Simple Strata or Sideways Strata?

Accounting baffles me. Despite this fact, I still attempt to educate myself in an earnest if not chaotic manner on the importance of double entry number crunching. In the swamp,the villagers generally assume experience is a requirement for any executive position on the council. This is not the case; however, it is a prudent decision to have a professional do all the checks and balances for a successful budget and reconciliation of accounts.Sometimes this will be a property management company and sometimes it will be a sub-contractor and yes, sometimes even an owner. Sometimes stratas operate simply with a daily dose of, “don’t ask, don’t tell”.

Professional is a word with only one connotation in the strata swamp – property management – keep it simple and everyone will be happy. Previous articles denounce that fantasy. Still, property management can be a very good tool for some strata corporations especially the ones with many owners in high-rise buildings within a cosmopolitan city. Suburbia too has a realistic requirement for property management where many expenses are needed to cover maintenance and repair. But, if a strata is comprised of-let’s say, 40 units or less-the degree of professional involvement and cost really must be carefully weighed against the demands for maintenance and governance along with willing participation of owners.

It never ceases to amaze me how often a perfectly intelligent individual will determine participating on council is “someone else’s role” and wipe his/her hands of the responsibility belonging to the corporation-the corporation being every strata owner. Subsequently, it isn’t difficult to see how manipulative certain people on council can become when allowed to “run a muk”. To clarify, it is a simple task to exploit indifference and cement control with the very best of intentions.

From the lowlands of the swamp I can view the bareland swamp across the way. Bareland stratas appear to be so darn different in the strata world because those owners bought actual swamp land together with some common property. A  bareland strata owner is the master of his asset with-apparently- less of a requirement to participate in council than those of us in the common swamp. After all, the expenses are fundamentally simple: Common municipal access,common garbage or not,landscaping,insurance and building scheme restrictions. Piece of cake – no brainer. The trouble is in the simplicity of it.

A simple bareland strata really doesn’t have to follow such an onerous read as The Strata Property Act because, well, its onerous. Bareland stratas are such good neighbours. The prevailing attitude is adoration for those owners that have a handle on things and the accompanying “if it ain’t broke, don’t fix it”. It’s charming in an idealistic way. Really the  bareland swamp is no different than the swamp when it comes to money. Someone has to control the inflow and the outflow. True, 10-20 checks a year are no big deal. A simple excel spreadsheet or accounting program can make light work of recording and reporting. Predictable contractors like landscaping and electricians, insurance and even snow removal (depending on location) can be managed by council members as easily as property management. If it has been done that way for years with no hiccups then no problem right? Wrong if it’s only one person doing the work and being paid to do that work and of that role is fundamentally misunderstood by all those good neighbours.

The problem becomes the inevitable hangover that follows a night of strata cocktails – the layered ones made up of ambivalence,power control and a frothy layer of nice. Why? Because any individual can come to believe he/she is indispensable after a time. For example, a strata owner does the books for a small bareland strata with few issues and a majority of part-time owners. This owner also is paid to do the books which gives the corporation a sense of security. To add even more interest, this owner does the job of Secretary-Treasurer without being elected to council.  All paperwork for purchase/sale, communication with owners, bylaw enforcement and corporation minutes together with all the financials is the responsibility of this one paid strata owner. Nice gig right?

Here are some of the many problems I see with this particular situation. To begin with, a review of the minutes would  indicate the requirement for property management.Often based upon the work done by council, it wouldn’t  make economic sense. Alternatively, just because property management is expensive doesn’t mean an owner should be paid to be a “defacto” property management. Hire a property manager because you can justify the expense or don’t hire a property manager because it is not a justifiable expense. There is no requirement to pay anyone to take on the responsibility of an executive council member. It is okay to hire an accountant to check work on an annual basis. And to be clear, even if an owner is paid a monthly stipend, a corporation should still pay an accountant for regular audits. A strata owner operating as a book keeper is not in itself problematic unless that same owner is acting in an executive position on council without actually running for or being elected to council. What if that same owner is also a signing authority on corporation checks? What if blank checks are signed by either President or Vice-President and the other strata owner? That’s not legal in my opinion and carries quite the risk for both the owner signing without authority and the corporation. What about bylaws that demand a strata corporation have a President, Vice-President as well as a Treasurer and a Secretary? All owners are on the hook for that “oversight”. I suppose argument could be made that it is assumed one owner will continue to do the work as well it could be presumed that this owner is indeed on council because the minutes have never been questioned.

Seems to me there is a huge liability issue for the strata owner acting as a financial/document council executive without insurance coverage and a huge, gigantic, scary monster reality for the corporation. What corporation working with business acumen and knowledge would allow a shareholder to control communications and finances without supervision, pay that same shareholder dividends, and not audit everything? What CEO would in his or her right mind, allow a company to operate this way? What corporate culture would abdicate its authority to one person willing to do the work, exploit the effort and manipulate the minds and hearts of the rest of the shareholders too ambivalent to care about the maintenance and governance of assets? 

Swamp life is a murky, smelly mess at the best of times. The personalities that make up swamp life are numerous to be sure. But there is a law that governs swamp life and bareland life. Simply, the law is The Strata Property Act. Sometimes internal dynamics and contention create arguments around interpretation of the law and the swamp laws. But, at least, argument creates dialogue. It is not pleasant to consider strata roulette in any strata swamp. Any strata swamp, bareland or otherwise, operating outside the laws for the sake of good intention  initiates a  roulette game for both a corporation and its council every time a decision is made that could have long term negative impacts on all owners. The culprit here is passive-aggression and the way it acquieses and manipulates to control the business of a strata corporation. If two entities sit down to play strata roulette aren’t they both bully and victim at different times? And what of the individual owners? Surely,”don’t ask don’t tell” is not a good way to run a corporation?

 

 

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One comment on “Simple Strata or Sideways Strata?
  1. Sandy says:

    A strata that hires an owner to be a “manager” is asking for trouble. Best to stick to the professionals! I get why some would hire an owner…”they’ll take a personal interest”, “we can’t afford a licensed management company”, “he/she is such a nice person”…but all these are just excuses for the council to pass the buck. Living in a strata is a commitment to participate and get along democratically, and those who can’t do it shouldn’t be living there, expecting the council and/or other more participatory owners to do their share. By letting the others “take charge”, the non-involved owners just contribute to the problem, and the unpleasant personalities (strata psychos!) are given free rein. Your “swamp” sounds a lot like what me and some of my fellow owners here call “the projects”. Finally got some new blood and (touch wood) things have been better lately…and the “manager” who was dipping into the cookie jar is now gone., replaced by a professional. Still gotta watch them, though. We don’t just turn them loose, the council is very involved. So much so,that the manager is a little confused about his role.

    Like

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