strata manager

Birth Notice – Twin strata laws delivered of the NSW parliament Tuesday, 27 October 2015; Both houses and bills are well

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Good Evil Twin

The most significant strata law reform packages ever delivered of a government of this country have been delivered safely through both houses of the NSW parliament.

To be named the Strata Schemes Development Act 2015 and the Strata Schemes Management Act 2015, the twin laws came in at 117 and 141 pages respectively and contain 90 new features. The laws are expected to become operative on 1 July 2016.

One twin will become the bad twin and the other the good twin. ‘Development’ will be the black knight, ‘Management’ will be the white knight.

Development introduces the concept of the forced sale of real property upon a 75% resolution of owners and will be misunderstood. The forced sale provisions will scare people initially although in reality it’s not nearly as scary as it looks. In the detail there is quite a lot of consumer protection.

The more endearing of the twins, ‘Management’, will make life easier for many. Online voting, simplified renovation approval processes and kinder by-laws will make living and investing in strata easier and more pleasant. Management will have however pack a solid punch when developers and strata managers abuse owners with improper disclosure and conflicts of interest.

Like all newborns, there will be sleepless nights and teething problems but both bills are expected to mature into productive and useful members of society.

Let’s hope everyone plays nicely in the meantime.

Sometimes being responsible means pissing people off too

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Opening of 2015 NSW Parliament

If the mark of good law reform is that all stakeholders are a little pissed off, then the new strata laws introduced last night to the NSW parliament is on the money. After 15 years in gestation, strata is about to get a bit harder for everyone; developers, owners corporations and strata managers alike. Mercifully, strata lawyers seemed to have been spared.

Developers are probably the hardest hit. They have to deliver an initial maintenance plan before settlement, put 2% of sales on deposit for building defects claims, fund a defects report in the first two years and become liable for understated estimates of future levies. For good measure they can’t become the strata manager for at least 10 years. The big boys won’t like that.

For strata managers the reforms are all about more disclosure. There must be annual disclosure of insurance and other commissions. Gifts and ‘soft dollar’ benefits from strata suppliers are out. Free training by lawyers and donations by banks and insurers to the manager’s annual seminar are also in scope.

Strata committees, as they will now be known, have tougher duties of disclosure and due diligence but they get immunity from personal liability for anything done in good faith. The twist is that the liability for their negligence or breach of statutory duties gets passed on the owners corporation as a whole so no-one is off the hook.

The headlines about this reform will focus on the historic attempt to allow owners to force co owners to sell their home and investment properties if 75% of owners by number, not voting entitlements, so decide. This is ground breaking: a first for any Australian parliament that has been more than 12 years in gestation. I’m proud to be one of the co-creators of ‘Renewal Plans’ that will safeguard all owners in these tricky situations (Teys, M and Russell, P, 2000, Renewing Our Strata Titled City: The Beginning of a Better End).

While renewal plans will be the focus of the media and the lobbyists as they try to increase the required level of support from 75%, it’s the more mundane matter of repairs and maintenance that will in practice be the most significant of the 90-odd reforms. Owners corporations become liable in damages to its members for breaches of statutory duty if they don’t maintain and keep common property in good and serviceable repair.

This is set to bring an end to the procrastination and ineffectiveness owners corporations and their strata managers, who are running around in ever-decreasing circles trying to avoid the inevitable responsibility and expenditure required to fix cracks and leaks.

Claims for breach of statutory duty rather than contests over strata renewal plans will be the real strata lawyer’s picnic and will fund many renovations and trips to Aspen. Just wait and see.


Michael Teys is the author of ‘Growing Up: How Strata Title Bodies Might Learn to Behave’, a specialist strata lawyer and the founder of Block Strata. You can follow him at www.michaelteys.com and on Twitter @michaelteys.

