A large mixed residential/commercial scheme which formed part of a BMC, Foreshew Strata Agency was requested to take on the management due to financial mismanagement from the previous agent resulting in the scheme having no funds and in excess of $250,000 in creditors.
After a througher review of the owners corporations records, it was found that along with in excess of $250,000 in creditors, the owners corporation had three seperate loans with a financial institution, in excess of $220,000.
When the prior years budget was reviewed we also noticed that the budget for the loan repayments were not sufficient to fund the loan. A budget of $70,000 was allocated however the loan repayments were more than $110,000 per annum. This also contributed to the lack of funds that the owners corporation had at its disposal, and also meant that the levies were not sufficient enough to fund the buildings expenses.
After many months and many hours, Foreshew Strata Agency came up with the strategy to have the owners corporation back in the black and in a far stronger financial position after 18-months.
When the team of Foreshew Strata Agency attended the AGM, the first hour of the meeting was used to explain to the owners how the buildings unfortunately got to this position with their previous agent, and a recommendation for our office of how they could get themselves out of the position within 18-months.
The owners were fully in support of the recommendation put forward by Foreshew Strata Agency, noting that there were some tough financial decisions that had to be made to move forward.
As of March 2019, one of the loans has been paid out, with the remaining two to be paid put by mid-2019. The owners corporation has paid all its creditors and now has surplus funds in its accounts.
During the course of the financial despair of the building, Foreshew Strata Agency provided a loan to the building to avoid potential fire fines from the local council. We were more than happy to assist during this period to assist the building and to ensure that the building was not placed under further financial strain.
It was also pleasing at the 2018 AGM that the owners corporation appointed Foreshew Strata Agency for a further 3-year term.
If you know of a building in a similar circumstance and require assistance, don't hesitate to contact our office so we can have a no obligation discussion how we may be able to assist you.