Monthly Archives: November 2016

The six most important reforms to NSW strata law that you won’t find in the Daily Telegraph

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All the fourth estate has been talking about is dogs, smoking, and redevelopment; but I think they’ve missed the point. I’ve identified six reforms that are much more likely to impact strata owners, committees and managers.

The three reforms that will be the most challenging for strata professionals will be:

  1. The right of owners to sue for failures to attend to repairs and maintenance,
  2. Allegations by troublemakers that committees have not exercised due care and diligence,
  3. And a surprise sleeper – that by-laws must be registered within six months – this has caught out many in other states.

And the three reforms that will do the most good are:

  1. Repair and maintenance damages for affected owners – the threat of this will stop committees procrastinating and will save grief for owners and strata managers alike,
  2. Telephone meeting participation – if offered by strata managers, this will bring more engagement and improve quality of life for managers who will have to attend less meetings at night,
  3. And the ability to delegate owners’ repairs to a committee – as long as this is done properly and not by email.

As for the other 90 or so reforms, they’ll initially be irritating, then they will become the norm. Ultimately they won’t change anything; people will continue to have disputes and muddle through as best they can, and buildings will still leak and crack.

It’s the little things that will bring big buildings down for the better

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While standing before a group of strata owners last night discussing a very big and important redevelopment I was reminded of a lesson I learned when I was a young competitive swimmer.

My coach pulled me out of the pool one morning to talk to me about my stroke and a particular technique I had let slip. As he made his point he pulled at my googles that were still on my head and screamed ‘LTMD’ as he released them and they snapped back onto my face.

LTMD stands for ‘Little things make the difference’ – I got over the shock and the pain of his brutality but I have never forgotten his message.

In redeveloping strata for owners corporations who see value in upgrading rather than merely repairing their ageing buildings and underdeveloped sites, I’ve found it’s not the legal process, the feasibility studies or the debt finance arrangements that carry the vote when it comes down to committing to the work and relocating while the work is done. It’s the little things.

It’s the colour of the carpet, the arrangements for parking and garbage bins in the upgraded common areas, how long people will be out of the building, how they will pay rent while they’re out and keep up with their mortgage and occupancy costs. I’ve learned that little things are not trivial things. It’s these things that matter and get the crowd behind the proposal or not.

That’s why I’m predicting on the eve of new laws applying to strata in NSW, developers will rarely use the renewal processes we have read so much about in the lead up to commencement; they simply won’t have the patience for the little things.

Strict rules on capital works plans could sink strata schemes and inspectors

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Sinking fund forecasts have been something of a joke to date.

It’s something you’ve had to have, and you’re required to think about them when setting levies but there’s been no sanction for ignoring them. So when the admin fund budget goes up, in the never-ending quest to keep levies the same as last year, the balancing amount has been the sinking fund levy. It comes down a bit, and hey presto the figures work.

Well that’s about to change. The tiger now has teeth.

Capital works plans, as they will be known, must be implemented, so far as practicable.

This brings us to our friends in the USA where similar provisions have led to new owners suing the owners corporation for not implementing the plan when funds have not been saved progressively for replacements and renewal.

The proviso, ‘so far as practicable’, will be used in defence but it won’t cut it when the reason is to keep the levies the same as last year when the price of just about everything else in the world is going up.

The first to be bitten might just be strata inspectors who fail to notice that difference between the amount in the capital works fund and the recommended closing balance in the study.

Strata managers’ lives are on the line as NSW law reform approaches

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This is my fourth preparation for major strata law change; one in Queensland, one in Victoria, the most recent in the ACT and in 22 days, Australia’s largest strata market, New South Wales.

There is something about this one that’s different. The others were met almost with indifference by the industry, certainly by the the body of owners. Change happened, people got on with it and ultimately nothing really changed.

On the lead up to this commencement the NSW strata market is restless. Strata managers are scrambling to fix month-to-month contracts before commencement day otherwise they will terminate even against the will of the parties six months later. Meetings are being called by strata managers using delegated powers to lock in long term contracts without allowing strata committees to test the market. There will be applications lodged later to set these aside.

The other area of restlessness is outstanding maintenance and repairs. For procrastinating strata committees there is growing awareness that the game is almost up. Long suffering owners with mould and water penetration are gearing up for legal action come 30 November 2016 when they get a statutory right to sue their owners corporation for damages. Strata committees facing these actions are looking for scapegoats; but this won’t help because their liability will be strict and absolute. If something is broken and not fixed they will be liable unless action is being taken against a builder or developer and the repairs are not affecting health and safety.These two reforms will be game changers for strata managers.

Those that manage these matters well will prosper. Those that don’t will die.

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