Strata

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The NSW Government is opening consultation on a proposed centralised digital strata hub to make it easier for anyone who seeks to buy into a strata block to get information.

The hub will consolidate core information about NSW’s 82,000 strata schemes in one place, giving property purchasers insights in their potential new home while allowing the regulator to monitor each building’s ongoing maintenance and defect management.

It will start with Information collected during the construction phase of a building to help consumers make informed decisions about the trustworthiness of a building.

“It will also let the regulators keep a close eye on each strata building to make sure NSW homeowners are not burdened with avoidable building defects when maintenance is neglected,” the Minister for Better Regulation and Innovation Kevin Anderson said.

Anderson hopes it will ensure well-built properties continue to be maintained and managed successfully.

Subject to the passing of legislation and regulations, owners corporations will be required to report certain information about their schemes such as annual fire safety statements, address for service of notices, contact details for the scheme and litigation relating to defects.

“The tool will also manage the building defect bond after it is lodged through the NSW ePlanning portal, which pays for any defects found in the first 24 months after finishing the building work.”

Minister for Customer Service Victor Dominello said the proposed hub will be a game changer for communities.

“Whether you are a strata owner, occupier or prospective buyer, we want to make your life easier by making all the information relevant to your scheme available on one easy to use platform,” Mr Dominello said.

Have your say about the Strata Hub by 19 March online <a href="https://haveyoursay.nsw.gov.au/access-strata-information">here</a>.

<h2>NSW properties selling now:</h2>

[smartcode_project:default project_id=7317]

[smartcode_project:default project_id=6201]

[smartcode_project:default project_id=32227]

