Strata Management

<html><body>The Queensland government has revealed a modernised set of body corporate regulations that applies to strata unit management from March 1, 2021.

The new set of regulations that lay out changes that will assist management transparency were announced by Attorney-General and Minister for Justice Shannon Fentima.

They apply to new and long established body corporates.

They will facilitate electronic voting and attendance at meetings for absentee owners, including remote personal attendance by teleconference or videoconference.

The electronic voting system may allow votes to elect committee members to be cast by computer, smartphone or tablet.

The new rules will encourage the use of email and other forms of electronic communication for the exchange of information and documents within bodies corporate, which ought reduce the hefty photocopying costs of strata management.

If owners give their email address to the body corporate as a part of their address for service, they will be consenting to receive all documents from the body corporate by email.

The rules also clarify and improve the list of documents that original owners or developers must provide to the body corporate to facilitate effective governance of the scheme.

It will encourage early identification and remedy of building defects by requiring a body corporate to consider a motion to prepare a defect assessment report at its second annual general meeting.

Motions submitted by members of the body corporate before the first annual general meeting must be included on the agenda, where possible.

The original developer owner will need to give additional items to the body corporate, including a copy of its development approval, any fire and evacuation plans required under the Fire and Emergency Services Act 1990
and any contracts or agreements for the supply of utility services to the body corporate.

The updated set of rules require the body corporate manager, and the caretaking service contractor, to disclose any associated commission, payment or other benefit received, including the amount of the benefit if it’s monetary, before a body corporate decides to enter into a contract, including for insurance.

From 1 March 2021, the maximum number of committee voting members will depend on the number of lots in the scheme, with fewer than 7 lots, the maximum number will be equal to the number of lots.

If it includes more than 7 lots, the maximum will be 7—unless it is a principal scheme at no more than 12.

Fentima said the government was still working on establishing a Community Titles Legislation Working Group which will provide advice to the government on a range of issues impacting the community titles sector.

https://www.qld.gov.au/law/housing-and-neighbours/body-corporate/legislation-and-bccm/regulation-changes/summary</body></html>

The modernised body corporate regulations will facilitate electronic voting and attendance at meetings.

jchancellor

Interstate apartment owners to access online Queensland strata management meetings

<html><body>
More than one million people in NSW are being invited to have their say on how laws can be changed to improve the experience of the growing number of people living and working in strata communities.

Minister for Better Regulation Kevin Anderson said community consultation was now open as a crucial part of the statutory review of both the Strata Schemes Development Act 2015 and Strata Schemes Management Act 2015.

“With the continued surge in popularity of apartment living we expect over half the population of Greater Sydney to be living in strata titled apartment towers, townhouses and blocks of flats by 2040,” Mr Anderson said. “There are now 81,717 strata schemes registered in NSW and every year this number grows by more than 1,000 across both Sydney and regional NSW.

“It is important that the laws covering strata living stay relevant and address some of the fundamental issues that might be stopping people from fulfilling the great Australian dream of home ownership. “The Government’s landmark 2015 reforms modernised strata living, but we know there is more to do.

"In particular, we know more needs to be done to ensure that apartment buildings are well maintained and remain free of building defects over their lifetime so that owners aren’t left out of pocket by tens of thousands of dollars. That’s why we will be seeking feedback on changes that would require owners to disclose critical information about programmed maintenance, capital works spending and defects.”

Mr Anderson said feedback was also being sought on a new digital Strata Portal that will capture mandatory information for each strata building in NSW and make it available to the regulator to ensure compliance with fire and other important safety requirements.

