[easty]

Whichever way you cut it a ducted air conditioning system is a major installation in any building.  I suspect you would not get any change out of 20 grand.  A ducted system has environmental, health, fire safety, insurance and energy implications for the owners and in this case, because it is on common property without an appropriate by-law, the OC are the owners. 

As such, technically, the OC is responsible for maintenance, including replacement and the more the lot changes hands the less likely it will be that new owners will regard the installation as anything other than common property.

However irrespective of a by-law to protect the OC (and the Lot Owner by the way) the OC needs to know some basic questions before any ducted system is approved and installed:

 

1. Where is the compressor located.  Very important and hopefully it is not in the roof which I have seen done and this can have disastrous consequences. Are suitable design drawing available for the system.  Has the system interfered with or likely to interfere with any other installations that may be in the roof e.g. sprinklers, power, hydraulics, AV systems (Foxtel, Internet, DTV etc. etc.).

2. Ducted systems need regular maintenance to ensure there is no transmission of bacteria.  What is the program for maintenance of filters for example.

3.        Has the appropriate gas been used and does the system fit in with the OC’s environmental policies.

4. Noise

5. What is the power source and has it been appropriately installed

6. To where does the condensate run and are there drip trays in the ceiling cavity?

7.        Access for the OC?

8.        Fire implications

9.        Insurance – major installation such as this may have to be notified to your insurer due to the increased value of the building.

 

If any of the above questions cannot be answered correctly then it is not the owners who is in strife – it is the OC, that is until you have satisfied yourself with all of the above (and more probably) and drafted the appropriate by-law.

 There are several ways to bring the owner to account – two of the most effective, if negotiations fall down, is to minute the unapproved alteration which could impact on any future sale of the lot.  You might also advise the lot owner that when he goes to sell his lot a question the strata searcher often asks is if there are any unapproved alterations to the common property attached to the lot.  A yes answer would not be in his interests.

You might also tell the owner that without formal approval at any time in the future he could be ordered by the OC to remove the installation. 

Unapproved alteraions and additions to the CP – a common problem and should never be put in the too hard basket.  It is in everyone interests if the process is correctly carried out.

[easty]

Your next stop should be your local Council's Environment and Health Department.  There are regulations relating to noise levels (dB) and time of day for generation of noise levels.  Generally speaking I think you are not allowed to run ventilation systems after 10:00 pm if the system can be heard in the room of an adjoining neighbour.

 

If the owner of the ventitlation equipment, who I presume is the Owners Corporation, does not comply with regulations then Council can issue an order under both the Protection of Environment & Operations Act 1997 and The Local Government Act 1993. 

 

Good Luck. 

[easty]

Struggler

 

Please do not despair – strata living works and can be a panacea for those who can't or won't look after a freestanding house.  It is also a boon for the older generation and those just starting out on the life’s great journey of property ownership.

 

In my view the problems with strata living does not lie in the Strata Schemes Management Act, although there is always room for improvement,  but rather, as I think our moderator once put succinctly “That many who live in Strata pretend they don't”.

 

Much of this has to do with the concept of common property – for example if you greeted a new owner to a strata plan, they being all excited about their new purchase, and said “I am so and so from the Executive Committee and welcome to our plan.  Now here is your unit; please note that you own nothing in this unit except the internal walls, fixtures and by the way the paint on the ceiling and external walls.  That’s it everything else belongs to us, the Owners’ Corporation – the doors, external walls, floors, windows, doors etc etc. so don’t touch any of this unless we give you permission”.

 

I reckon most new owners would say, he must be kidding  – I just paid a bomb for this joint and I have big plans to make some improvements.  And that is when the trouble starts.

 

Common property is a concept and for many lot owners a concept they can’t or won’t accept or simply just don’t understand because it is so at odds with previous house ownership or living experiences where they just did whatever they wanted whenever they wanted. It is also true many Executive Committee’s fail to understand the concept of common property and so begins the constant battle, arguments, litigation, fights etc. about who is responsible for what.

 

However at its most simplistic the principal should work well in a well-managed strata.  The fact is that this concept of common property frees owners from the responsibility of having to look after probably 75% of their lot and done competently should ensure a safe, secure and sound building.

