Yearly Archives: 2011

New strata laws on the horizon

On 3 December 2010 Clover Moore introduced a Bill into the NSW Parliament to amend the Strata Schemes Management Act 1996 and other strata legislation.

The Bill follows a discussion paper on proposals for strata law reform released by Clover last year and represents the culmination of several months’ consultation with owners, residents and industry stakeholders.

Overview of the Strata Legislation Amendment Bill 2010

The Bill contains a number of novel ideas. Broadly speaking, the Bill is aimed at reducing the influence developers have over the ongoing management of strata schemes, enhancing the powers of strata adjudicators and the CTTT, and improving the administration of strata schemes, for example, by allowing strata committee meetings to be held by telephone and documents to be served by email.

Reducing the Developer’s Influence Over Strata Managers, Caretakers and Lawyers

Under the Bill it would be illegal for a developer or a person connected to a developer (such as a company that employs the developer) to be appointed as a strata manager or caretaker.

The Bill would require a strata manager to disclose in writing to the owners corporation any connection with the developer or a caretaker.

If an owners corporation becomes aware that its strata manager or caretaker is the developer or is connected with the developer, the owners corporation would be able to terminate the strata manager or caretaker’s appointment.

The Bill would require lawyers to disclose in writing to an owners corporation any connection they have to the developer before providing any legal services to that owners corporation. The owners corporation would have the right to terminate the lawyer’s appointment if there is a connection between the lawyer and the developer.

Strata Committee

Under the Bill it would be an offence for a person to be elected as a member of the strata committee without making a disclosure of any connections held with the developer or caretaker. If a person is elected without making the disclosure, the owners corporation would need to declare the member’s position on the strata committee vacant. The same rules would apply to substitute strata committee members.

By-Laws

The Bill would require an owners corporation, whenever registering a change to its by-laws,  to lodge a copy of the resolution approving the change and a consolidated copy of all by-laws for the strata scheme.

Levies

The Bill would allow owners corporations to raise special levies payable to the sinking fund rather than just the administrative fund as is currently the case.

The Bill also provides that if a quorum is not present at an adjourned annual general meeting, the contributions levied by the owners corporation are taken to be the same amounts as the contributions last determined, increased by the Consumer Price Index.

The Bill would clarify that a person who pays levies by cheque would not become financial for a meeting unless the cheque was received at least 5 clear working days before the meeting and a dishonour notice had not been received by the time of the meeting.

Insurance Cover

Under the Bill, owners corporations would need to increase the amount of public liability insurance cover they hold from $10,000,000.00 to $20,000,000.00.

Strata Roll

The Bill would require additional recordings to be made in the strata roll including details of each special resolution passed by an owners corporation under section 65A of the Strata Schemes Management Act 1996, details of any loan made to the owners corporation, a copy of any licence granted by the owners corporation for the use of the common property and plans and approvals for all building work that has been carried out to the common property.

Damage to Common Property

A novel provision in the Bill would make owners and occupiers jointly and severally liable for any damage caused to the common property by the occupier and give the owner a right to claim an indemnity from the occupier for any amount of damage caused to the common property by the occupier for which the owner is liable.

Apartment Occupancy Rates

An equally novel provision in the Bill would impose a statutory duty on owners and occupiers not to allow more than 2 adults per bedroom to occupy their lots.

CTTT

The Bill would give strata adjudicators the power to resolve disputes concerning Strata Management Statements. The Bill would also allow strata adjudicators to terminate the compulsory appointment of a strata manager under section 162 of the Strata Schemes Management Act 1996.

Under the Bill, the penalties that apply for contempt of the CTTT in strata matters would increase from 5 penalty units (currently $550.00) to 50 penalty units (currently $5,500.00). The Bill would also make it an offence for a person who is the subject of an order made by a strata adjudicator or the CTTT to contravene the order and render the offender liable for a penalty of up to 200 penalty units (currently $22,000.00) if prosecuted for the offence.

Supreme Court

The Bill would require the Supreme Court to hear and decide strata disputes even if the disputes could be heard and decided by a strata adjudicator or the CTTT. However the Court would be required to order the applicant to pay the respondent’s costs if the court action should have been dealt with by a strata adjudicator or the CTTT.

Service of Documents

The Bill would allow court documents to be served on an owners corporation by being left with the chairperson or strata manager whose address has been recorded as the owners corporation’s address for service of notices and by posting it to the owners corporation at that address and at the address of the building.

The Bill would also allow owners corporations and strata committees to serve documents by email on those who have given an email address for service of notices.

The Bill would further allow an owners corporation to have recorded on the common property title the address of the chairperson for the service of notices.

Office Bearers

The Bill would allow regulations to be made to set out the procedures to be observed by the chairperson and secretary in relation to meetings of the owners corporation and a code of conduct for the office bearers of the owners corporation.

Meetings

The Bill would clarify that a request for a poll vote would need to be made before the next item on the meeting agenda has been dealt with.

In a welcome provision, the Bill would allow an owners corporation to vary the time at which it will hold its annual general meeting, without having to apply to a strata adjudicator for permission to do so.

