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Leaky Homes A Trans Tasman Problem

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Legislation was passed in New Zealand last week setting up a $1billion government funded rescue package for repairing leaky homes.

The leaky homes saga in New Zealand emerged in the 1990’s when the building code prescribed a particular type of untreated timber, which resulted in rising damp.

The building and construction minister described the package as necessary because there had been a systemic failure across the entire industry.

Meanwhile, in Australia, our own systemic failure is taking its toll on unit and townhouse owners. In 1997 or thereabouts, our local authorities decided it would be a good idea to outsource the certification of a building’s compliance with national standards, to private contractors chosen and paid by the developer of the building concerned. Recent academic studies show a rise in the incidence of serious building defects in unit and townhouse living since that time.

In Canberra, where our firm is active in resolving large-scale high rise building and construction defects, the president of the Owners Corporation Network ACT has recently been quoted as saying that defects in the ACT market are so prevalent that developers are finding it hard to sell units off the plan.

Private certification is one of those conflicts of interest that is impossible to manage. It is simply bad policy. Unless local authorities take back the responsibility of being the police for the building and construction industry, it won’t be too long and our governments will be shelling out to fund our own systemic failures.

The incidental upside of greening strata

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I have attended more than my share of unit owner gatherings over the years. In my experience they are usually pretty angry affairs. I guess I am speaking about the ones in Queensland in particular where traditionally unit owners have gathered en masse to air dirty linen about management rights and strata management.

In Melbourne, Sydney and Canberra too, despite organisers’ best efforts, these events can descend into ‘whinge ‘ sessions. Unit owners when they get together en masse will want to hold everyone else to blame for all the bad things that can happen to owners with very little responsibility taken by the owners themselves.

Well all that went by the wayside on Saturday when 200 or so of the environmental movement faithful, and some who were just a little curious, gathered in Chatswood, Sydney (or The City of Willoughby, to be more accurate). The event was the inaugural Green Strata forum, of which Teys Lawyers were proud supporters.

I met many new folk attending with their fellow owners to learn about new ways of saving money and the planet. There was plenty of new information about savings and technology but what was missing was the usual beatings about the government should do this and the strata managers should do that. Here was a group of people rolling up their sleeves and taking primary responsibility for their micro-community.

The economics are now incontrovertible, sustainable initiatives save unit owners money. There were case studies about water and electricity of $10,000 to $70,000 per building with more expected. With plenty of politicking and negative press about green issues at present, it was refreshing to see real people at the coalface (excuse the pun) taking action and making friends of their neighbours in the process.

Telephone Hacking and its Relevance to Strata

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A certain phone hacking scandal has made privacy the cause célèbre of recent times.

The truth is that before these events, the principle has struggled for the attention it deserves. Laws passed more than twenty years ago in Australia go misunderstood and misused on a daily basis. A comprehensive review of these laws published in 2008 languishes in the backroom of our parliamentary recesses struggling for attention amidst so many other issues that seem to have a more direct impact on us.

Meanwhile in strata–land, the Australian Capital Territory has released proposed new unit titles management laws that declare the National Privacy Principles to apply to owners corporations. It’s a clever piece of law reform neatly side stepping the more difficult argument of whether or not Privacy Laws as presently enacted, apply to strata by simply declaring in strata management legislation that they do. There would be much less confusion in our meeting rooms if we took this declaratory approach more often.

So with doubt about privacy for owners corporations soon to be removed, our friends in the ACT begin to grapple with how information about owners is collected, stored, used and discarded. The reforms will play out at two levels; privacy policies for owners corporations and privacy policies for the strata management companies that serve them. And here is the first learning from this experience for all of us, the information we are talking about is the property and responsibility of the owners corporation, not the strata manager so it is for the owners to tell the strata managers what to do with the information and not vice versa.

In the ACT at least, the tables have been turned. To borrow from a former Prime Minister; ‘the people will determine who has access to our information, and the terms upon which it will be used.’

