How ‘boring old farts’ use proxy
farming to take over
trendy new
buildings
Sydney Morning Herald
Jimmy Thomson
12 February 2015
At best it has been described as "boring old farts running trendy new
buildings", but at worst it allows illegal short-term lets and
overcrowding landlords to ride roughshod over council zoning and strata
(condominium) by-laws.
Now, as peak strata AGM season gets into full swing in NSW, Sydney MP
Alex Greenwich has lashed out at delays to strata law reform that allow
one or two owners to continue to control large buildings through proxy
farming.
Proxy farming
Proxy farming is when individuals or minority groups collect votes from
fellow owners who can't or won't attend their buildings' annual general
meetings, giving them a majority over those who actually turn up at the
meetings.
"I've been calling for reforms to proxy votes since I was elected,"
says Mr Greenwich whose constituency contains the highest number of
strata schemes in the state. "Current practices that allow one person
or a small group of people to control management of a building,
sometimes at the expense of most owners, are unfair and undemocratic.
"Concern about proxy harvesting is one of the most common strata issues
raised with me, not far behind short term letting and overcrowding. In
fact some owners say one of the barriers to stamping out these problems
is when perpetrators hold majority proxies."
One Sydney city apartment resident and multi-block investor, who
preferred not to be named, told Domain that failure to curb proxy
farming means even some of Sydney's smartest buildings are being run by
a tiny minority of owners determined to hang on to power at all costs.
"They are often retirees with too much time on their hands who treat
their buildings like a hobby farm. Even in our trendier buildings, half
the other owners are landlords and the rest are time-poor
professionals, so the boring old farts take over.
"They aren't necessarily bad people and they may not do bad things -
but they do as they and their mates please and it often gets to the
point where hanging on to power becomes more important than what they
do with it."
One tactic frequently used by proxy harvesters is to warn owners that
failure to get a quorum for a general meeting means it will need to be
held again a week later, a waste of time and money (although the second
meeting doesn't need a quorum).
"To be fair, as the laws stand, some buildings would never get anything
done if someone didn't collect a few proxies, just to make a quorum at
their AGMs," says Karen Stiles, executive officer of the Owners
Corporation Network, the peak body for apartment owners.
holding owners to ransom
"But, having said that, there is no excuse for one or two owners
holding the balance of power or, even worse, holding owners to ransom,
demanding their votes in exchange for favourable treatment in the
running of the building.
"The strata reforms slated for next year can't come soon enough. Then
every owner, wherever they are, can vote electronically and take part
in the future of their home or investment."
Strata law changes that were supposed to come into effect in July last
year and are now hoped to be in place early next year, will limit proxy
votes to 5 per cent per individual owner, in line with legislation
already in place in Queensland.
"The government promised improvements as part of its strata law reforms
but we've seen changes delayed by over a year and I am not aware of the
opposition's position," says Mr Greenwich. "If I'm re-elected I will
push whoever is in government to make reforms on proxies and other
vital strata issues."
As numerous posts on the Flat Chat website confirm, proxy harvesters
can become highly effective in gaining and then maintaining power,
using their privileged access to owners' email addresses as well as the
normal communications through their strata managers.
highly massaged meeting minutes
With highly massaged meeting minutes, dedicated proxy harvesters can
easily convince other owners that all is well in their building and
suggest that any challenge to their status is a threat to the whole
community and, especially, its finances.
"They present themselves as having the building's best interests at
heart and some even agree to vote however the proxy giver wants on
specific issues," says the unnamed strata owner. "But that means they
can vote however they want on everything else - including the size of
the executive committee and who gets to be on it. The committee then,
of course, elects them as chairman or whatever.
"It will be interesting when the new legislation comes in. But you can
bet your bottom dollar these guys have already worked out a way to
spread the proxy votes among their mates so they can still stay in
power."
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