“Strata schemes are integral to supporting NSW’s growing population and housing boom. As more and more people choose to call NSW home, strata living holds the key to encouraging growing cities and urban development which is why this review is so important to ensure we make strata living more appealing,” Mr Anderson said.
</body></html>

Community consultation is now open as a crucial part of the statutory review of two the strata scheme acts



Joel Robinson

Strata laws in New South Wales to be reviewed

<html><body>
GUEST OBSERVATION
Should private citizens be allowed to force the sale of a neighbour’s property against his or her will?
Let’s ask the question another way: is it fair that just one neighbour, or maybe a small group of neighbours, should be able to block the sale or redevelopment of someone else’s property?
When it comes to collective strata sales, the answer isn’t obvious.
Strata title is the most common form of apartment ownership in Australia. It gives each owner ‘title’ over their own unit and shared ownership of the shared space. Three million people live in them. In most states (except for NT and NSW), 100% of the owners have to agree in order to terminate a strata scheme and sell the block of units.
The need for achieving a unanimous decision makes it difficult for ageing buildings to be sold and redeveloped in order to increase urban density. Until 2016, only 1.1% of all the strata schemes in NSW had been terminated since 1961.
Economists, at least since 1838, have understood that attempts to assemble complementary resources can be plagued by the holdout problem.
A new law, which commenced in NSW in 2016, intends to remedy it. Only 75% of the owners in a strata will have to agree in order to sell or redevelop a site. Early in 2018 the Land &amp; Environment Court issued preliminary decisions in two cases in Sydney. It’s easy to see more will follow due to inherent problems with the solution.
What’s wrong with 75%?
First, the urban redevelopment benefits might not materialise. There’s no requirement for the properties developed to be replaced by properties with increased density.
Second, the legislation gives private citizens a power previously only available to the government: the power to compulsorily acquire someone else’s property. Given the cultural and legal importance of property rights in Western societies, violating those rights is a big step.
Third, the law says the terms of the settlement must be “just and equitable in all the circumstances”. This can be taken to mean the market value of the lot and other costs, such those of moving.
But market value is problematic. The market value of the entire block sold as one will often be much more than the sum of the market value of each unit sold individually. And the market value of an individual unit might be insufficient to purchase a replacement in the neighbourhood after the redevelopment takes place.
The property might be an investment which, if sold, would be subject to capital gains tax. After payment of the tax, the owner might have insufficient funds to purchase a suitable replacement.
And existing owners are likely to value their property higher than the market, otherwise, the property would already have been sold.
A premium is justified, but how much?
The legislation doesn’t define the highly subjective concept, “just and equitable compensation”.
It provides no guidance as to how to separate the true subjective value to the owners from what they might be asking for just because they’re holding out to inflate their financial gains.
Our solution: reducing holdouts while protecting property rights
We believe it is. Most people didn’t want to see a single owner holding out on a development purely for personal financial gain. On the other hand, most don’t want to see a vulnerable resident removed from their home against their wishes.
The method we propose in a working paper coauthored with economists from Florida State University and University of California Santa Barbara assigns to each owner a right to a defined fractional share of any collective sales proceeds, equal to his or her proportion of the overall market value of the whole building, as assessed by the independent valuer (the shares add up to 100%). Then, each strata owner specifies the lowest price at which he or she is willing to sell.
How it would work
Consider an owner called Jo whose share is 10% and who nominates $1.2 million as the compensation she wants (this may well be more than the valuer’s estimate of the market price of Jo’s apartment). For Jo to receive $1.2 million, the whole building would have to sell for $12 million.
Thus Jo, by nominating her required compensation as $1.2 million has, in effect, set a reserve price of $12 million for the whole building. Every owner does the same, each setting the building’s reserve price. The highest of these building reserve prices becomes the actual reserve price and it is what matters: when it is met, every owner will get at least what they asked for.
Wouldn’t the owners all nominate unreasonable and untruthfully high prices? It turns out our scheme gives the owners a financial incentive to set a truthful price, that is to nominate the lowest prices at which they would voluntarily sell their individual properties. If they set a price too high they run the risk of the sale falling through and getting nothing.
How it could be used
It’s an idea that could be applied in other contexts. The sale of group water rights in the Murray Darling Basin is one.
For decisions to sell strata-titled units, the scheme would require the appointment of a neutral agent to receive the individual demands for compensation and to set the (secret) reserve necessary to ensure no collective sale is made unless all demands for compensation are met.
It would eliminate the incentive for holding out. Any collective sale that took place would be unanimous, satisfying the NSW law and also the laws of the states that require 100% agreement.
There’s nothing to stop it being adopted voluntarily, on a case by case basis, now, as an option that will get the best result for development and owners within the laws that we have got.<img src="https://counter.theconversation.com/content/103091/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;">
Duygu Yengin, Associate Professor of Economics, University of Adelaide
Jonathan Pincus, Visiting Professor, School of Economics, University of Adelaide
This article is republished from <a href="http://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/evictions-versus-holdouts-how-to-painlessly-dissolve-a-strata-title-103091" target="_blank">original article</a>.
</body></html>

