Self managed or self destructive?

“Acting quickly and understanding the Owners Corporation (OC) requirements has enabled these owners to rest easy, they are now comfortable that their interests are being looked after” - Tim McNally, MBCM Strata Specialists - Western Districts, Victoria.
 
We are often asked (particularly by OC’s looking to leave their incumbent management company) why they should engage with us rather than taking the management in-house and managing it themselves. Many figure they could save money doing this or have more control of their building. The reality is, that it's only when your OC manager is really working hard for you that it all appears so simple and seamless.
 
A recent example of some of the pitfalls of a self-managed owners corporation were highlighted by a property in Koroit Street Warrnambool. The group of units had been self-managed until one of the owners believed they were “in over their heads” and contacted Tim McNally from MBCM Strata Specialists Western Districts for help. The owner was worried and rightfully so. He advised they currently had no owners corporation insurance including building or common area insurance. This is a legal requirement, so it was very concerning. Tim immediately provided him with a brochure from Consumer Affairs Victoria with more details of the required management of an owners corporation so that he could understand where they stood from a compliance perspective.
 
Unfortunately, that was not the only problem the self-managed OC had encountered. They also had no luck contacting two separate lot owners, as they did not live at their properties, to discuss the requirements and responsibilities of being part of an OC. Basically, this owner at the property was at his wits end and urgently required help. Tim was happy to step in and demonstrate the value of engaging an owners corporation manager.
 
Tim got to work consulting with other OC members and encouraging them to attend an inaugural meeting where they could vote on appointing MBCM Strata Specialists as their OC Manager, which they did. Immediately after the meeting, Tim organised the required OC insurance ensuring the members were receiving the correct cover and providing instant peace of mind.
 
Tim then spent several months pursuing the two lot owners that were previously uncontactable. He tried letters, phone calls, door knocking and property visits. Whatever avenues he could think of in order to advise them of their responsibilities.  He finally had success, but the work was not over. When Tim got hold of them they were initially reluctant to accept their involvement in an OC. After lengthy discussion, Tim realised they just didn’t know what was involved. A bit of patient explaining of the legal requirements of an OC and how OC managers can help, went a long way. Tim feels proud to now be able to count both owners as active financial members of this OC.
 
The owners of this property all acknowledge that without Tim’s constant investigative pursuit, this OC would still be non-functioning.
 
“It came down to a matter of trust. I needed to prove the value of bringing us on as OC managers so that they could feel comfortable that their interests are being looked after and that management was a worthwhile investment.” – Tim McNally, MBCM Strata Specialists - Western Districts, Victoria.

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Plumbing defects resolved

“New builds often come with building defects – some severe, some less so, however plumbing defects are always challenging”
 
Matt Smith, MBCM Strata Specialists Lilydale.

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Parking the problem

“Each large industrial site comes with unique and specific issues, particularly around parking. ”

Matt Smith, MBCM Strata Specialists Lilydale.
 
Matt Smith from MBCM Owners Corporation Lilydale is an expert at managing large commercial sites with practical and diplomatic solutions. The largest property in Matt’s extensive portfolio is an industrial site that consists of several automotive businesses - mechanics, panel beaters and tow truck operators - resulting in a high demand for parking spaces.
 
Despite the fact there were already ‘house rules’ regarding parking, many tenants ignored them or were unaware they existed. As a result, Matt was constantly dealing with complaints and conflicts regarding parking. On more than one occasion the police were even called.
 
Knowing the full extent of the problem and realising things needed to change, Matt took the proactive step of arranging a committee meeting. He explained that initially, the plan for the meeting was to discuss how to deal with the tenants ignoring the parking rules, however, the focus quickly shifted to changing the rules and having owner and tenants provide input on how to best accommodate the parking needs of the estate.
 
Matt understands that communication is key in disputes, listening to all parties impartially and then finding a solution will create a more harmonious outcome - so he took all the feedback on-board and considered several approaches; he then devised a parking plan to present to the committee. 
 
The solution included allocating new spaces, updated line marking, new wayfinding and clear signage throughout the estate. There would also be a new strategy for better communication with all the occupants, including tenants.
 
From there Matt collated the committee’s comments on the plan and taking all their feedback into consideration he presented a final proposal at the Annual General Meeting (AGM). It was immediately voted to adopt the plan and was implemented shortly after.
 
Matt describes how, “although it required more work, seeking feedback from everyone allowed us to gain a better understanding of the full picture and everyone’s needs.” Then, by adopting some of the recommendations and putting them to a vote at an AGM, the result is that more residents will follow the rules because they have been involved in the process.
 
“When I enabled tenants and owners alike to take ownership of the solution and this highly contentious parking problem it was diplomatically solved.” – Matt Smith, MBCM Strata Specialists Lilydale.

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When owners insist on using their favourite insurance broker

Some owners instruct Owners Corporation managers to place their insurance with local brokers with whom they are familiar. This places OC Managers in a difficult position, because it can potentially lead to a range of problems, including working outside the legislation.
There are several considerations which both OC Managers as well as owners must be aware of when placing insurance through brokers with whom the OC Manager has no formal arrangement either as Authorised Representative or Distributor.
MBCM franchisees are licensed Representatives of CHU Insurance which means we are able to deal direct with CHU; MBCM franchisees are also a licensed Distributors for Honan Insurance Brokers and Whitbread Insurance Brokers, through whom we have access to every specialist insurance company operating in the strata sector.
MBCM franchisees undertake regular industry training and examinations in order to maintain these business arrangements on behalf of our clients. Part of our job under our relationship with the insurance industry is also to centralise and manage insurance claims on behalf of owners.
It must be noted that owners are free to obtain their own insurance, however in this case there are a number of issues which must be considered:

  • Providing advice: It is only natural that owners will always come to us for information about their insurance policy. Where a policy has been placed through another broker (ie one which we do not have a formal relationship with) we may continue to safely offer factual advice however we may not provide general advice, as we can with CHU, Honan and Whitbread products. In this case we must advise owners to take their questions direct to the broker or the insurance company that they have chosen as we are unable to assist in any way.
  • Is it an effective policy: Strata insurance is a highly specialised industry. Insurance obtained through external brokers may not be appropriate for our owners.
  • Paying for Insurance: In these cases, we recommend that owners must provide s specific direction that enables us to safely use owners corporation funds to pay for their preferred insurance policy.
  • Errors and Omissions: When we are not directly involved with closely managing the insurance policy, our concern is always the potential for late payment or failure to pay, which puts us at great professional risk.
  • Confirming Coverage and Additional Protection: Being a licensed representative or distributor offers a strong layer of protection from the principle insurers. We do not receive this benefit when placing insurance through other brokers, which also adds professional risk.

In the event that owners choose to select their own insurance, it is recommended that MBCM franchisees do not involve ourselves in certain aspects of that insurance policy, particularly including administering claims. Under these circumstances we must advise these owners that they will have to make their own claims.
Where owners resolve at an AGM that we are to obtain competitive quotes, we will always do this through our existing formal relationships, either direct through CHU Insurance, Honan Insurance Brokers Whitbread Insurance Brokers.

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