 

But that is an ideal world I know – here for example are some of the more innocuous work that lot owners undertake because they can’t come to terms with the idea that most of their lot belongs to someone else and  anyway it is only minor work:

 

1. Install air conditioning units on their balconies; drill into the water proof membrane to secure the compressor and years later after the water has caused damage to the structure turn to the OC to repair.
2. Drill window frames and external doors to install locks – thereby compromising the manufacturer’s waterproofing design of the window and or door;
3. Change locks on doors and create a non-compliant fire door
4. Install security screens on external doors which don’t comply with fire requirement and are intrinsically unsafe as they don’t provide ready egress in case of emergency.
5. Install film on external windows which if not done correctly can degrade and or cause windows to crack.
6. Throw down a few tiles in their dining room without any consideration for their neighbours below – out of sight out of mind.
7. Install aerials and dishes on roofs resulting in leaks.
8. Generally drill into CP walls causing all sorts of problems.
9. I’ll put a Spa on my balcony – what a great idea.

10. Install “over the top” balcony gardens and when watered annoy neighbours downstairs

 

The list can be as long as lot owner’s imagination.  And some just don’t stop there of course.  They add rooms; take over CP anything they can get away with.

 

The truth is that many owners want to claim ownership of CP when they want to change it (like the examples above) and are just as quick to disown CP when something goes wrong and they want it fixed.

 

It falls to the Executive Committee to monitor the situation and they have to be firm but also understanding.  By this I mean they should have in place processes and by-laws that support lot owners improving their lots but within strict guidelines that don’t compromise safety and building standards and ensure ongoing maintenance of improvements lies with the lot owner and the not the OC.

 

And one of the best ways to stop lot owners fiddling around with the common property is to tell them that when they go to sell the strata inspector will often pose the question “Are there any unauthorised alterations or additions to the common property attached to the lot my client is thinking of buying”.  That an affirmative answer will put your sale in jeopardy should have them very concerned.

 

And I know you say that you can’t know what changes lot owners make to CP but I think you would be surprised – people talk and an EC with its ear to the ground will usually find out what owners have done.  And of course the occasional inspection helps.

 

The other control the OC has is that soon as it becomes aware a change has been made to the CP without approval it can order the improvement to be removed and the CP made good.  And this can apply to a person to whom the offending lot owner sells.

 

So don’t despair – the good thing is that with forums such as this and bodies like the Owners Corporation Network and the information available on the internet generally things should improve.  Strata living is here to stay and will get bigger and hopefully better.

[easty]

I have no problems with an OC being responsible for damage to Lot Owner’s property when that damage (or loss) is caused by a failure to maintain the common property.  Siewa v SP35042 clearly established an OC has a legal and absolute responsibility to maintain the CP and failure to do so can result in severe financial penalties and in Seiwa’s case $400,000 was awarded against the OC.  And that is as it should be – every member of an EC, if they know nothing else, should understand 100% the responsibilities imposed on an OC through Section 62 of the SSMA.  Section 62 states clearly that an OC must maintain and repair the CP and in my opinion this is its principal responsibility.

 

However I would argue that a burst internal pipe in a common property wall would not normally constitute a “failure to maintain the common property”.  Burst pipes can result from many other things other than a “failure to maintain”.  For example a sudden external increase in water pressure, building movement, freezing of water, stress fractures etc. most being events which cannot be foreseen even by the most fastidious and conscientious OC.  A burst water pipe is an accident or a “defined event” as insurers like to say. And as such it is insurable. 

 

In Hasabean’s situation if we are saying damage caused any fault in the CP (such as a burst water pipe) legally should be paid for by the OC then this exposes every CP to an uninsurable risk because no entity (or individual for that matter) can insure against the  loss or damage to another entity’s or individual’s property.

 

Hasabean, for example could have had a $100,000 sound system or a Brett Whitely hanging on his wall, loss of or damage to which could not be covered under any insurance policy taken out by the OC.  So even though the burst pipe was not caused by a failure to maintain the argument is that OC would still be legally liable to Hasabean’s loss.  I think that is very onerous and could potentially bankrupt an OC even if it were committed to Section 62. 