 
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jchancellor

Find out which government is proposing a centralised digital strata hub

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GUEST OBSERVER
In a landmark ruling, the Supreme Court of Victoria has found that planning law, not strata law, is to govern short-term lettings of strata apartments.
Specifically, in Owners Corporation PS 501391P v Balcombe [2016] VSC 384, Justice Riordan found that a rule made to prohibit the use of a residential lot ‘for any trade or business’ in a strata scheme was invalid for these reasons:
<ol>
<li>The role of the owners corporation was confined to managing and administering the common property, and did not extend to restricting the use of a lot..</li>
<li>The rule was a substantial interference with the lot owners’ proprietary rights.</li>
<li>The strata law needed to clearly spell out clearly an intention to inhibit a lot owner’s use of their own lot for the rule to be valid - which it did not.</li>
</ol>
Background
The Watergate Apartments, Strata No PS 501391P is a mixed use development. It consists of 349 residential lots in two 16 storey apartment towers, erected upon a four storey podium which contains 12 retail lots and car park facilities. The plan of strata subdivision was registered on 28 June 2004. It is a residential Class 2 building under the Building Code of Australia, and therefore was not designed for the operation of a serviced apartment style business.
Ms Balcombe and Mr Slater utilise 14 apartments (1 owned, 9 leased, 4 available on a commission basis) to operate a Short-Term Letting business trading as ‘Docklands Executive Apartments’. In eight and a half years of operation, they have had over 3,500 bookings and 10,500 guests. They charge ‘executive’ prices, have minimum seven days stays, require photo identification and credit card details and can evict disruptive tenants immediately.
The City of Melbourne Council (the planning authority) consented to the use of apartments in the building for short-term commercial accommodation (serviced apartments) on condition that: a smoke alarm was installed in each bedroom; an emergency evacuation plan was affixed inside the entry doors; exit signs were placed in the corridors; and the tenants acknowledged the receipt of a safety/evacuation induction.
The proceedings were commenced by the Owners Corporation which sought restraining orders against Ms Balcombe and Mr Slater, alleging a breach of its rule (Rule 34) that provided:
The Proprietor or Occupier of a residential Lot must not use a Lot or the Common Property for any trade, profession or business (other than letting the Lot for residential accommodation to the same party for periods in excess of one month), nor permit any other person to do so, unless:
<ol>
<li>The person … is a full time resident of the Lot and only operates a home office …; and</li>
<li>The relevant planning scheme does not prohibit the relevant trade, profession or business to be carried on in a Lot; and</li>
<li>The Lot owner has obtained all necessary permits from the relevant authorities …</li>
</ol>
The Court’s finding that the Owners Corporation had no power to make the rule
The functions of an owners corporation are set out in section 4 of the Owners Corporations Act 2006(Vic). They can be summarised as:
<ol>
<li>to manage and administer the common property;</li>
<li>to repair and maintain the common property, fittings, fixtures, equipment and services relative to it;</li>
<li>to maintain strata insurance;</li>
<li>to keep records and issue certificates.</li>
</ol>
The powers of an owners corporation to make rules are set out in section 138 of the Owners Corporations Act 2006 (Vic), and are limited to the purposes set out in Schedule 1 of that Act. These purposes are relevant:
<ol>
<li>Health, safety and security – of lot owners, occupiers of lots and invitees.</li>
<li>Change of use of lots – which affect the insurance premiums payable by the owners corporation.</li>
<li>Behaviour of owners, occupiers and invitees on common property, noise and other nuisance control.</li>
</ol>
The Court found that the principal function of the owners corporation was ‘to own and manage the common property of the strata development’.
The Court found that the power of the owners corporation to make rules to prevent the use of a lot for an illegal or injurious purpose, to prevent a nuisance or hazard, or the behaviour of and noise created by tenants, was limited. It was not sufficient to support a general ban on Short-Term Letting on all lots. 
Health and safety issues and changes of use for a lot (an apartment), were planning matters for the Melbourne City Council to deal with.
Therefore the rule to outlaw use of an apartment for short-term letting was invalid as it exceeded the power of the owners corporation and interfered with the rights of the freehold owners.
As a result of this decision, an apartment owner in Victoria needs only planning permission to use their apartment for short-term lettings: Airbnb style short stays and service accommodation. They do not need permission from the owners corporation and any rule in place to restrict or prohibit that use is invalid.
Is the position the same or different in NSW?
There are subtle but significant differences in the strata law between NSW and Victoria:
<ul>
<li>In Victoria the owners corporation makes rules, in NSW it makes by-laws.</li>
<li>In both states, the common property is owned by the owners corporation (it used to be called the body corporate).</li>
<li>In NSW, under section 47(1) of the Strata Schemes Management Act 1996 (NSW), by-laws can be made generally ‘for the purpose of the control, management, administration, use or enjoyment’ of the lots or common property’, without limitation (see section 43), and with a right of appeal.</li>
<li>In Victoria, the rules are limited to the powers set out in Schedule 1.</li>
<li>Also in NSW, original by-laws which are lodged with the strata plan for registration can be broader than the section 47(1) powers, but are subject to section 49 restrictions which include prohibitions on by-laws which restrain leasing.</li>
</ul>
In NSW, the new Strata Schemes Management Act 2015 will commence on 30 November 2016. Section 136(1) is in similar terms to section 47(1) of the 1996 Act. Section 139 contains the section 49 restrictions, with some additions, including an override that a by-law must not be harsh, unconscionable or oppressive.
As a result, it is unclear whether the Victorian decision can be taken as a precedent to invalidate by-laws in NSW Strata Schemes which prohibit the use of lots for short-term letting.
Comments
The NSW Parliamentary Committee on Environment and Planning is currently conducting an inquiry upon the Adequacy of the Regulation of Short-term Holiday Letting in New South Wales. It would be most helpful if it were to indicate how the strata law should be clarified to deal with short-term lettings when it reports at the end of August 2016.
This matter needs to be addressed because of the requirement that all strata schemes review their by-laws within 12 months of the commencement of the 2015 Act.
My suggestions are:
<ul>
<li>That the planning authorities specifically provide for the regulation of short-term lettings for strata apartments in their planning policies.</li>
<li>That owners corporations be able to include a policy statement, which sets out their policy upon use of the residential apartments for short-term lettings, as an adjunct to their by-laws. This policy statement would not have the legal force of a by-law, but would be influential if an application were made to the planning authorities for approval to use an apartment for short-term lettings.</li>
<li>To assist in enforcement, the owners corporation should be given the power to assist the enforcement officers of the planning authority to prosecute contraventions of the planning laws.</li>
<li>If a short-term letting use is being carried on, with or without planning approval, the owners corporation should be entitled to levy a surcharge upon the strata levies payable for the apartment in question, to cover extra wear and tear, garbage, insurance premiums, visitor parking and water use.</li>
</ul>
Anthony J Cordato is lawyer, Cordato Partners and can be <a href="https://www.businesslawyer.com.au" target="_blank">contacted here</a>.
 
