success of your business will be closely linked to the success of your people skills. It is a real art! As a service provider you have to learn how to roll with the punches where appropriate and when to draw a line in the sand. When you do draw the line, make sure you don’t back yourself into a corner that you can’t get out of. You need to be firm but polite. It is not always easy! Some people naturally have these skills - others don’t and have to develop them.

3. Where possible, be a member of your executive committee
There is nothing in the strata legislation that prevents you from being a member of the executive committee. There are restrictions however on your use of proxies when voting at general meetings on anything to do with your caretaking agreement.

The executive committee can be a very powerful group of individuals. They can strongly influence the relationship between you and the owners. Some committee members will say that it is a conflict of interest for the manager to be on the committee. However, after the developer has sold all units in the complex, it is the manager that then generally has the biggest financial investment in the building. Accordingly, why shouldn’t you be on the executive committee?

If you are on the committee you know first hand what is going on and accordingly, you can react much quicker if issues start to fester. It also gives you an opportunity to stand up to the one or two dominant committee members who often hijack the agendas.

4. Know your duties and record your work
Your caretaking agreement is a contract between you and the Owners Corporation whereby you are to perform specified duties in exchange for remuneration.
Clearly, your must know exactly what your duties are and not only must you carry out those duties, you should record (on a daily basis) what you did and when you did it. If you are later questioned by the executive committee about your performance, you can always hand in your daily work sheet. This is a very valuable tool in the event that you end up in a dispute situation with your owner’s corporation.

I strongly recommend that you have your executive committee (or strata manager) check through your work sheet once set up to ensure that there is no misunderstanding as to the nature or the extent of your duties.

5. Isolate the Agitator(s)
Every building (no matter the size) seems to have someone who we call a “condo commander”. These people seem to dedicate a good part of their day checking on or making the managers life miserable. Many times, these agitators are elected to the executive committee. This is where they can really do some damage!

If you cannot successfully negotiate or reason with these people, then you need to isolate them from their fellow committee members or owners. You do this by ensuring that the other committee members and owners fully understand that you are doing what you are required to do under your agreement and you are doing it to a proper standard. Make it clear that the agitator is totally unreasonable in their dealings with you. By doing this you are isolating that person to such a degree that there opinion won’t be respected (or sought) when that critical vote is taken.

Also remember that at the end of the day most resolutions only require a 51% majority. It is my experience that when the agitators don’t get their way they eventually take their bat and ball and move on.

6. Ensure your basic legal structure is right
Your basic legal structure is everything in this business. Get it wrong and it may cost your dearly!

Management Rights is an area for specialists only - don’t engage a solicitor unless he/she actively practices in the area on a day to day basis. Many solicitors will tell you that they know what they are doing in this area, but the reality is, only a handful of solicitors work in this area on a full-time basis and this is an area of law full of traps for new players.

Believe me, if you end up on the wrong side of an owners’ corporation and they want you out, they will engage one of a number of owners’ corporation solicitors who are very good at what they do. These solicitors will pull apart every little aspect of your agreements - from the wording, to the by-laws, to the conduct of the meeting when the agreements and by-laws were entered into and to the possible ongoing review of the caretaking agreement by the Consumer Trader and Tenancy Tribunal.

It is only when things start to go wrong that your legal structure will come under scrutiny. By then, it is to late to have it rectified.

If you are unsure if your set up is 100% correct, have it reviewed by a specialist solicitor now - if something needs changing, your owners will support you whilst they are happy with you. The costs involved will be insignificant in the overall context of what you could loose.

Remember, if your agreements are not right, you do not have anything to sell!