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& How a Community Manager can assist in the preparation and transition from development to Community Corporation

In South Australia, The Developer has a legal obligation to set up the first statutory meeting of the Community group called the Inaugural meeting. Often the Developers engage a Management firm to prepare and run that meeting along with the recording of the minutes and setting up the group from that point forward to meet the Corporations on-going statutory requirements; such as forward budgets, bank accounts, sinking funds, etc.

Before a Community Manager facilitates the initial Inaugural meeting, there is a need for the Developer to provide information about the Corporation.  This includes all statutory documentation as outlined in the Act. Below is the relevant section of the Community Titles Act 1996 (link to Act) which outlines what the Developer must have ready for that meeting.

Some examples of information that is necessary for the incoming manager to build the budgets:

  • Is there any communal electricity? Such as lighting, elevators, etc
  • Is there any landscaping which will require routine maintenance?
  • Are there common items such as heating or cooling for common area, or shared between individual units?
  • What is the required levels of insurance:
    • Is the group insured collectively; all buildings and common land?
    • Are the units individually insured but require common property cover which includes common power, fencing, driveways, gates, etc
  • Is there any ongoing cleaning requirements?
  • Is there a common water meter, individual meters? Or a single meter with third party water readers installed for measuring the use of each unit?
  • Is there a need for ongoing fire system maintenance and inspections?
  • Any common facilities such as Elevators, pools, gyms or other communal spaces?
  • Are there communal Hot water systems? Or embedded networks
  • What are the Community group By-laws, Scheme description and plans. Importantly for the budget, what are the unit entitlements on the entitlement page of the plans.

Engaging a Community Manager early, with the necessary information will allow that Manager to support the Developer by building proper forward budgets which they can present to potential purchasers. A genuine budget with clear ongoing costs will mean that each purchaser has a clear understanding of what they are purchasing and the ongoing costs involved. Poor budgets, or a lack of understanding from purchasers before buying a new development can create much confusion and frustration for the new Owner and the Developer in remedying these matters later.

The Manager can also assist with the setting up of these insurance policies, contractor contracts and provide a source of knowledge to those coming into the group, so that they feel supported in their purchase.

Developers aren’t just building a multi-dwelling property, they are developing a Community. Just as the property requires the proper foundations, so too does the Community. When these foundations are done well, this community of Members (Lot and unit Owners) will flourish and fully enjoy their new homes, and be thankful for it.

If your Developer did not set up your Inaugural meeting, contact STRATARAMA to discuss the next steps in laying the foundations for your group. If you are Developer, commencing a new project, consider the above, and how we might help you prepare for leaving the project and the new Purchasers with the right start!

Link: Community Title Information Guide – Stratarama

Extract from: Community Titles Act 1996

Division 2—General meetings

79—First statutory general meeting

(1) The developer must convene a general meeting of the community corporation within 3 months after the day on which there are at least 2 different members of the community corporation (not including the developer or any person who the developer knows, or ought reasonably to know, is an associate of the developer).

Maximum penalty: $15 000.

(2) A member of the corporation may convene the meeting required under subsection (1) if the developer fails to do so.

80—Business at first statutory general meeting

(1) The developer must deliver to the corporation at the first statutory general meeting—

(a) a copy of the plan of community division deposited in the Lands Titles Registration Office which shows the service infrastructure by which the lots and common property are provided with water, gas, electricity and other services; and

(b) a copy of—

(i) the scheme description (if any); and

(ii) the by-laws; and

(iii) the development contract or contracts (if any), filed by the Registrar-General with the deposited plan; and

(c) a copy of specifications, diagrams and drawings relating to the buildings or other improvements (if any) on the community parcel; and

(d) the duplicate certificate of title for the common property; and

(e) all policies of insurance taken out by the developer; and

(f) a statement of the corporation’s assets and liabilities; and

(g) an expenditure and contribution statement complying with section 113; and

(h) books of account and other records relating to the corporation; and

(i) the corporation’s common seal; and

(j) a copy of all other documents in the developer’s possession that are likely to be of use to the corporation.

Maximum penalty: $15 000.

(2) The following matters must be addressed at the first statutory general meeting—

(a) the appointment of the presiding officer, treasurer and secretary;

(b) the custody of the corporation’s common seal and the manner of its use;

(c) the corporation’s recurrent and non-recurrent expenditure in its first financial year and the amount to be raised by contributions from owners of community lots to cover that expenditure;

(d) the appointment of an auditor of the corporation’s accounts in its first financial year or a special resolution that the accounts for that year need not be audited;

(e) such other matters as are required by regulation.

(3) If a document of a kind referred to in subsection (1) comes into the possession of the developer within 12 months after the corporation’s first statutory general meeting, the developer must  deliver it, or a copy of it, to the corporation.

Maximum penalty: $15 000.

Link: Community Title Information Guide – Stratarama

It’s your Community.

This article and the information provided represents general advice and does not take into account any specific financial situations, objectives or needs of an individual or Body Corporate/ Strata Corporation. Before you make any decision about whether to acquire a certain product, you should read the relevant product disclosure statement, policy wording and/or consult your Insurer.

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