 
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jchancellor-FAypfDUnLy

Property 101: Victorian strata and lot owner proprietary rights

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<img src="https://counter.theconversation.edu.au/content/57114/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
Australia is a nation of pet owners. Yet as the popularity of apartment living grows, this culture is increasingly at risk from strata regulations that restrict the keeping of animals. Are these laws out of touch?
NSW Fair Trading has released a review of strata regulation. Key changes include a review of model by-laws relating to pet ownership. The proposed by-laws will make it easier for residents to keep pets in a strata scheme, such as an apartment or townhouse.
<h2>What changes are proposed?</h2>
The Strata Schemes Development Act currently incorporates three model by-laws, one of which bans pets. The proposed model by-laws remove this option.
Modifications to retained by-laws are also proposed. For example, a current clause allowing small dogs requires that people “carry the animal when it is on the common property”. The review proposes replacing this with one that doesn’t mention size and requires that owners “supervise the animal when it is on common property”.
The proposed changes are to the model by-laws. Strata communities will still retain the right to adopt by-laws that suit their particular context, including restricting pets.
<h2>Why support the changes?</h2>
Anecdotal evidence suggests that animals are banned from the majority of strata schemes, especially apartment buildings. However, the market appears to be undergoing change.
Growing numbers of pet-friendly apartments are going on sale. It is now not uncommon to see advertisements for apartments that include a picture of a fluffy dog. For developers, pet-friendly status is often part of the sales strategy and is believed to broaden market appeal.
Growing support for pet keeping in strata communities reflects the cultural importance of pet ownership in Australia. More than 60 percent of Australian households include at least one companion animal, with dogs and cats most common. These animals are more than just “pets”: 88 percent of households see them as family members.
Restrictive policies on pets are a real barrier to apartment living. Such rules can force people to consider relinquishing their pets, which can result in euthanasia and be devastating for the owner. Restrictive by-laws also drastically reduce the available market for people trying to sell an apartment.
Pets can be an asset to the whole community. More than just supporting good physical health and wellbeing and acting as a buffer against loneliness, pets have a “ripple effect” on interactions within neighbourhoods; they help to create a sense of community.
My research with dog owners in apartments across Sydney shows this. People I spoke with described having more social interactions with their neighbours after they got a dog. Dogs made people recognisable to their neighbours and served as an ice-breaker, helping people to have “easy conversation” without the feeling of invading someone else’s privacy or personal space.
<h2>I don’t want to live with a barking dog!</h2>
Unsurprisingly, barking dogs are one of the top concerns that people have when they think about allowing pets in apartments. It is important to remember, though, that the vast majority of dogs are not nuisance barkers.
Also, dogs already live across Australia in 39% of households. You wouldn’t even know that most of these dogs were there.
Issues with barking in apartments can be managed in the same way as in detached housing. This involves talking with the owner of the dog and involving the local council if the issue persists.
Importantly, apartments also bring another layer of regulation. The same noise by-laws that can be used to stop your neighbour playing loud music all night also apply to pets.
<h2>What’s wrong with the current rules?</h2>
Existing model by-laws are unnecessarily restrictive. While some are “other regarding”, ensuring that animals do not have negative impacts on the experience of others living in the strata building, many (such as blanket pet bans) are “self-regarding”.
These by-laws do not regulate a specific behaviour that may have impacts on other residents, such as barking. Instead, these are blanket restrictions that limit residents’ choices regardless of whether these would have impacts on others.
The current model by-law that favours small dogs is a good example of an “other regulating” by-law. It also comes with a sting in the tail: some large dogs are behaviourally quite well suited to living in apartment buildings, while some small dogs are high energy and not as suited to this type of living unless kept by someone who is able to meet these energy needs.
The current by-laws therefore risk encouraging some pets that are entirely unsuited to apartment living.
<h2>What else do we need to do?</h2>
Proposed changes to strata regulation in NSW are open for public comment until May 27, 2016. If the changes are adopted, new strata schemes should be encouraged to adopt one of the pet-friendly by-laws. Existing schemes can also be proactive and consider making changes to their by-laws to make them more pet-friendly.
Beyond changes to strata regulation, apartment and urban design that is pet-friendly is needed so that people can live well with companion animals. Design measures such as good sound-proofing, ledges and windows that allow animals to see outside, and pet-friendly open spaces in and around apartment buildings (including gardens and local parks) are good for the wellbeing of people and animals.
We should also support good neighbouring. Recent research, including my own with pet owners, suggests that in many strata communities neighbours make formal complaints about neighbours rather than knocking on the door and having a chat.
Some pet owners claim to be unaware that their pet has been a nuisance to others until they get a letter from the strata committee. This is not only stressful, it also limits the opportunity for people to respond to any issues.
Pet keeping is already widespread in Australia and brings numerous benefits to individuals and communities. Rather than trying to restrict the presence of pets in one type of housing, it is time to think about how we can live well with our companion animals.
Emma Power is senior research fellow, Geography and Urban Studies, Western Sydney University and author for The Conversation.
She can be contacted <a href="https://theconversation.com/profiles/emma-power-250930" target="_blank">here</a>.
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What's a nation of pet owners to do with the rise of apartment living?

