Is there a need for “Professional Strata Committee Members (paid condo directors)?”
Look Up Strata
Deryck Walker
01 August 2017
I was reflecting on my involvement with larger scale Strata Schemes,
and both the significant risk and finances which are on the line in
these situations.
Even in a medium size scheme (not large) fee income alone can be well
into seven figures and above, with individual projects (even simple
ones like carpet replacement) coming with a cost in the hundreds of
thousands of dollars.
I believe this creates a specific need for professional persons to take
paid positions on committees for large schemes, not dissimilar to board
members who steer a listed company.
Would this be required for every scheme? Of course not, there could be
an array of individuals available within the scheme who have the
required knowledge and expertise, but this is not always the case.
Some large Strata Scheme Committees sit with members who know little or
nothing about strata-specific legal obligations, and this creates
significant risks for both the Committee and the Strata Scheme.
If you were running a large company, would you fill the board with
entirely inexperienced board members? Of course not. Conversely, I
would argue a good board consists of a mix of persons with mixed
backgrounds and experiences. This sort of dynamic encourages thorough
debate and as a result quality decision making with subject matter
being scrutinised from multiple angles.
Some may argue this is the manager’s role to fulfill, in some cases,
yes, but unfortunately some operators are not fulfilling their
fiduciary duty to the scheme and provide advice which is clouded by
conflicts of interest to bend committee decisions to garner benefit
(regular disclaimer, some, not all!).
It is very commonplace that a Strata Manager holds significant power,
both tangible and intangible. This power comes out of the significant
knowledge they hold (with knowledge comes power).
By introducing independent professional committee members with a
similar level of knowledge, it would work to redistribute the power
balance to the benefit of the Strata Scheme, whilst also holding the
manager to account to ensure they meet their fiduciary duties. All the
while improving the quality and effectiveness of decision making, and
reducing risk.
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