Duties of Owners Corporations to maintain books and records

Need help with the strata law issue or a building in construction matter. Saxe Girarchi Lawyers is a leading Sydney law firm that can help. With over 20 years experience, Saxe Girarchi Lawyers focus on commercial litigation, building and construction, strata law and local government regulation issues. Now, here is your podcast. It goes without saying that in the day-to-day conduct of owner's corporations and strata managers, there are lots of moving parts. So it begs the question, what are the legal obligations when it comes to the maintaining our books and records? Will the find out I'm with a climate low, senior associate at Saxe Girarchi Lawyers? So, climate, what are the requirements for owner's corporations and strata managing agents to maintain books and records? Yes, Dan. Well, it might seem obvious, but I guess it's always good to get a refresher on what's required. The requirements are fairly extensive and they're set out in the strata schemes management act of 2015. For instance, in section 96 of that act. It says under Subsection 1, an owner's corporation must keep accounting records in accordance with this division. The accounting records may be made and stored in the form determined by the owner's corporation. And separate accounting records must be kept for the administrative fund, capital works fund, and any other fund kept by the owner's corporation. That's just the accounting records and there's also a further or extensive exhaustive list of records that the owner's corporation must retain for seven years under Section 180 that the strata schemes management act. And those records include any records notices and orders required to be kept under this division or part ten of the strata schemes development act that include things like in-cat orders or other court orders that are required to be kept file. Minutes of meetings, financial statements and accounting records, which I've mentioned is also forms part of Section 96. Copies of correspondence received and sent by the owner's corporation notices of meetings of the owner's corporation and its strata capability, proxies delivered to the owner's corporation, voting papers relating to motions for resolutions by the owner's corporation, and to the election of officers or the establishment of the strata renewal committee. Copies of any signed strata managing agent agreement or building manager agreement entered into by the owner's corporation and the list goes on and the list is obviously quite extensive as I've just read out and also copies of the strata role also in Section 176 of the strata schemes management act. So the requirements to maintain books and records is extensive and required by law. It's probably a silly question and claimant, but what, you know, the ramifications if owners' corpse and strata managing agents don't maintain books and records? Yeah, thanks Dan, good question. It might seem obvious, but will there are penalties for failing to comply with those requirements to maintain books and records, five penalty units, which is about $550. That might not seem like very much at all, but it certainly is, certainly annoying and definitely not something you would want on your record. It's also important because there are also provisions under the strata schemes management act for people to inspect those records. So it's obviously important that those records whenever they're inspected are in good order because the people who may want to inspect those records could be any one of a number of people. For instance, any lot owner has a right to inspect the other people who have the right to inspect include mortgagees who hold mortgages in lots. So, and anyone who obviously is wanting to purchase into a strata scheme will inevitably, usually, if the due diligence is being done, will order a strata search in order to determine how the strata is functioning and those records are very much a part of that. It's also important because in the event of a dispute involving the strata scheme, those records could very well become important in the proceedings. In relation to keeping accurate minutes, that is important because what has occurred at a meeting could very much be an issue in dispute. For instance, if it's later disputed whether a motion, a particular motion was passed or whether something was said or done or in fact, whether someone attended at a particular meeting, that could become very important. The accuracy of these records takes on a lot of significance in that regard. It's also important, for instance, if there are disputes over whether the strata committee is spending too much or too little money on maintenance or other aspects of managing the strata scheme. And those records will become important as to how, why and what amounts have been spent in relation to the budget and also in relation to the actual scheme itself. Of course, the other issue that in the event of litigation and particularly in the event of a lot owner wanting to seek the appointment of a compulsory strata manager, if the proper records are not kept, then that could be used as evidence of dysfunction and form part of the overall circumstances. It's not likely to be definitive, of course, but certainly it would flavor the tribunal's view as the potential to do so. If there is an application to a point of compulsory strata manager, because if the records are not being kept properly, then there would be a good argument to suggest that a new manager should be brought into to pick up those records and bring them into line with what's required under the act. And of course, for a lot owners themselves, incomplete strata records, as I referred to earlier, it can discourage buyers from doing, who are doing their property diligence, that might discourage buyers from buying into this game and making their property harder to sell or sell at a lower price. So obviously it's also in the interest of blood owners themselves to to make sure that the strata records are kept in good order. Clement, how can sector Archie Lawyers help in this regard? Yes. So we can advise owners' corporations and strata managers on their record-keeping obligations and disputes that relate to them. We can also advise a lot owners on their rights, remedies, if they think that the owner's corporation is in breach of these record-keeping obligations. And more generally, we can advise on strata and building construction disputes of clients involving owners' corporations, so building defects claims and obviously disputes between a lot owners and owners' corporations. Clement, thanks for joining me. My pleasure. Thanks, Dan. Thanks for listening. If you have any questions or need more information, simply call Saksger Archie on O2-9331-51-77.