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Joining Chris on the latest episode of your Property Empire is Andrew Rechtman from Realestate.com.au and Charles Tarbey, Chairman and owner of Century 21, Australasia.
During the week we had an email in from Frank Raiti in Sydney and he asked:
I've just received a letter from my Strata managers as one of the other owners in my block has requested a Special By-law be introduced to prohibit smoking on the whole property.
I don’t live there and so it doesn't directly affect me but how do you think it will affect my ability to rent or sell the property in the future? Is it a positive or a negative?
Charles: I’m not a smoker so I guess it would be a good thing if you’re not a smoker, because those people who don’t smoke can really smell it.
Chris: More and more these days because no one’s smoking
Charles: If one of my team goes out in the back lane for a coffee you can tell well before they get anywhere near you they’ve been smoking. I think it would impact very much on their ability to rent. I think also, in fact, on the sale price.
Chris: Do you think that’s a positive or a negative?
Charles: I think it’s a negative thing because people like to have a smoke and you can’t take that away. If a guy has nowhere else to go what are you going to do? walk out to the street in your own home now, in your own property and have a smoke? It could be quite a problem for values and for renters. Absolutely. 
Chris: Well the other thing is do you have the other tick box on REA, smoke free zone? 
Andrew: For a smoke free zone yes, but there certainly are things like pet friendly versus not pet friendly. There are issues around making noise. There are buildings where you’re not allowed to have excessive noise and parties. Even parking on some property. My personal favourite is… we have seen buildings with excessive smoke from BBQs… so you’ve got to keep the BBQ under control. It’s very hard to know and you’d have to talk, you know, for your reader, you’d have to ask what is the domain in that particular building? Talk to the tenants, do the tenants mind? I tend to agree with Charles. 
Charles: How do you police it though, really?
Andrew: There’s got to be better ways of them putting, you know, by-law in the building to stop smoking and it does feel like it’s stepped over that personal…
Chris: You see with corporate buildings these days that ban the smokers from being out the front because it’s a bad image for the company as well isn’t it. 
Charles: I think it’s a very bad image for any business when you’ve got people out the front having a smoke. I know some companies where people stand out the front and have a drink. You know, they’ve got a can of VB in the hand and it never looks good. So the back lane is always the best place. But still, you’re going to end up removing a whole series of situations. Pet friendly’s great because a lot of people have a small pet and I don’t see that as an issue as long as it doesn’t make so much noise, but boy oh boy you’re getting really into it if you’re going to start smoking.
Chris: The pet friendly thing is, if you didn’t like pets and you’ve found they’re noisy, would that reduce buyers in the building?
Charles: Well, anything that reduces the opportunity to expose your property to more sellers than normal is always going to have an impact on your price. Limitations like a first home buyer’s property is going to have a million buyers looking at it. A super residence in the eastern suburbs or top area in any area of Sydney is going to have 10 buyers looking at it. 
Andrew: It depends on community standards as well. So at some point it’s going to flip the other way which is I won’t buy from a building that allows smoking. We’re seeing that change in community standards over time. I remember going on airlines where you could smoke not that long ago and you could smoke in bars and pubs and restaurants.
Chris: But having the pet friendly, for instance then, there’s a lot of people who won’t rent. So my philosophy on rentvesting is all good financially but if you’ve got a pet or you’ve got a dog then suddenly you can’t do the rentvesting thing. So that’s where someone may get a premium to get into pet friendly. 
Charles: They may, but I think people just don’t tell you they have a pet. I mean my experience in real estate is you don’t get the full picture on what’s really going on when somebody’s renting. I’m sure that’s your experience too. You rent a property out to one person and in some parts of medium density, you find 10 people living in the property.
Chris: So, would you go with the by-law or go against it do you think? And obviously we’re not giving financial advice here.
Andrew: I’d encourage you to talk to the tenants and see what they think. If there’s a general mood that they shouldn’t be smoking then I’d probably be in support of it. But I think in the long term it probably devalues your property.
Charles: I would be against it and I’m a non-smoker.
For more information other things to consider when buying a property contact Chris at <a href="mailto:yourempire@skynews.com.au" target="_blank">chris@yourempire.com.au</a>.
To watch Your Property Empire on Sky News Business with Chris Gray, <a href="https://www.youtube.com/watch?v=7azCaK_aYKU" target="_blank">click here</a>.
 