The Bill would also require the notice of a general meeting at which a change of by-laws will be considered to be accompanied by a report prepared by the strata committee explaining the effect of the proposed change.

The Bill would allow strata committee meetings to be held by telephone, closed-circuit television or by other means.

Comments on the Bill

Many of the strata law reforms that are proposed by the Bill will be welcomed by the strata industry.

The parts of the Bill which propose to beef up the powers of strata adjudicators and improve compliance with orders made by adjudicators and the CTTT are welcome reforms. So are the reforms that would allow service of notices by email, and permit strata committee meetings to be held by teleconference. Further, many will welcome the reforms to make owners liable for any damage to the common property caused by their tenants and which place limits on the number of persons that can reside in apartments to help stamp out overcrowding in some schemes.

However, some of the amendments are unnecessary, have been poorly drafted and will impose additional administrative burdens on owners corporations and strata managers with little associated benefits. For example, the reforms which would make it illegal for developers or persons connected to developers to be appointed as strata managers or caretakers, and require various disclosures, do not go far enough to achieve their objective and in practice will have little impact on the appointment of strata managers and caretakers by developers or the degree to which developers will be able to control the affairs of an owners corporation in its early stages. The reforms that would require consolidated sets of by-laws to be lodged and additional recordings to be made on the strata roll are well intended, but will add to the administrative costs incurred by owners corporations who decide to follow them and are likely to be ignored by many schemes without penalty.

Conclusion

The Bill has only just been introduced into Parliament and it is unlikely to be made law in the near future. Clover Moore has indicated that she intends to consult further during the Christmas and New Year holiday period and reintroduce the Bill with amendments next year.  This is likely to be followed by further proposals for strata law reform that are likely to deal with other important issues such as proxy voting rights and illegal parking.

In view of the impact the Bill would have on the management of strata schemes, and the improvements that could be made to it, strata managers and other stakeholders in the strata industry should be encouraged to make representations in relation to the Bill to Clover Moore and the Minister for Fair Trading.

Many thanks to J.S Mueller and Co Solicitors for providing this article.

Owners beware of noisy tenants

A recent decision of the Local Court in Jean Whittlam v Sara Hannah & John Hannah [2011] Downing Centre Local Court 63913/11 has received significant press attention suggesting the case represents a panacea for lot owners affected by offensive noise from short term tenants.

FACTS

Mrs Whittlam lived in a unit in Double Bay.   Mr and Mrs Hannah owned the unit directly above Mrs Whittlam’s unit. They did not live in the unit but let it out as furnished rental property. There were numerous different tenants changing regularly. There was a consistent problem with the noise created by those tenants.   Mrs Whittlam took proceedings against the owners of the unit for orders pursuant to section 268(4) of the Protection of the Environment Operations Act 1997. That Act permits the Local Court to make an order in favour of an occupier of premises affected by offensive noise against the person alleged to be making or contributing to that noise or the occupier of the premises from which the noise is emanating.   The Court may make an order directing the offender to abate the offensive noise within a time specified in the order or an order directing the offender to prevent a recurrence of the offensive noise.

The Magistrate found in the circumstances of this case that the landlord was a person contributing to the noise of the occupier.   She did so because they were able to control who they leased to and for how long and because they could terminate the lease if breaches occurred.

Having found that the application was properly brought against the owners and having found that offensive noise did exist, Her Honour considered the remedies which were sought by Mrs Whittlam.   Those remedies orders that the owners must:

  • Install new floor coverings with an appropriate acoustic rating.
  • Install hydraulic door closers on all doors in or to the lot.
  • Install rubber feet on all of the legs of the furniture within the lot.
  • Not cause or permit any musical instruments or electrically amplified sound equipment to be used in such a manner that emits noise that can be heard within a habitable room in Mrs Whittlam’s lot whether or not a door or window was open and during specified hours.

The Magistrate made the second and fourth orders.

It is worth noting that the claim was made by Mrs Whittlam that the short term tenancies were illegal, presumably as they breached an instrument issued pursuant to the Environmental Planning and Assessment Act 1979.   Where that is the case powerful prohibitive orders preventing, for example, short term leasing in breach of the Act, can be obtained from the Land & Environment Court pursuant to section 123 of that Act. Appropriate by-laws may also render a breach of the Act a breach of the by-laws thereby permitting the matter to be dealt by the Consumer Trader and Tenancy Tribunal.

Whittlam’s case now extends the range of options that may be considered by aggrieved owners corporations or lot owners.

Many thanks to J.S Mueller and Co Solicitors for providing this article.

Security of payment act disputes- how do I get help?

Almost every contract for building work on common property is subject to the provisions of the Building and Construction Industry Security of Payment Act 1999 (“SOPA”).

Amongst other things, this Act provides:-

  • Payment of a claim can only be disputed if a payment schedule is served on the builder within 10 business days of receiving the claim.
  • A payment schedule must set out the amount which the owners corporation is prepared to pay, why that amount is less than the claimed amount and the reasons for withholding payment.
  • Failure to serve a payment schedule within 10 business days of receiving the claim will mean that the owners corporation becomes liable to pay the claimed amount and cannot raise any cross claim or defence arising under the contract.
  • If a payment schedule is served within time the builder may still take the matter to adjudication.
  • The owners corporation cannot raise any defence in the adjudication which was not raised in the payment schedule.
  • The owners corporation will have five business days from the date of service of the adjudication application to lodge its response.

