Top Ten Sectional Title Management Issues: Part Two

By Prof. Graham Paddock

This is the second article in which I deal with the sixth to tenth most important issues in sectional title scheme management and suggest the most effective measures trustees, assisted by their managing agents, can implement to address or initiate remediation. In the first article, which you can access here, I dealt  with the first five, Financial Issues, Maintenance and Repairs, Trustees, General Meetings and Managing Agents. In this final article I will deal with Disputes, Legislative Compliance, Communication, Smaller Schemes and Distressed Schemes.

6. Handling Disputes and Conflicts

Disputes in sectional title schemes are inevitable, arising from levy arrears, maintenance issues, cost-sharing or rule enforcement. Unresolved conflicts can disrupt harmony and lead to CSOS applications and costly litigation. Here are what I see as effective preventative and remedial measures:

• Clear and Enforceable Rules: Establishing clear, defensible, enforceable rules and procedures for financial issues, pet ownership, noise levels, and common property use can help reduce disputes.
• Open Communication Channels: Encouraging open and respectful communication between owners, trustees, and managing agents allows for early resolution of concerns.
• Utilising CSOS Dispute Resolution: Trustees and managing agents should attempt internal dispute resolution, but also be familiar with the CSOS dispute resolution process that allow the body corporate and owners to  access conciliation and adjudication when necessary.

7. Ensuring Compliance with Legislation and Regulations

Bodies corporate must comply with the Sectional Titles Schemes Management Act, its regulations and body corporate rules. Ignorance or disregard for legal requirements can lead to penalties, invalidate decisions, and create liability. Here are some suggestions:

• Staying Informed: Trustees and managing agents should actively stay updated on legislative changes and attend refresher courses, industry workshops or seminars.
• Professional Legal Counsel: Seeking legal advice from attorneys specialising in sectional title law can help ensure compliance with complex provisions, particularly regarding rule amendments, special resolutions, and dispute resolution.
• Regular Audits and Reviews: Conducting regular audits of financial records, meeting minutes, and compliance with the scheme’s rules can identify and address areas of non-compliance.

8. Transparency and Communication

Lack of transparency in financial management, decision-making processes, and access to information can erode trust and lead to suspicions of mismanagement. Here’s what you can do:

• Accessible Records: Maintaining organised and accessible records, including financial statements, meeting minutes, and insurance policies, allows owners to review scheme affairs. Online portals can facilitate convenient access for owners.
• Regular Communication: Utilising newsletters, email updates, and notice boards to inform owners about important scheme matters, upcoming meetings, and trustee decisions.
• Open Forums for Discussion: Encouraging owner participation in meetings and creating opportunities for open dialogue with trustees and managing agents can address concerns and build consensus.

9. Addressing Challenges in Smaller Schemes

Smaller schemes may face difficulties in finding willing trustees, have limited resources for professional services, and face potential deadlocks due to fewer owners. Here’s what you need to know:

• Simplified Management Regime: Explore the possibility of adopting a simpler set of rules tailored to the needs of smaller schemes, reducing administrative burdens. Amending the management rules does require a unanimous resolution from all owners, but when the need is clear, CSOS can be approached to overcome unreasonable objections.
• Shared Responsibilities: Encouraging owners to share responsibilities for tasks like gardening or minor repairs can reduce reliance on paid services.
• External Assistance: Considering the appointment of an executive managing agent to handle day-to-day management, particularly if owners lack the time or expertise.

10. Rehabilitation of Problematic Schemes

Severe mismanagement or financial distress can necessitate the appointment of an administrator, a costly and potentially lengthy process that may not always fully address the underlying issues.  Here are some suggested effective steps:

• Early Intervention: Addressing management problems promptly through open dialogue, seeking professional guidance, and implementing corrective measures can prevent situations from escalating to the point of requiring an administrator.
• Collaboration with Experts: Utilising the expertise of financial, legal and scheme management experts for guidance on financial, physical and administrative  management can avoid the necessity of appointing an administrator.
• Careful Selection of Administrator: If an administrator is necessary, a thorough selection process is crucial, considering experience with sectional title schemes and both financial and legal expertise combined with a track record of successful rehabilitations.

Effective management of sectional title schemes requires a proactive approach, clear communication, and adherence to legal requirements. Trustees and managing agents play a vital role in ensuring the smooth operation of the scheme and the protection of owner interests. By implementing the measures outlined above, they can proactively address common challenges and create a harmonious and well-maintained living environment for all owners and residents.

Article reference: Paddocks Press: Volume 19, Issue 11.

This article is published under the Creative Commons Attribution license.

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