Anyone who has run a business, been on a board or committee, or participated in organising an event knows that one thing is inevitable: lots and lots of documents. If anything this has only gotten worse in recent years with the ascent of email usage and the existence of the “reply all” button.
An owners corporation is no different. From day-to-day administration to voting records to minutes and accounting, an owners corporation generates enormous amounts of paperwork as part of its ordinary functions (whether electronic or hard copy).
So this begs the question: what books and records is the owners corporation required to keep?
Accounting Records
It won’t come as much of a surprise that an owners corporation (and any appointed manager) has to keep proper accounting records.
Not only this is a legislative requirement, it’s also just common sense to keep a close eye on the financial situation of the scheme.
Section 96 of the Strata Schemes Management Act 2015 says the owners corporations must keep “accounting records in accordance with this division”, which isn’t particularly helpful.
However, at a minimum the following should be kept:
- Copies of receipts issued to persons who make payments to the owners corporation (which must be issued on request);
- Records of moneys received or disbursed by the owners corporation – essentially, the normal credits and debits you would expect to see in any business, showing what money was paid, who the relevant persons to the transaction were, and a brief description of the transaction;
- Reconciliations of the accounting records against the bank records;
- Separate ledgers (accounting records) for each of the administrative fund, the capital works fund, and any other fund.
Fortunately, most of these records will be part of the ordinary day-to-day book-keeping of any properly trained person, so there is nothing of particular complexity there other than the requirement to keep separate accounting records for the owners corporation’s various funds.
The owners corporation can decide how to keep these records (eg by way of a paper ledger or in an accounting system of some kind).
The Levy Register
One accounting requirement that sits a little outside normal business record keeping is the need for an owners corporation to keep a levy register.
A normal part of owning a lot in a strata scheme is the requirement to pay various levies from time to time.
The owners corporation must keep, in relation to each lot, proper records of the levies that are payable and paid, including:
- The date the contribution was due;
- The type of contribution it was and the date it applied to;
- The amount of the contribution payable;
- The amount of each payment;
- The date on which each payment was made;
- How the payment was made;
- Whether the payment was full or part;
- Details of any discount; and
- The balance of the entire account for that lot.
Keeping these records helps any individual lot owner be sure that their contributions are being properly accounted for, and allows for an at-a-glance way to determine whether any amounts are outstanding.
Beyond Accounting – Other Records
An owners corporation obviously deals with a lot more issues than just money. As a result, there are plenty more books and records generated that it might be required to keep.
The documents we mention below are required to be kept for a minimum of 7 years from the date they were generated.
As a general rule, finding a system where you are able to keep everything is probably the best bet. Here, however, we will touch on a few of the high points that get a specific mention in the relevant laws.
Minutes
The owners corporation should keep proper minutes of both general meetings and committee meetings.
Ideally these should be up to date, organised properly and authenticated as correct by two people who attended the meeting in question.
Correspondence
Believe it or not, even in a world of swift email communications the owners corporation is required to keep every piece of correspondence that is sent or received by it.
We would suggest opting for a fairly broad definition of what is “sent or received” by the owners corporation. So, for example, a communication sent by email from the chairperson of the committee to another lot owner is best to be kept (assuming it relates to scheme affairs), even if it was not on some kind of official letterhead.
Notices of Meetings
Any notices of meetings issued by relevant persons in connection with either the owners corporation or the strata committee are required to be kept.
Proxies
If someone attends a meeting or votes by proxy, the owners corporation needs to keep a copy of the proxy by which that person was appointed.
Voting Papers
At a minimum, the owners corporation must keep copies of voting papers relating to motions about the election of officers and about the establishment of a strata renewal committee.
While it could get voluminous, keeping a record of all voting papers in some way would not be the worst idea given that this is an area ripe for later disputes.
Managing Agent Agreements/Building Manager Agreements
The owners corporation must keep copies of these agreements if they exist.
Agent’s Records
If you appoint an agent to do things on behalf of the owners corporation and they provide you with records relating to their actions, you must keep copies of those records.
Organise!
Of course, keeping all of these records can place quite a burden on the person whose responsibility it is to do it.
We highly recommend, especially for a new strata scheme or one that has a history of poor record keeping, that someone on the committee take some time to come up with a well organised, functional system that is easy to navigate, easy to store documents on, and readily accessible when needed.
While an exercise like this seems tedious at the time, it will save a lot of time down the track.
Penalties
The penalties for failing to keep proper records are, in fact, fairly modest at just 5 penalty units.
However penalties are one thing, and consequences are another. Keeping proper records will help avoid many potential issues that are going to arise as part of the scheme’s operations.
Proper Records Help Avoid Disputes
Many strata scheme disputes arise because one person’s recollection of events (conduct, things said, votes, undertakings, agreements) differs from that of another.
Proper record keeping is the first line of defence to claims about things that are said to have happened in times past.
So, for example, if there was a vote to appoint someone to a position – there should be a record. That way, any dispute about their authority later can be headed off at the pass.
Similarly, if the owners corporation approved a part of the property for a particular use there should be a record of it.
In all, having a good system for accurate document retention is going to solve a lot of issues before they become real problems.
Proper Records Build Confidence
Beyond avoiding disputes, any prospective purchase of a lot in a strata scheme who is doing their homework properly is going to request access to certain books and records.
Having those documents readily available, in good order and up to date, is going to build trust and confidence in the systems that the owners corporation has adopted.
This facilitates value for the lot owners and eases their transactions buy and sell in the scheme.
Need Help with your Record Keeping?
If you’re not sure whether your owners corporation is keeping proper records, or you need help to bring things up to date – let us know and we’d be happy to work through it with you to ensure that you’re adopting best practice and setting yourselves up for success.
