Stratas falter on financial reporting
Published:Sunday | June 4, 2023 | 12:57 AM
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More than a decade after a law was passed to regulate the management of residential complexes and other properties that operate as strata corporations, compliance with the regulations that support their proper management remains low. Stratas are...
More than a decade after a law was passed to regulate the management of residential complexes and other properties that operate as strata corporations, compliance with the regulations that support their proper management remains low.
Stratas are required by law to file annual financial statements and reports, among other requirements, but are still doing poorly at meeting that obligation.
The Real Estate Board of Jamaica said it has taken enforcement action against numerous unregistered strata corporations through the courts to force their compliance with the law.
Last fiscal year ending March 2023, the Strata Commission, which is a division of the Real Estate Board, instituted proceedings against 21 unregistered strata corporations. Sixteen have since made the required applications for registration.
The board also said that as of April, the compliance rate for registration was at 87 per cent, totalling 1,788 complexes.
A strata property is any residential or commercial development in which units share walls, such as in apartment complexes. A strata corporation is made up of members who are the owners of units in the complexes, who pay a fee to the body to manage the shared space and services, inclusive of proper insurance arrangements and maintenance of common areas.
Stratas are required to account for the monies they collect and spend, but the Real Estate Board said the corporations have largely been non-compliant with the obligation to file annual returns and reports on their activities.
They are also required to provide the Strata Commission with minutes of their annual and extraordinary general meetings, resolutions passed and a record of the appointment of executive committee members over the past 15 months.
The strata titles law also requires stratas to file financial statements and a report of their activities within 120 days after the end of each financial year. But many reports are missing, and others are improperly produced, the Real Estate Board said.
The shortcomings include discrepancies in the accounting report, poor internal procedures for handling of finances, failing to insure the buildings, failing to legally apportion maintenance and other fees by unit of entitlement, and errors in the formatting and service of notice of the general meetings, the board said.
It costs $500 per residential unit to register a strata corporation, while non-compliance incurs a penalty of up to $250,000.
The Strata Commission has been using court actions and fines to keep the management bodies in line since the enactment of The Registration (Strata Titles) Act in 2010.
In some cases, strata corporations are said to have secured payment plans to clear the outstanding fees owed.