*The title quote is sourced from Colin Powell on the topic of leadership

7 habits of highly ineffective strata managers… that are about to cost their owners corporations dearly

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We live in happy times where owners corporations and their strata mangers can procrastinate to their heart’s content about fixing leaks and cracks that cause mould inside apartments. Thanks to the Thoo decision of the NSW Court of Appeal all owners can do in these circumstances is go to NCAT for orders for the owners corporation to do the work.

That’s little comfort when your kid’s bedroom looks more like a mushroom farm than a place for nighty-nites and your lawyer tells you that a NCAT application is likely to cost $3,000, take up to 12 weeks for an order that can then be appealed and restart the whole process.

Come 1 July 2016, the rumoured commencement date for new strata title laws in NSW, all this will change and owners corporation will be liable in damages for failing to take reasonable steps to fix these sorts of problems.

Here are the top 7 habits of the highly ineffective strata managers when it comes to delay and obfuscation on repairs and maintenance that will soon be punished by damages awards:

  1. It’s not the owners corporation’s responsibility! Come on – the owners corporation is responsible for the common property and it’s almost always the floors, walls and ceilings that are the source of the leak. This isn’t rocket science. All you’re required to do is to know how to read your strata plan.
  2. The mould might have been caused by the tenant! I don’t know too many parents or carers that complain to their landlord or property manager about mould growing in their kid’s bedroom who have caused the problem by leaving a dryer running in a confined space. Tenants aren’t the problem here; it’s to the builder you should be looking.
  3. The builder’s coming to fix it! Beware the man with the silicone gun I say. He caused the problem in the first place, a blast of plastic is not going to fix this – water has a way of finding its way out at the next weakest joint.
  4. We’ll sue the builder and then get it fixed! Sorry, that’s not the law. The law is that it’s your place, you fix it, fix it now and worry about who ultimately pays when that’s done.
  5. We need three quotes first! Ah, no you don’t; you need to get rid of the mould first, that’s the thing that makes people sick. Then get your quotes.
  6. There’s something wrong here; there’s so much disparity between the quotes! That might be so, that might be because reputable people weren’t asked to quote or they were and not given the right instructions.
  7. We can’t proceed without the insurer’s say so! Not true and not relevant. The obligation to fix the work is the owners corporations and it’s not dependent on whether the owners corporation insurers approved the claim. That’s a matter between the owners corporation and the insurer, it’s got nothing to do with the lot owners or the tenants.

Strata managers should put a stop to this nonsense. Get your executive committees to put themselves in the shoes of the person living with this nightmare and do the right thing. If you don’t get this right by mid 2016 expect the lawsuits to arrive thick and fast.

Heard @ Griffith 2015 – ‘Thank you, your call isn’t very important to us’

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A colleague called a strata manager recently to arrange the collection of books and records for a building that’s switching to Block Strata and the message went, ‘There’s no one here to take your call’. Yes, it was in business hours. No, there was no explanation for the abandoned ship.

Little wonder then that in the Griffith University 2015 Strata Title Conference survey of strata owners, ‘low quality strata management services’ was number 2 on the list of the most significant challenges confronting strata title living and management, second only to building defects.

In the discussion that followed it became clear the time honoured model for strata management has all but had its day. One respected elder put it this way, ‘the days of strata managers charging based on inputs rather than outputs has to end.’ This was a reference to the typical strata management pricing model based on charging for additional time and disbursements like photocopying and even sending email. As I put it, ‘people in this room must stop charging people for things they don’t ask for, don’t want and don’t need’.

At industry conferences agreement on problems is more common than agreement on solutions. There were the usual calls for more government intervention and education and my eyes glazed over. Government policy and learning doesn’t deliver reform, markets do.

New laws will tease tenants with a false sense of relevance

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The cultural divide in Australia between owners and tenants will be widened by proposed laws for NSW allowing tenants limited rights to participate in meetings of owners corporations.

By these proposals a copy of the agenda of each meeting is to be provided to tenants on the owners corporations roll, and tenants will be entitled to attend strata meetings.