j.ballantyne1990-6AQqhLzZaK

Evictions v holdouts: How to painlessly dissolve a strata apartment title 

<html><body>
The Victorian government’s plan for major rental reforms could turn away landlords from renting, and inadvertently lead to a surge in short stays such as Airbnb in Melbourne, says a leading strata management body. 
A response from the state government on short stays following lengthy public consultation is due on December 8, and the proposed new rental laws once again highlight the need to get short stay regulation right, according to Strata Community Australia (Vic) — the peak industry body for strata management in Victoria. 
SCA general manager Rob Beck says rightly or wrongly, stronger tenant rights could see landlords review how they use their investment properties. 
“Key proposals like the removal of no pet clauses in rental agreements, a cap on maximum rental bonds and new protections to make it easier for renters to make minor modifications to the property are ones which will likely make owners think long and hard about whether they want to keep renting or not,” said Rob Beck. 
Landlord insurance will go up after the Andrews' government <a href="https://www.urban.com.au/news/76815-pet-policy-for-tenants-will-trigger-higher-landlord-insirance" target="_blank">pet policy for tenants</a> is introduced in Victoria next year.
Emphasizing the need to regulate short stays, Beck said it wouldn’t be a surprise to see a shift from investor owners towards short stays if the proposals announced for new rental laws are brought into effect, and that this raised “the importance of having short stay regulation in place to new levels”.
Beck says short stays present a unique challenge for strata communities to manage compared to leasing arrangements, and SCA (Vic) wanted regulations to allow strata schemes have better control over this issue. 
More than 1.6 million Victorians live in strata properties, so potentially a huge number in Melbourne could be impacted by a spike in short stays, according to Beck.
“What we want to see as part of the regulations delivered by State Government are measures like the ability for strata schemes to create rules to regulate short stays, and the ability to recover costs such as any damage or any increased proportion of strata fees. 
“These would work to make strata schemes better able to manage these stays.” 
“Provided the right regulatory framework exists, short stays have a place in Victorian strata communities, and it will be perfect timing ahead of the summer period, for the State Government to deliver laws for the busy years ahead.” 
 