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Should strata place a ban on smoking? Chris Gray's Your Property Empire

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GUEST OBSERVER
Energy efficiency is a concern for many strata schemes that we talk to with several schemes recently upgrading their common property to capitalise on new technology and the ability to save money.
This is becoming increasingly important with energy costs rising and councils signing up to carbon emission reduction programs.
For instance the City of Sydney has a Sustainable Sydney 2030 target of 70 percent carbon emission reduction.
An interesting report for the City of Sydney by Wattblock details research on schemes in the City of Sydney and provides ideas of how energy efficiency can be achieved in existing residential buildings by retrofitting existing solutions.
The report can be found <a href="https://www.wattblock.com.au/how-it-works" target="_blank">here</a>
<div class="entry-content">
Christopher Kerin is Sydney Director, Kerin Benson Lawyers and can be contacted <a href="https://kerinbensonlawyers.com.au" target="_blank">here</a>.
<h3 class="r"> </h3>
<div class="entry-meta"> </div>
</div>
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Property 101: Energy efficiency and strata schemes

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GUEST OBSERVER 
There is growing anger in the WA property industry with the continuing delay in introducing much-needed reforms to the state’s antiquated strata title laws. 
The industry is calling on the Minister for Lands, Terry Redman to reconsider an announcement last month that the reforms are unlikely to make the 2016 Parliamentary priorities.  
After more than five years of consultation and promises it is disappointing that we still are still no closer to achieving strata reforms in WA in the near future.
“It is crucial that the state’s property laws keep up with the growing popularity of strata titles in WA. 
Over 40 percent of all new homes and many businesses in WA, are located in strata titled properties. 
However the current strata laws were not designed for this level of strata activity, which has resulted in a lot of complex systems and procedures for everyone involved in strata, including home buyers, property managers, investors and developers.
Key reforms that we are waiting for, include: community titles and staged strata developments to create better places to live and work; leasehold strata to enable groups like universities and church groups to do strata development; improvements to management of strata schemes and easier ways to settled strata disputes; and better buyer information.
Unfortunately the lack of strata reforms will impact the anticipated wave of activity centre development in Perth and the regions. 
Some developments will go ahead but they will miss out on the innovations that would be possible with reforms like community titles, and other developments will be delayed until the reforms are introduced.
Meanwhile strata buyers and strata managers will have to continue to struggle with out-dated systems.
Lino Iacomella is executive director, Property Council WA and can be contacted <a href="https://www.propertycouncil.com.au" target="_blank">here</a>.
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Industry anger at delayed strata reform: Property Council WA