Some owners will be object to this reform merely on economic grounds. Strata managers usually charge by the page or in some cases, unbelievably, by the email so the more they send they more they are paid. The tenants’ objections will be far more personal.

The right of attendance given to tenants by the proposals is insignificant having regard to the limitations attached. Unless specifically resolved by an owners corporation on a case by case basis:

• Tenants will be entitled to be seen but not heard.
• Tenants will be asked to leave when financial matters are being debated.
• Tenants will not be entitled to see any documents sent with the agenda.

If the purpose of these proposals is to unite our strata communities, then they fail miserably. Tenants won’t come to a show to be relegated to the cheap seats without a program and to suffer the indignity of being removed when matters of finance are raised.

This is a policy so compromised in the making that it perhaps unwittingly will set owner/tenant relations back 50 years, ironically to a time of segregation when King had a dream and Kennedy thought what unites us was far greater than what divides us.

Not in strata my friends, not in strata.

Online voting will make for lonely convenience in strata

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I voted online at the last election but, strangely, I had to be out of the state to do that. Still, it worked, and one would think soon we will all be logging on and casting away.

There are rituals about voting that are threatened by this advancing technology. The local state school election day cake stall and sausage sizzle will soon be things of the past. Political party hacks won’t have to stand in the sun all day taking snide looks and comments from those declining their how-to vote-cards, the scrutineers will miss out on a good day’s pay for crossing out names, and we won’t have to line up at a cardboard booth for the nation to decide.

Proposed laws for voting online for strata communities will change rituals too. Some will be missed, some not so much. No longer will you have to be present personally or by proxy to participate in a meeting. Proxy farming will be curtailed. You will be able to cast your vote in writing and in other ways adopted by the owners corporation and approved by government regulation. The specific details for this have not yet been released but voting online, by apps and using social media should be in the mix.

Participation levels in strata affairs should rise if these proposals become law. No longer will you have to go out at night, fight the traffic and find a park to vote on your strata issues. The sometimes laborious task of counting votes will be faster and more accurate. We will all get home earlier but like all reform this one will not be without its consequences too.

Firstly, those of us that care enough to engage won’t meet as many of our fellow owners because most will vote with their keyboard, and the already too lonely corridors and foyers of apartment buildings will become that much more isolated. Secondly, in the absence of live debate and presentations strata entities will probably be more likely than they already are to vote on price, not quality. That happens when there is nothing else for the decision maker to go on and no one believes all that stuff in the propaganda about quality and service.

When we can vote by a click of a button on the bus on the way home strata communities that care about community and quality will have to find new and better ways of meeting, forming relationships and making decisions on the true merits of a proposal rather than merely the bottom line.

Bronny’s out, are strata managers next?

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Strata management is perhaps the most thankless task I have ever performed. As a general rule, do your job well and indifference is the best you can expect. Put a foot wrong and you will be roundly castigated as a useless but necessary evil. It’s a rare day indeed when you awake to an email congratulating you on a job well done at last nights meeting that dragged on interminably.

It is then with some mirth I note the proposed new strata laws of NSW strike at the very heart of corruption in this industry by banning the insidious practice of strata managers requesting or accepting a gift for performing their duties. Most in this industry struggle to get a CPI rise on their annual fee let alone a bottle of Grange on the side.

To add insult to injury the proposed law links us directly to that least respected of modern callings, politics. The ‘gifts’ we will be banned from requesting or accepting are those defined in the Election Funding, Expenditure & Disclosures Act 1981.

This reform is not about banning undisclosed commissions for insurance and other financial services, that have quite properly been dealt with elsewhere. This is directed fairly and squarely at the bottles of grog, the boxes of chocolates and the tickets to the footy. What nonsense.

I’ve got to fly now, the Chairman’s outside in a helicopter to take me to a ‘meeting’ near Geelong.

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