DEEP DIVE: Administration

By Chris Irons

Strata Solve can be nominated as an administrator for dysfunctional schemes. What does that mean, we hear you ask? Read on…

What happens if a strata scheme gets into so much trouble, they can no longer effectively manage things themselves?

We bet there would be plenty of people reading this who would immediately be interested in the answer.

It is relatively common for an owner to feel like their body corporate is in such disrepair that it needs an intervention from someone or something. That sense of disrepair might be literal (e.g., necessary maintenance is not being carried out). It might be financial in nature, with levies not being routinely collected. This means that the body corporate won’t be able to meet its statutory obligations.

It might be that insurance isn’t taken out. It might be that a committee cannot be formed, which of course, means that decisions can’t be made. In extreme cases, it might mean that body corporate funds cannot be accounted for.

We can group all the above scenarios under the heading of ‘dysfunction’. When the dysfunction gets so intense that the body corporate can no longer effectively manage itself, an application can be made to the Commissioner’s Office to have an administrator appointed.

Having an administrator appointed is something which occurs in the corporate sector, and it is often associated with being in financial trouble (such as when a liquidator or receiver is appointed). As we can see from the above, an administrator in the strata sector incorporates other aspects.

Getting an administrator appointed will probably sound like ‘the answer’ to anyone who is part of a challenging body corporate situation: ‘Excellent, we will get an administrator appointed and our strata disputes will be dealt with’. Not so fast: appointing an administrator is a serious step. It effectively takes away the voting rights of all owners and vests that power into the administrator alone. For this reason, an adjudicator in the Commissioner’s Office might be reluctant to order an administrator appointment. The adjudicator will need to be very convinced it is required, and that there might not be another solution to the issues. Moreover, if you are the person who is seeking the administrator appointment, it will be up to you to find someone who is qualified to do the job and who consents to doing it. Understandably, some people will be reluctant to be an administrator, particularly if the body corporate in question is really troubled. Why would they want to take on that stress, even if they get paid for it?

So what does it mean to be a ‘dysfunctional’ strata scheme and how do you get an administrator appointed? Find out more in our Part 2, coming soon.

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