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[Strata Ken]

We are in a similar but more extreme position to this Flatchatter. We have been quoted nearly $200,000 per unit for a mix of problems mainly waterproofing. This is a block where typical unit prices are about $550,000. One part of it is that we are having all balconies redone for waterproofing. Our strata manager has been doing all the talking to the engineers, so the quotes were a big surprise. One reason for doing this is that we have an old building condition report that the insurers looked at, and said no more insurance so now we have the very expensive Lloyds insurance.

Looking at it, we are very unlikely to get a special levy of $200k. Even doing a third of the work we would probably have trouble with $60k.

Now taking a loan would mean extra strata fees of $30k per year for ten years. My impression from other comments above is that there would likely be a problem with non payment and then you end up with a special levy to cover the owners who didn’t pay. I also would be surprised if the banks would actually be fine with that. Is that others experience?

So we end up with what seems to me two possible decisions.

1. Keep paying the high insurance (it is an extra $5k per unit per year) and hope that nothing happens to increase it markedly.
2. We decide to do some of the work. One thing we don’t know is the different priorities. It also seems that part of the work on the balconies is because they are no longer up to code, and some is for waterproofing so in the end they are all being done. Possibly we could look at just fixing the bits that need it. However if we do that we may never be able to get cheap insurance and we will be spending a lot of money. There is the problem that the water may be weakening parts of the structure. My guess is that a lot of units in Sydney have water where it shouldn’t be, just no one has checked.

Any suggestions on what option we should look for?

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[kaindub]

The tribunal has set the precedent that its an absolute responsibility of the OC to repair and maintain  common property.

In the poster’s case they have no option but to carry out the repairs.

$200k per lot seems an extremely high repair  bill.

As a start the   committee needs to get involved and get some other quotes. There are project consultants out there that can write a scope and get quotes. If that’s a help.

The ne t step, after you get quotes, is to figure out how to pay for this. I suggest a loan  considering the high amount.

As a last option, you may consider selling the whole building for redevelopment. Right now your equity is about $350k. A developer may pay you more than that .

[Quirky]

What do you mean “unlikely to get a special levy of $200k”? You actually don’t have a choice – the OC has a legal duty to repair and maintain common property. The OC cannot postpone the work because of costs. (So now is a good time to sell up, if you can!). Any owner can to to NCAT for an Order to carry out the repairs. Recent changes to strata law also allow the Dept of Fair Trading to step in and arrange the repairs. In that case the special levy will be raised, and any owner that cannot pay it will have to go bankrupt – or arrange a mortgage to pay it.

So the owners need to get involved. Call a general meeting to review the quotes, and go and get other cheaper quotes that fix the problem from other companies. Strata law requires at least 2 quotes for work over $30k.

But $200k does not seem unusual for a block with several Units. Currently in a multi-storey apartment building a failure of a bathroom waterproofing will cost the Owners Corporation around $30k to repair (current building code requires the bathroom to be stripped entirely, and a new waterproof membrane installed). The Design and Building Practitioners Act applies to waterproofing repairs, and so a design expert will be needed to oversee the work. I’d go with the $200k quote, if you cant get a better deal, as the longer you delay the more it will cost.
(And talk to your bank about a mortgage, or cashing in some of your super!)

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