The Problem

SOPA time limits are short and can not be extended.

The owners corporation may need legal assistance to prepare a payment schedule or an adjudication response. That assistance may be estimated to cost more than the amount set out in Regulation 15 of the Strata Schemes Management Regulation 2010. In such a case the SOPA time limits will expire before an owners corporation can authorize the provision of legal advice and its legal rights will be lost.

The Solution

Whenever an owners corporation enters into a construction contract for the common property it should pass, at a general meeting, a resolution authorising the obtaining of legal advice in relation to the contract and SOPA matters based on a fee estimate provided by a solicitor.  For matters where the building contract is approved by the executive committee, it is often the case that a general meeting will be scheduled during the contract negotiations or shortly after.   In such a case a motion should be placed on the meeting agenda.

Many thanks to J.S Mueller and Co Solicitors for providing this article.

Netstrata VS Masterchef

The Netstrata Social Club Committee (inspired by the Masterchef phenomena) arranged a cook-off dubbed “Cooking up a Storm” last Friday evening. The event involved the creation of 2 teams (red & blue) and the challenge was  to prepare and present a restaurant quality 3 course meal. The event was a great opportunity to get together for a team building event which included a few calories and create something from scratch.. The night was a huge success and thanks to all involved. Check out some of the photos below.

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Not only excellence in strata management but in Culinary Masterpieces…

CookingUpAStorm

Come in and feel the noise: landlords to pay for rowdy tenants

Photocopies sticky-taped to city lamp posts offering dirt-cheap, shared-room rentals in luxury apartments could soon be a thing of the past after a landmark court ruling.

Previously, landlords who crammed partying backpackers and students into houses and apartments could ignore complaints about noise, passing them back to tenants who changed so often no one could be held responsible. But in a game-changing move, a noise-abatement order has been served on the owners, rather than their tenants, of a Double Bay apartment. The downstairs neighbours had complained for years of noise and disturbance.

Anyone breaching a noise-abatement order can face fines of up to $5500 as well as charges of contempt of court that could lead to jail terms.

For Jean Whittlam, 71, and her son Anthony, 41, the noise-abatement order marks the end of a five-year battle with the owners of the apartment above their flat in New South Head Road, Double Bay.

“We’ve been told this is the first time anything like this has ever happened,” said Mr Whittlam, who said the upstairs flat had been run as a backpacker flophouse. “It’s great… It gives all of us hope.”

Landlords John and Sarah Hanna, who own more than 100 properties in the eastern suburbs, denied the allegation.

“It’s an insult to call the tenants of this flat backpackers,” Mrs Hanna, 76, said. “They were educated people from good families who just happened to be English and Irish.”

However, Jean Whittlam claimed in court that the Hannas’ tenants were often shouting and singing at night, slamming doors, playing soccer at 2am, swearing, partying and playing loud music.

The Hannas’ lawyer disputed that the owners could limit the noise because they did not live in the apartment, but the magistrate, Harriet Grahame, ruled they were responsible because they could control who they leased the apartment to, for how long and, if necessary, make physical changes to the property to decrease noise.

Colin Grace, of Grace Lawyers, whose firm represented the Whittlams, said this was a landmark decision. “It means if a landlord has been told about a problem with their tenants but does nothing about it they effectively ‘adopt’ the problem and are responsible for it.”

Recent changes in the tenancy laws allowing landlords to demand written consent before tenants can sublet mean owners have even less excuse for not knowing who lives in a property.

SMH 7th May 2011

Major building refurbishment

Netstrata tackle a major building refurbishment for one of Southern Sydney’s largest strata schemes, this has included the removal and repair of dummy render and a complete repainting of the exterior building facades.

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Netstrata’s Danielle Brell is managing the process in conjunction with building consultant Ian Thompson from Essential Facilities Management. The project at this stage is running 2 months ahead of schedule which is a fantastic result. If your strata scheme is looking for a strata management service that could assist you with a similar project we would be happy to assist.

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DeStress Initiative at Netstrata

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DeStressing the team!

Whilst the Strata Management industry is a very rewarding one, at times it can also be an exceptionally busy and stressful sector to be involved in. Strata managers deal day in and day out with challenges faced to buildings and  the people living in them.

Netstrata is very aware of the pressures of the strata management sector and strives to develop an environment that not only attracts the best team members but also retains them. Netstrata boasts one of the highest staff retention rates within the industry, whilst many of our strata managers are shareholders of the company we also have regular social activities and have just commenced a yoga DeStress initiative, with yoga classes being made available during lunchtime.

The feedback has been fantastic with the team learning how to better deal with stress and helping to develop techniques to unwind and be able to refocus.

“When a gifted team dedicates itself to unselfish trust and combines instinct with boldness and effort, it is ready to climb.”

Patanjali Yoga Sutra