Owners Associations
An owners’ association is a formal arrangement between the owners of your building. It arranges regular meetings to discuss how your building will be managed and maintained. By “formal” we mean having a constitution – an agreed set of rules and procedures.
Advantages
Having an Owners Association gives a number of advantages, even if you have a property manager:
- If you want to open a Maintenance Account, the bank will insist that you have a constituted owners association
- Research indicates that owners’ associations make owners more satisfied with the way their flats are managed
- It can make speedier and better decisions
- It gives leadership to the repairs process
- It provides a single source of contact and better communication.
The Rules
The Owners Association rules should cover:
- The purpose of the Association
- Who can be members
- Subscriptions
- Office bearers
- How meetings are conducted
- Finances
- How to make changes to the Association Rules.
The Owners Association can make decisions about:
- Appointing or changing property managers
- “House Rules”
- Getting regular surveys carried out
- Planning repairs and maintenance
- Which contractors to use
- Arrangements for saving and paying for repairs.
Office bearers
Depending on the number of owners, you should have a committee headed by a Chairperson who is supported by a Secretary and a Treasurer. The Chairperson should be your best leader and someone you trust to speak up for you. The Secretary should be a well organised person who is responsible for all your record keeping. The Treasurer should ideally know how to do spreadsheets so that they can keep track of money coming in going out. If you have enough owners, other committee members can help with other tasks and its a good idea to spread out and rotate tasks so that everyone gets a chance to gain experience and no-one person is over-burdened. You don't want to be in a position that, if the key person leaves, the whole association collapses.
Owners Associations and contracts
An Owners Association is not normally a legal entity in its own right. This means it does not have powers to take legal action in its own name. So if you want to sign a contract with a builder or architect or property manager or take an owner to court for non-payment, it will need to be individual owners that do this. (Consider using an escrow account).
If someone wants to sue owners for non-payment of a bill or negligence, they cannot take action against the Owners Association but will need to take action against individual owners. Anyone commissioning repairs must be sure to follow proper procedures and contract builders correctly to protect themselves and get the best job.
If you are a larger development with many flats and owners, then it would be worth considering establishing a Development Management Association (DMA). A number of new developments already have DMAs. These are more costly to run, need to be set up by a professional adviser such as a solicitor and incorporated into your Title Deeds. But it does have the advantage of being a legal entity in its own right and can sign contracts or take legal action in its own name. This gives more protection to individual owners.
Setting up a Development Management Association