</body></html>

jonathanchancellor-7SQnKwU6yx

Victoria's new rental reforms could trigger surge in short stays: Strata body

<html><body>
A top strata management body has urged the federal government to spell out its stance on fixing the flammable cladding on buildings as it fears apartment owners could be on their own on fixing this issue which is likely to cost a huge amount of money.
The Prime Minister is being urged to reconsider his reported decision to “handball” the flammable cladding crisis onto state governments, according to a media release from Strata Community Australia, which is the leading industry body for Body Corporate and Community Title Management in Australia. It has about $1.2 trillion worth property under management.
Chief executive Erik Adriaanse said without immediate support from the federal government, thousands of apartment owners nationwide could find themselves in an insurance and financial disaster.
“We’re very concerned that owners will be left to face this issue alone, with little to no support coming from the parties responsible,” Adriaanse said today.
SCA said it was unacceptable that the federal government, based on the Prime Minister’s comments, wants to wash its hands of the issue especially as national building codes and border screening measures lie within their control.
The issue of flammable cladding was brought to light after an ABC Four Corners report detailed the volume of non-compliant flammable cladding on Australian buildings as “unquantifiable”.
Some insurance providers are reviewing how this affects their policies.
“We have already seen this issue in recent years take the shape of a multi-million dollar problem for owners in a single building, and with insurers and lenders now reviewing their position on policies and property values, there’s never been a more important time for the Federal Government to be hands on.”
The growing fear is that an “unquantifiable” number of buildings with cladding may not be able to get insurance, once identified, thus causing major problems with property valuations, and the ability of owners to get loans.
Adriaanse says by enlarge, Australia’s cladding ‘crisis’ been facilitated by a weak chain of responsibility from suppliers, to contractors, to certifiers and so on, so it is important that the federal government take responsibility on this matter.
He referred to the recent Senate report which called for a ban on such cladding. The Senate committee looking into <a href="https://www.urban.com.au/news/75567-senate-panel-wants-total-ban-on-combustible-cladding-in-buildings">flammable cladding</a> in buildings in the aftermath of London’s Grenfell Tower tragedy has recommended a ban on the importation, sale and use of the aluminium panels.
“The Senate Inquiry into non-compliant building products was set up to advise the Federal Government on solutions to this widespread issue, and it beggars belief that its first recommendation, to impose an immediate ban on the importation and use of non-compliant cladding, has been passed along the line.”
“A fortnight ago, it was announced that stronger screening measures for these products at the border was not going to be pursued federally, and now that the Senate Inquiry has delivered its initial report, we’re eager to be briefed on what action will be taken by the Federal Government.”
Adriaanse says the overwhelming barrier to see the safety threat of cladding managed once identified is the associated cost, which more often than not falls to the owners.
“If one of the parties involved in the supply, installation or certification cannot be pursued by owners to fund rectifications, we will see non-compliant cladding stay on Australian buildings.”
“The cladding responsible for a 13 storey fire which broke out at Melbourne’s Lacrosse Apartments back in 2014, still resides on the exterior of the building for one sole reason, the owners cannot afford to have it removed and replaced.”
“In this instance it was $8.6 million for the cladding replacement, and we’re desperate to see other owners around the country avoid bills of this crippling nature.”
Adriaanse says it has been very positive in the last week to see national builders commit to auditing their buildings at their own cost, but it is the rectification government support must come.
“We’d like to see a commitment from the Federal Government to support owners in these situations moving forward, for the benefit of making buildings and their occupants safe.
“Be it in the form of a financial assistance package, or new laws which hold suppliers, installers, certifiers and all involved in the process accountable, we’re adamant that this issue will drag on if owners are left to pick up the tab.” 
</body></html>

Federal government washing its hands of cladding issue: Strata body

<html><body>
GUEST OBSERVER
Changes to smoking rules in parts of the country set the stage for 'smoke free by-laws' in strata properties.
The stage is set for new smoking laws in Victoria, as New South Wales and Queensland progress reforms on controlling if and where apartment owners can smoke.
Owners corporations in Victoria are encouraged to get feedback from their owners on what their position is.
As part of a raft of changes to New South Wales strata legislation in late 2016, for the first time smoking was included as a potential nuisance or hazard to apartment residents. Owners corporations there can now create by-laws to make their buildings smoke-free.
Queensland, which is currently reviewing its strata legislation, has also proposed laws to allow smoking to be banned in apartment buildings.
Should Victoria be looking to emulate these reforms?
Residents of apartments are more vulnerable to second-hand smoke because the smoke can easily drift between areas of a building. Furthermore reverse cycle air conditioners, common to many apartment buildings are often taking the second hand smoke from one individual and circulating it to other members of the Owners Corporation.
Some strata schemes have been crying out for the chance to regulate smoking in their buildings.
The aim of these by-laws is not to stigmatise people who smoke but restrict where people can smoke or restrict smoking completely to create a cleaner and healthier living environment for all residents of a scheme.
The most obvious benefits of smoke-free apartment buildings is the health benefits from decreased exposure to second-hand smoke.
Second-hand tobacco smoke causes cancer and any level of exposure is potentially unsafe. Children exposed to second-hand smoke are at an increased risk of a range of conditions.
Adults who have been exposed to second-hand smoke experience immediate adverse effects on their cardiovascular system and in the long term can develop coronary heart disease and lung cancer.
Benefits to smoke-free apartment buildings is not limited to just the health aspect but can also create financial benefits to owners.
Tobacco smoke leaves residue on walls and curtains and smoke-free apartments have been shown to have cheaper cleaning costs.
Smoke-free buildings also carry a reduced risk of fire and other damage such as burn marks on carpets, furniture and counters thereby reducing repair or replacement costs.
Current laws in Victoria only allow for smoking to be prohibited on common property.
Owners Corporations under the 2006 Act are able to pass a rule as a special resolution at an AGM, prohibiting smoking in designated common property areas but cannot prohibit a resident from smoking in their lot.
So how do the NSW laws work?
In NSW an owners’ corporation can create smoke-free by-laws or make changes to existing ones. New by-laws require a special resolution at a general meeting of the owners’ corporation. For the by-law to be introduced 75 percent must vote in favour of the resolution.
Once a by-law is in place and communicated to all residents in the building a breach can result in a penalty notice being issued by the owners’ corporation. The offending owner or resident may be ordered to pay a monetary penalty.
Ultimately it is about giving strata communities a choice.
The updated legislation that allowed these by-laws to be brought in are not anti-smoking per se, but they do give strata communities that do not want smoking in their buildings a great deal more power enforce restrictions. Ultimately it’s up to each community to individually decide how their scheme is managed.
Victorian decision makers should be closely watching their New South Wales and Queensland counterparts to see how the smoking model rule is received by owners.
 