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GUEST OBSERVER
If GST is payable on the sale of a strata lot, can a dissenting owner recover GST in respect of the sale of its lot having regard to Part 10 of the Strata Schemes Development Bill 2015? 
The short answer is yes, GST will most likely be recoverable as part of the “compensation value” received by a dissenting owner.
Who is a “dissenting owner”?
A dissenting owner is an owner of a lot which does not support a strata renewal plan prepared in accordance with Part 10 of the Strata Schemes Development Bill 2015. 
What is the “compensation value”?
The “compensation value” is the value of a lot determined:
• pursuant to s55 of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (Acquisition Act) subject to any modifications prescribed by the regulations; or  • by any different valuation method prescribed by the regulations.
The regulations are yet to be published, so it is unclear whether the regulations will specifically regulate (or modify) the manner in which the “compensation value” is calculated, and in particular whether or not  GST will be recoverable by a dissenting owner as part of the market value of the dissenting lot.
However, if the “compensation value” is to be determined solely pursuant to the Acquisition Act, then it is most likely that any GST paid (or payable) on the sale of the dissenting lot would form part of the market value of that lot, meaning that a dissenting lot owner would then recover GST as part of the overall value it receives. 
Is a dissenting owner entitled to “compensation value” for its lot?
Yes, at a minimum.
When making an order to effect to a strata renewal plan, a court must be satisfied in relation to the compensation being received by lot owners that:
• in the event of the sale of the entire strata scheme (a “collective sale”), each lot owner must receive not less than the “compensation value”; and • in the event of a “redevelopment”, the amount to be paid to a dissenting owner must be the greater of the “compensation value” of the dissenting owner’s lot and the amount which the dissenting owner would have been entitled to had they supported the strata renewal plan.
Leisha de Aboitiz, partner at William James Law and Ole Mitrevski, solicitor at William James Law. They can be contacted <a href="https://www.williamjameslaw.com.au" target="_blank">here</a>.
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Property 101: GST and strata

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<div style="text-align: left;" align="center">GUEST OBSERVER</div>
<div style="text-align: left;" align="center"> </div>
<div style="text-align: left;" align="center">Following some of the most damaging weather Australia’s east coast has ever seen, the Victorian State Government is being urged to consider reforms which would see maintenance funds be made mandatory for owners corporation communities. </div>
<div style="text-align: left;"> </div>
<div style="text-align: left;">Maintenance funds help communities pay for emergency repairs whilst waiting for insurance claims to be processed; but without them, the wait can be perilous. </div>
<div style="text-align: left;"> </div>
<div style="text-align: left;">Thousands of apartment and unit communities were hit hard by recent weather, and with no laws in place to ensure that emergency maintenance funds are collected; many will struggle to cope with the fallout now and in the future. </div>
<div style="text-align: left;"> </div>
<div style="text-align: left;">We’re very concerned that Victorian owners corporation communities aren’t in a position to financially deal with the unpredictable nature of Australian weather.</div>
<div style="text-align: left;"> </div>
<div style="text-align: left;">We understand 20,000 claims have been lodged since the wild weather hit, and with the knowledge that many won’t be covered, the number of affected owners unable to afford repairs could very well reach into the thousands.</div>
<div style="text-align: left;"> </div>
<div style="text-align: left;">If reports of insurers not covering recent damage, under an “act of the sea” clause are correct, it really shines a light on the need for maintenance funds to be behind each community. </div>
<div style="text-align: left;"> </div>
<div style="text-align: left;">Living in Australia often means being exposed to wild weather events and communities need to go a step further than simply relying on their insurance policy to save the day.</div>
<div style="text-align: left;"> </div>
<div style="text-align: left;">Insurers commonly do not cover ‘acts of the sea’ so repairs following the raging waters that have ripped coastline communities apart will likely need to be funded in other ways.</div>
<div style="text-align: left;"> </div>
<div style="text-align: left;">Aside from the funds themselves however, the wait for claims to be processed amid major events like the ones just seen can hurt just as much, so having access to funds immediately is pretty crucial.</div>
<div style="text-align: left;"> </div>
<div style="text-align: left;">Beyond weather from above, bushfires are a year-in year-out threat to Victorian owners corporation communities and communities need to be held accountable on their financial preparedness as soon as possible. </div>
<div style="text-align: left;"> </div>
<div style="text-align: left;">It won’t be long until we’re discussing the devastating effect of bushfires on owners throughout the state and we’ve got a scheduled rollout for the State Government to consider in making these funds mandatory.</div>
<div style="text-align: left;"> </div>
<ul style="text-align: left;">
<li>By end of year 1, owners corporations with greater than 50 lots must implement a maintenance plan and set up the collection of funds. </li>
<li>By end of year 2, for owners corporations with 10-50 lots must implement a maintenance plan and set up the collection of funds. </li>
<li>By end of year 3, remaining owners corporations with 10 lots or less must implement a maintenance plan and set up the collection of funds. </li>
</ul>
<div style="text-align: left;"> </div>
<div style="text-align: left;">Under this plan, the 1.5 million Victorians living in strata will in 3 years be able to consider minor hiccups following major weather events as a worst case scenario and we’re encouraging the State Government to consider the value of that.</div>
<div style="text-align: left;"> </div>
<div style="text-align: left;">In place of any progress on the legislative front, Mr Beck is urging Victorian owners corporation residents to raise their voice and speak to a professional owners corporation manager to get clarification on how their community should best go about setting up funds. </div>
<div style="text-align: left;"> </div>
<div style="text-align: left;">Owners corporation communities don’t have to wait for the regulatory say so to set up maintenance funds, they can start financing their future needs today.</div>
<div style="text-align: left;"> </div>
<div style="text-align: left;">The ugly truth is that there’s no guarantee there won’t be a major event this weekend that creates more chaos, so we hope State Government decision makers and owners corporation communities alike move quickly to see this issue overcome.</div>
<div style="text-align: left;"> </div>
<div style="text-align: left;">Rob Beck is general manager, Strata Community Australia (Vic) and can be contacted <a href="https://www.vic.stratacommunity.org.au" target="_blank">here</a>.</div>
 
