There’s the “family and mate’s rates” scams too. OSMs will hand over vacant or un-let units and apartments to family and friends for a wee cash payment, or for free, even in peak periods when the properties should be fully let at market rates. I’ve seen for myself the rage and fight that ensued when an interstate owner arrived without notice (he was under no obligation to provide any notice to anyone to occupy his own property by the way) to stay in his beachfront unit (which was never let out to anyone). The front door was open, kids running everywhere, beautiful apartment full of sand and wet carpets and a bunch of slobs drunk, rowdy and barbequing on the deck.
I heard the swearing from my Unit and stuck my head out to see an almighty argument in full flight. The owner had initially been quite calm in speaking with the trespassers (who “knew” they weren’t supposed to be there) but when they told him to stop being such a dick, he exploded.
This happens a lot more than you think…
I move on to “Standby Rate” signs that you often see outside Holiday or Vacation let apartment and high rise complexes… and what sometimes goes on in “The Office”.
I’ve been told of a case where there were two sets of Trust Account Receipts kept under the front counter. One was legitimate and the other ordered online, printed overseas with no questions asked…
Anyone walking in off the street to stay using the standby rate was always asked to pay in cash or use a nearby ATM to withdraw cash in order to access the “fantastic” rate on offer. A very “Official Looking Trust Account Receipt” was issued and the happy customers led to their apartment. My contact told me that the building had over 100 apartments in the holiday letting pool. The scam involved, over just one year, an average of 20 stolen room nights at about $180 per night from some 70 apartments. Per annum take – just over a quarter of a million dollars, CASH! Each owner scammed out of around $3,500.00 in twelve months.
There are of course, the dodgy tradesman scams. False Tax Invoices issued to cover electrical, plumbing, carpet and curtain cleaning, appliance repair and so on where monies taken from owners trust accounts are paid to the unscrupulous tradie who then returns a percentage to the OSM.
Bodies Corporate often have a lot of equipment that’s used to maintain the common areas. In many jurisdictions when Body Corporate monies are expended on such equipment, a register is required to be maintained. Good practice by OSMs would dictate they scrupulously note all purchase, use, servicing and subsequent disposal of such assets. Most don’t and sadly treat the equipment as their own. But there’s more.
In two complexes where I owned an apartment I uncovered private use and abuse of body corporate assets. In the first instance the husband of the OSM bought garden tools with Body Corporate funds and threw them in his truck to be used in his own business. He did this, unchallenged, for more than 5 years. Until I turned up!
In the larger complex I caught the OSMs son loading a very expensive lawnmower, whipper-snipper, edge trimmer, hedge tool, pool chemicals, brushes and assorted other equipment into his utility truck. All this “Kit” came from the Body Corporate locked cage in the underground car park. I made notes not really knowing what was going on, except to think it was odd that so much equipment was being taken off site. At first I thought he may have been taking it all to be serviced. However when it happened day-in, day out for a whole week I decided, on a day off, to follow him.
Sure enough, his first stop was a private residence. He used OUR equipment, and OUR pool chemicals, bought and paid for by OUR Body Corporate, to run his own business.
After I gathered a group of two dozen owner occupiers and told them, there was a Posse to the Office!
In another “case” if you like, I caught the OSM doing a number of very naughty things that eventually led to her being dismissed by the Body Corporate, losing her rights to run a business on the property and forcing her to sell her apartment at a substantial loss. I was elected Chairman of the Body Corporate and immediately sought access to all the Body Corporate records. I didn’t like what I saw and called in a lawyer mate and an accountant to see what they had to say. There was much tut-tutting…
I began to talk to the tenants in the building. I discovered enough offences in the first day to warrant a gaol term for our sneaky OSM. Rent monies are required to be paid by tenants into a properly registered Trust Account, with all monies to stay there until accounted for at the end of the month.
Approved fees and charges are deducted and transferred to the OSMs General Account and the balance sent to the respective owners. I asked one old lady who’d been there a long time how she paid her rent. Now, the Trust Account was in “Bank A”. The elderly and trusting woman showed me a Bank Deposit Book issued by “Bank B”. Even more startling was what was printed on the deposit slips… (OSM name Mortgage Account). About $2,500.00 a week was going into her private mortgage account instead of straight into the required Trust Account.
How the “Auditor” didn’t pick up her fraud was beyond me!
Every so often she transferred “some” money into the Trust Account to pay bills.
It got worse. She would write Trust Account cheques with insufficient funds in the account, causing them to be dishonoured. Banks in this State are obliged, by Law, to report breaches of Trust Account Rules, especially cases of dishonoured cheques, to the relevant authorities. Bank “A” did not, in at least 5 cases we were able to prove, report as required by law.
I wrote to all owners, the vast majority of whom lived more than 1,000 kms away or overseas, asking for their experiences, observations and requests. An avalanche of letters arrived, none of them any good.
As a result the OSM hurriedly wrote out and mailed a number of Trust Account cheques for amounts ranging from $1,000.00 to just over $5,200.00 to concerned owners. They were all dishonoured! One owner lived in New Guinea, had not had one rent payment or statement for over a year and was too busy to chase it up or travel to Australia to confront the woman.
It’s getting late so I’ll end here on about 1,300 words.
There are several morals here.
1. Don’t trust your Bank to always do the right thing by you (DOH! – obvious)
2. Don’t trust Trust Accounts and Trust Account Receipts unless they’re independently verified by someone you can “TRUST!”
3. Don’t ever be intimidated by OSMs, Real Estate Agents and others who tell you how it’s going to be…
4. Know your Legislation. Know the Rules, Read the bloody paperwork, all the time and many times.
5. If you don’t understand anything, don’t be a numpty – ASK, and keep asking until you understand all your rights and obligations
6. If it sounds too good to be true…derrrrr…
7. If you don’t think something’s right, listen to that little voice and don’t put your head in the sand hoping it’ll work out or disappear…
8. Never be scared of calling the Office of Fair Trading or the Police Fraud Squad
9. Talk to your fellow owners
10. Go to as many Body Corporate Meetings as you can – don’t be ill informed or completely in the dark
11. Keep reading http://www.realestatecells.com !