Stephen Raff is the CEO of Ace Body Corporate Management and can be contacted <a href="https://www.acebodycorp.com.au" target="_blank">here.</a>
</body></html>

jchancellor-FAypfDUnLy

Are Victorian apartment blocks the new no smoking areas? Stephen Raff 

<html><body>
<div class="page" title="Page 1">
<div class="layoutArea">
<div class="column">
The recent state-wide blackout in South Australia has prompted the strata property sector to use the outage as a wake-up call leading into the summer season.
Stephen Raff, chief executive officer of Ace Body Corporate Management said apartment and unit owners need assurances their communities are 'power planned' for wild summer weather, ahead of what forecasters are saying could be a very eventful season.
"Black outs bring all of our lives to a standstill, but perhaps no group is hit harder than strata communities, where tens, even hundreds of residents are simultaneously cut off from the grid," he said.
"Suddenly, elevators not working, garage doors not opening, fridges turning warm and hallways plunged into darkness become an issue for 10, 20, 50, 100 residents and the recent example of South Australia must be a wakeup call for owners corporations in Victoria.
</div>
</div>
</div>
<div class="page" title="Page 2">
<div class="layoutArea">
<div class="column">
“There’s obviously a cost associated with being ‘power planned’ but when the benefits are stacked up next to it, it’s a no contest.
"Alongside the addition of an alternative power source like a generator, there also must be consideration for a policy around how this is used in times of need. 
“It’s going to be pretty tough for owners corporations of a 15 or 50 lot building to find a generator that can power the whole place up, so there’s got to be some planning that goes into this.
“The first thing that springs to mind is a schedule system, whereby over a period of 3, 4, or 10 hours of complete loss of power, owners corporations have a plan for where the generator is most needed.
"What happened in South Australia acts to remind us that the weather in this country is wild and it is not only traditional storm and bushfire affected areas that can be hit with sudden power outages."
</div>
</div>
</div>
</body></html>