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Strata maintenance funds need advance planning given weathering impacts: Rob Beck 

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GUEST OBSERVER
Misinformation and scare tactics are clouding the debate around incoming strata reform.
The strata laws under which we operate are the oldest in the world so the system is in desperate need of an upgrade. The exponential growth in the popularity of strata ownership means that reform is urgently needed to bring it in line with modern life.
Bills do not apply to existing strata schemes, only future strata schemes with current strata owners having the option to opt in, so it will take time to see material change in the NSW system.
If 75% of residents agree to redevelop a strata development the remaining 25% will not be thrown out onto the streets.
The facts have been lost along the way here. One thing people need to be aware of is this strata reform is not retrospective. It will apply only to existing strata committees if they chose to sign on to it, and it will apply to strata committees that are established post the introduction of the reforms.
And in reality any collective sale of the strata development is complex and will take up to two years to achieve. The sale would have to go through courts and those in opposition will have the opportunity to argue their case.
Further facts are:
<ul>
<li>Old strata buildings are expensive to maintain. The upkeep of a dilapidated building is not only a burden to residents but also owners who wish to sell their apartments. </li>
<li>Strata unit owners stand to benefit. The majority of residents will make more profit from the collective sale of a strata development then if they were to go it alone. </li>
</ul>
Stephen Albin is chief executive of the Urban Development Institute of Australia and can be contacted <a href="https://www.udiansw.com.au/" target="_blank">here</a>.
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Dispelling the myths around strata reform: UDIA

