Owners committee: Wasteful or wonderful?
EWAN MORTON, director at Morton and Morton, stands up for owners committees and shares what makes a good owners committee.
They exist across all areas of business, community and everyday life, and are often perceived as a group of overzealous, underactive, opinionated do-gooders. Whether it be representing the school P&C, the golf club, a charity, a corporate or a profession, the mere mention of a ‘volunteer committee’ can send shudders down a sane man’s spine. And, that includes the executive committee of the owners’ corporation in a strata title building. But, are they really the sore point of a strata title building or are they the saviour?
In my opinion, an efficient, informed and motivated owners committee actually represents real estate gold. If a building looks good and has well-kept facilities, it will reflect well in the selling price, and the reverse is certainly true. At the same time, savvy investors will also be looking to see whether there is adequate forward planning for ongoing maintenance of the building and effective management of the asset over the long-term. A building manager’s job will actually be easier if a good owners committee is in place.
WHAT MAKES A GOOD OWNERS COMMITTEE?
So, what makes a good owners committee and what makes a bad one? According to Robert Anderson of Advanced Community Management, it isn’t about good or bad; rather, the focus should be on an active committee with an emphasis on teamwork and transparency.
“Managing a strata title building is complicated, so a focus on teamwork is crucial,” Anderson comments. “The best outcomes for residents and owners will be delivered if the management teams and owners committee can work together.
“Owners committees don’t need to be made up of experts – there are experts out there to provide advice. Rather the committee needs to be willing to seek and accept independent advice. It should not be an adversarial relationship,” he adds.
This is where transparency comes into play. “An owners committee needs to be able to trust that the managers they have in place are working in the best interest of the building and the residents,” Anderson states.
Representatives of the owners committee need to be met with on a regular basis in order to foster that relationship of trust. The aim is to provide a platform for discussion about issues relating to the building. It may be updates on how work is progressing, discussion about work that needs to be done or feedback on points raised by other residents. These meetings can be relatively informal, but they must be formally documented so at any time any owner can review how their building is being managed. Again, it is about creating a relationship of trust through transparency.
Financially, Anderson explains that an effective owners committee is one that does not ignore the reality of building maintenance and asset deterioration. “The sinking fund and administration fund requirements may be legislated, but the reality is that nobody likes to spend money and there is always pressure to reduce strata fees and limit expenditure,” he notes. “That’s where a proactive, informed owners committee comes to the fore. A dollar spent today can be worth $10 tomorrow and may save residents significantly more than that a year later,” Anderson explains, “but that is usually a matter of hot debate among owners. It isn’t easy, but it is important for the committee to be able to set aside their self-interest to make decisions that will be for the benefit of the community as a whole. That is going to happen if the committee has trust in the advice they are receiving.”
Building managers need to work closely with the owners committee to ensure they can make informed, timely decisions. New owners should also be provided with advice on how they can stay informed and contribute to the operation of the owners committee, even if they are not officially on the committee. In addition, it should be recommended that owners attend meetings and take the time to review the minutes and supporting documentation to get an understanding of the management, maintenance and motivations of the committee working on their behalf.
Strata is a democratic system. As with our national electoral democracy, it isn’t a system that is always appreciated, but it will operate most efficiently if members of that democracy are active and informed.