Combating the onset of fully blown strata rage

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It might be the economy, the prospect of a carbon tax, or just a full moon but it seems the time is right for full onset strata rage.

Our shelves are full of cases of owners behaving badly, but lately it’s getting a bit dangerous. In one case we are handling, an argument about parking has got way out of control amidst the background of one owner wanting to bring the common property up to grade and the other preferring austerity measures only just being embraced by certain European governments.

Over the weekend it culminated with one owner hurling bricks at the other in this two-lot development and ‘yelling like a patient in a mental institution’. They are off to the local court for apprehended violence orders against each other. Keeping their distance under these orders will be difficult given that they share a dividing wall.

Nowhere is the intensity of strata rage more acute than in a two-lot development. If unit entitlements are equal there is a stalemate. If one has more entitlements than the other, the relationship is complicated by a sense of unequal bargaining power. Neither is ideal.

Two packs form roughly the majority of strata lots in this country, yet they are the most under serviced by strata professionals. Serving two is just uneconomical.

And so as this commercially unappealing majority of our sector slugs it out, it falls to the lawyers and the community justice centers’ to combat strata rage. It pains me to turn to government for a solution. Some say compulsory sinking funds are the way to avoid these ugly disputes. I say a standard or minimum benchmark sum that a small scheme should contribute each year to its sinking fund, perhaps expressed as a percentage of the buildings value might better inform the decision making of co–owners and avoid some of the disputes we are seeing between people with different abilities to contribute to upgrades when the property has been neglected for too long.

Why speed counts in strata

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The old adage, ‘if you want something done, ask a busy person’ holds true in strata, according to a new survey of committee members released last week by City Futures (Survey of Executive Committee Members, City Futures Research Centre November 2010). Significantly, more executive committee members surveyed were full time employees or self-employed (62%) compared with retiree members (23%) correcting a long held perception that committees are ‘full of retirees’.

This finding no doubt accounts for the fact that the survey also shows that 80% of meetings are still held in the evening and go for between 1- 2 hours only. The time poor circumstances of the majority of executive committee members also explains the primary reason for satisfaction with strata managers, and for that matter, dissatisfaction, is responsiveness to enquiries.

The working poor (both in terms of time and money) are tough customers so it’s no wonder strata managers are under pressure everywhere to provide better answers and relevant information quickly and accurately. Congratulations to City Futures for another fascinating insight into our mysterious industry.

On being fifty and frightened

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As I approach my forty-ninth birthday, I blog this week from something of a personal perspective; approaching fifty and being a little bit frightened about the future, my fitness, and my finances.

The strata concept is a year older than me having just had its fiftieth birthday but by my reckoning, it’s a little frightened too about these things and well it should be.

As case after case of chronic abuse and property neglect comes across my desk, it’s time we addressed the issue of middle-aged strata. There are buildings near death and dying for want of funds, for much-needed repairs and replacement in every state in which I practice and no one seems to care.

Kubler Ross’ seminal piece on death and dying comes to mind – on facing terminal illness the five stages of grieving unfold thus –

  • Denial – this can’t be happening to me!
  • Anger – who is to blame for this – the former committee for ignoring their obligations to save progressively for this day?
  • Bargaining – we do a deal with ourselves that delays the day of judgment- lets get another quote on those repairs, before we commit
  • Depression – we will never emerge from this, then mercifully
  • Acceptance – we can fix this, and we must.

The trouble is in strata-land, these five stages come at different times for different folk and that makes the whole middle age strata condition just that little more dysfunctional. I have a case at present where the experts say the remedial bill is $ 9M – more than $ 100,000 per lot and some naysayer (a past committee stalwart who presided over decades of neglect) says without authority that $10 grand per head should do the trick. The trouble is that people in denial or bargaining think that sounds pretty good and behave accordingly.

As night follows day for those of a certain age, the future will be no fun unless some hard decisions are made sooner rather than later about finances and fitness of our strata stock.

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