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GUEST OBSERVER
Although the Strata Schemes Development Act 2015 does not yet have a commencement date, Part 10 of the Act, the part dealing with strata renewal is the topic of much discussion. Specifically, lot owners and owners corporations have been asking what is the process for strata renewal?
Note: we use the term strata renewal for both a collective sale (lot owners agreeing to sell to a developer) and a collective redevelopment (lot owners agreeing to refurbish the building and potentially build additions).
Once Part 10 of the Act comes into effect the process is as follows:
Anyone (it does not have to be a lot owner) can give a written proposal to the owners corporation (OC) for a collective sale or redevelopment of the strata scheme. The proposal cannot be the same as, or substantially similar to, a proposal that lapsed within the previous twelve months.
The executive committee (soon to be the strata committee (SC)) must consider the proposal at a meeting no later than 30 days after it is received. There are two options at this meeting:
If the SC decides the proposal warrants further consideration it must no later than 30 days after the meeting convene a general meeting to consider the proposal.
If the SC decides the proposal is not worthy of consideration the proposal will lapse unless lot owners with at least 25% of the unit entitlements of the scheme request the proposal be considered at general meeting.
Assuming the proposal has been deemed worthy of consideration or there has been a qualified request, the OC at general meeting must decide whether the proposal warrants further consideration. This is an ordinary resolution meaning a simple majority is required to pass it.
If the OC decides the proposal is worthy of consideration it:
<ul>
<li>Must establish a strata renewal committee to prepare a strata renewal plan (ordinary resolution required);</li>
<li>Must elect members of the strata renewal committee (ordinary resolution required &amp; note there are eligibility requirements);</li>
<li>May provide the strata renewal committee with a budget to develop the proposal; and / or</li>
<li>May authorise the strata renewal committee to engage professional advisers to assist it in developing the proposal;</li>
<li>If the OC decides the proposal is not worthy of consideration it lapses.</li>
</ul>
Assuming the OC decided the proposal was worthy and elected a strata renewal committee, that committee is to prepare a strata renewal plan. The committee will operate for one year unless it is either dissolved by the OC or the OC by special resolution, votes to extend its time frame. The contents of a strata renewal plan are prescribed and include provision for compensating dissenting lot owners.
Once the committee has a strata renewal plan to its satisfaction it must put it to the OC at general meeting for approval. The OC must, by special resolution, decide whether or not to give the plan to lot owners for their consideration.
If the OC specially resolves to put the plan (or an amended plan) to lot owners for their approval:
<ul>
<li>A copy of the strata renewal plan must be provided to all lot owners within 14 days plus any information prescribed by the regulations, then</li>
<li>A minimum of 60 days after receipt of the strata renewal plan, lot owners may provide a support notice stating they support the plan. It must be signed by each owner and registered mortgagee or covenant chargee of the lot.</li>
<li>A minimum of 75% of lot owners must return a support notice (and not withdraw it) for the strata renewal plan to proceed. If the required support is not received within three months the plan lapses.</li>
</ul>
If the OC decides not to put the strata renewal plan to the lot owners then it may either:
<ul>
<li>resolve (ordinary resolution) to amend the strata renewal plan and put that plan to the lot owners instead: or</li>
<li>resolve (ordinary resolution) to return the strata renewal plan to the strata renewal committee for amendment; or</li>
<li>if it does neither and does not pass the special resolution to put the strata renewal plan to the lot owners, the plan lapses.</li>
</ul>
Assuming 75 percent of lot owners return (and do not withdraw) a valid support notice within the three month period the OC must:
<ul>
<li>provide notification to the Registrar General and each lot owner within 14 days of being advised the required support has been obtained.</li>
<li>meet and resolve to apply to the Land and Environment Court for orders to give effect to the strata renewal plan.</li>
</ul>
If the OC decides (by ordinary resolution) to apply to the Land and Environment Court the OC must provide notice of the decision to do so to all tenants within 14 days.
The Land and Environment Court must review the strata renewal plan and go through a hearing process to consider whether to make orders to give effect to it. The Act prescribes factors that the Court must consider including the relationship between the owners of lots and the purchaser or developer, steps taken in preparing the plan including whether the required notices were served, the compensation value to be paid to dissenting lot owners and the proposed distribution to supporting lot owners. Lot owners (and specified others) may file objections to the application to the Land &amp; Environment Court and be joined to the proceedings.
As you can see, even a summary shows that this is a complicated process. We recommend seeking legal advice before embarking along this path.
Also please note that compensation is problematic. If the plan is for a collective sale it must provide for each dissenting lot owner’s lot to be purchased at not less than the compensation value for the lot. If the plan is for a redevelopment it must provide for each dissenting lot owner’s lot to be purchased at not less than the compensation value of the lot.
The compensation value for a lot is based on section 55 of the Land Acquisition (Just Terms Compensation) Act 1991. This Act however primarily relates to compensating land owners for compulsory acquisition by statutory authorities which arguably has a different effect when used in valuing the lot of a dissenting owner.
The “highest and best use” which is used to determine market value of the dissenting lot owners lot would likely not be the same as the highest and best use that a developer could put that lot to. Section 55 does however allow a component for disturbance in calculating the compensation value. This is likely to include stamp duty, legal costs and relocation fees but may not include costs such as the liability from terminated leases.  We believe this will be an area that is much disputed.
If you or your scheme are potentially looking at a strata renewal program you may find the report “Renewing the Compact City” by UNSW’s City Futures Research Centre of interest. The link to the report is <a href="https://cityfutures.be.unsw.edu.au/research/projects/renewing-the-compact-city/" target="_blank">here</a>.
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Allison Benson is legal practitioner director, Kerin Benson Lawyers and can be contacted <a href="https://kerinbensonlawyers.com.au/">here</a>.
</div>
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