Here we will discuss the very first executive committee i.e. the one voted in at the very first annual general meeting. In the next section we will cover more general advice. The first executive committee is extremely important as it has the power to decide, appoint and lock-in service providers on long-term contracts which can set the scene for the many years to come.
|One new large strata scheme found itself have a situation where developer/strata manager/building manager are all same identity due to general meeting resolution. The Developer called for the general meeting to follow on the same day immediately after the First annual general meeting. The agenda for the general meeting was to appoint developer's related company as the building manager on a 10 year contract under.|
The first executive committee is elected at the first annual general meeting of the owners corporation which is held within 2 months of when one-third, or more of the apartments have been sold by the developer to individual owners. Even though the developer only gets 1/3 of its voting rights. it is effectively in control at that stage.
At this meeting nominations are usually done by asking the assembled new owners who’d like to stand, and then asking everyone present to either agree on those who’ve volunteered, or vote, if the number of volunteers exceeds the number of places. Most new owners do not understand the importance of a good executive committee in maintaining the value of what maybe the most significant capital investment of their lives. Most people don’t know each other so the situation can be exploited by “mates” who can effectively take over the running of your building. At this stage it is possible for the developer’s representatives to be nominated, including any developer appointed building manager. It is here that you should keep an ear out for the disclosure by nominees of any relationship with the developer. Beware of these nominations as they represent clear vested interests. These service providers or their representatives should not be considered.
The best approach is to go to the first annual general meeting ready not just to get on to the executive committee but also to encourage others to do the same. Challenge every person who stands for the executive committee by asking them to state whether or not they are an investor or, if an owner occupier, how long they plan to live in the building. Also, ask them to declare whether they have any links with the developer or anyone else involved in your building and to provide the detail of any financial, business or relationship links. Ask them why they want to be on the executive committee, and what they believe they can bring to the management of the building. Ask them if they have any experience and what are their plans for researching, tendering and appointing and service providers, especially strata managers, building managers, caretakers and legal representatives.
Relevant NSW Legislation: The Strata Schemes (Freehold Development) Act (1973)
Schedule 2, Section 18: Counting of votes on motions