Property 101: Apartment owners, strata need to prep for summer season

<html><body>
GUET OBSERVER
The NSW Civil &amp; Administrative Tribunal (NCAT) has the power under section 162 of the Strata Schemes Management Act 1996 to appoint a compulsory strata managing agent to a strata scheme.
This power is also contained in section 237 of the Strata Schemes Management Act 2015 which, but for part 11, will commence on 30 November 2016. The sections, which differ slightly, empower the NCAT the make an order that either all, or part, of the functions* of the owners corporation are delegated to a strata manager.
What does compulsory strata management mean? 
The simple answer is that it means different things in different cases. For instance, NCAT may order that all the functions of the owners corporation are to given to the strata management agent or, it may order that only a certain power or function is given to the strata managing agent.
If all the powers of the owners corporation are granted to the strata managing agent meetings of the owners corporation are not necessary. Instead of you, as a lot owner, voting to decide matters the strata manager will exercise their delegated power. If they do so they can raise levies, pass resolutions on behalf of the owners corporation and pass by-laws pursuant to section 65A. A by-law could also be passed pursuant to section 52 by the compulsory strata manager with the prior written consent of the lot owner granted the exclusive use right or special privilege.
On the other hand if the strata manager were only granted the powers of the executive committee, they could call meetings, pay invoices (unless restricted by the owners corporation at general meeting from doing so) and conduct the day to day affairs of the owners corporation but could not pass any resolutions that are required by the Act to be passed at general meeting. This would include resolutions to pass by-laws, to accept an easement or to alter or amend the common property.
Who can apply for an order for compulsory management? 
A wide variety of people can obtain an order to appoint a compulsory strata manager and it need not be a lot owner. They are:
anyone with an interest or estate in a lot in the scheme or if the scheme is a leasehold scheme, a lease of a lot;
anyone who has obtained an order under the 1996 or the 2015 Act that has not been complied with and that imposed a duty on the owners corporation, executive/strata committee or an officer of the owners corporation
an authority that has the benefit of a positive covenant requiring a duty of the owners corporation; or
a judgment creditor to whom the owners corporation owes a judgement debt
When can the NCAT make an order for compulsory management? 
Both the 1996 and 2015 Acts provide that the NCAT may make an order only if satisfied that:
(a)  the management of a strata scheme is not functioning or is not functioning satisfactorily, or
(b)  an owners corporation has failed to comply with a requirement imposed on the owners corporation by an order made under the Act, or
(c)  an owners corporation has failed to perform one or more of its duties, or
(d)  an owners corporation owes a judgment debt.
What does “not functioning or is not functioning satisfactorily” mean?
CTTT (the predecessor to the NCAT) Member Moore in Coote v Sharpe, Wentzel &amp; Owners Corporation Strata Plan 55434 stated that imposing a compulsory strata manager upon an owners corporation is a “draconian” measure as it “removes the democratic process which has been established” under the Act. As such, the reasons for a finding of dysfunction must be based on objective evidence. For this reason, these orders are not lightly granted.
Instances where an order for compulsory strata management has been made show that the following behaviour can be a sign of a failure to function when affects the management structure of the scheme:
<ul>
<li>a failure (or inability) to pass resolutions to raise contributions;</li>
<li>a continued failure to carry out required maintenance and repairs</li>
<li>a long history of acrimony, deep seated discord and or violence in the scheme;</li>
<li>the presence of a voting block, for instance, where divisions within the scheme see a 50/50 stand off meaning resolutions cannot be passed;</li>
<li>a pattern of strata managers terminating their appointment; and</li>
<li>a pattern of improper decisions making (i.e. decisions not made in accordance with the Act)</li>
</ul>
* The Dictionary to the Act defines “function” as “function includes a power, authority or duty.”
Allison Benson is legal practitioner director, Kerin Benson Lawyers and can be contacted <a href="https://kerinbensonlawyers.com.au/">here</a>.
 
</body></html>

Property 101: Compulsory NSW strata management and how it affects you and your scheme?

<html><body>
Michael Teys has written to clients after ASIC disqualified him from being a director or officer of a company for a period of five years.
It followed the winding up of two companies of which he was a director. One was wound up in 2010 and the other in 2014.
He told clients neither company nor the events investigated were related to his work for them as a lawyer or his recent work as founder and director of Block Strata Pty Ltd.
Block Strata was formed after these events took place.
"I deeply regret my past commercial failings.
"However, I cannot change what has happened and must learn from my experience.
"Therefore, having co-operated fully with ASIC, I have resigned from all of my directorships and corporate roles and have decided not to appeal the disqualification."
Teys notified the management of Block Strata Pty Ltd would continue under Jacqui Bartholomeusz’ directorship and a new licensee-in-charge, Paul Loccisano, has been appointed.
However he signalled he would continue to serve Block Strata as its legal counsel and would maintain my private legal practice as a specialist in strata law.
In February ASIC disqualified Michael John Teys from managing corporations for five years following his involvement in the <a href="/news/50644-michael-teys-disqualifed-by-asic" target="_blank">failure of three companies</a>.
</body></html>

Strata Management

Editor's Picks

Have something to contribute?

Developments

New apartments

New townhouses

News

Strata Management

Editor's Picks

Receive the latest news stories to your inbox

Have something to contribute?

Developments

New apartments

New townhouses

News