 

I would agree however if the leak from the CP pipe was due to the faulty pipe about which the OC was aware and did nothing to address – then Siewa comes into play.   

 

One last thought.  Does the reverse apply to Lot Owners regarding faulty property – for example if Hasabean’s pipes underneath his kitchen sink burst (and burst kitchen and dishwasher pipes is a common event) while he was at work and thousands of litres of water flooded and damaged the CP and lot owner’s property below I think he would be pretty miffed if the OC and lot owner came knocking on his door seeking restitution.

 

The lesson here is that everyone (including OC’s) should insure their own property and take out the excess with which they are prepared to pay in the case of an event.   And of course OC’s must have as their number one priority repair and maintenance of the CP.

[easty]

Chris

 

What would the situation be if Hasbean was not insured?  Would the OC have been liable to pay for his carpet?  Or for that matter anything at all damaged due to the leak?

[easty]

This is a problem that has perplexed our plan for several years.  This is because for about ten years nearly every owner in our plan has made changes to the common property attached to their lots without seeking approval from the OC.  These changes range from installation of air conditioning to shutters and awnings, timber floors and bathroom renovations.  Once the first owner did something it proved hard for others not to follow.  One in all in so to speak. 

 

It was the culture in the plan therefore for about the first seven years that if you wanted to do or install anything you just went ahead and did it. Now the problems caused by not monitoring CP changes are coming home to roost – last year for example the OC had to replace a storm damaged awning which had been installed eight years ago by a lot owners without seeking approval.  

 

Two of the most expensive additions to our lots have been the installation of shutter doors outside the existing balcony doors of a townhouse and a $25,000 air conditioning system contained wholly within the common property (i.e. the roof) of another lot.

 

The OC has been advised these and indeed all alterations to the CP, even though they have been made without reference to the OC,, still form part of the CP and if they require repair and or replacement it will be at the expense of the OC.  The OC can of course decide not to repair or replace but this requires a special resolution at general meeting which would be hard to pass as nearly all owners have unapproved renovations to their lots.

 

As time moves on it will become more and more difficult to remember what changes came after the building was completed (in 199) as only one of the original owners still lives in the plan.  Several lots have changed hands many times so any new owners would have a reasonable assumption if an item is on the CP it will be the responsibility of the OC to maintain.

 

To address the situation we are trying to identify all the CP changes and then have owners retrospectively apply for approval of the alterations/additions.  The OC has already approved two alterations with the condition that the owner agrees in writing to maintain the changes, insofar as they affect the CP.  We have created and registered a generic by law for the purpose and set up a register of Common Property changes.  It will be a long process.

 

While we have implemented this program on advice of both the OFT and LPM Authority we have formally written to then for written confirmation as to conformity with the SSMA 1996.

 

Anyone with advice or suggestions would be most appreciated.

   

[easty]

There is provision in Section 183 of the Act for financial penalties to the developer.

 

The registration of strata plans and Units of Entitlement (UOE) is prone to abuse by developers who have no real interest in the ongoing financial imposts on owners except insofar as the setting of UOE (and by default levies) can help sell their properties.  Understandable from a commercial aspect but unacceptable as a process – prone to abuse.  I am not sure what the answer is but I do think the fact you can’t review UOE unless you have valuations as at the time of registration makes it very difficult (perhaps purposely) to review UOE’s.

 

I would like to think in this day and age with all the data around that UOE’s could be more fluid and adjusted say on a five or ten yearly basis depending on valuations, if an OC so desires or simply as a part of the legislative process.   The current system is very inflexible and the older a plan the more difficult it is to review.  I would be interested to know from a valuer and maybe strata lawyer as to why the act was framed in such a way that we have to seek a reallocation of UOE based on the original valuations.

 

Away for the legal aspect the real problem for an OC is that if the UOE is badly skewed at registration it makes the imposition (usually increases) of levies at later dates difficult because of the percentage multiplier effect.

 

So for example say one owner whose property is valued at say $850,000 and pays $2,200 a qtr in levies and is faced with a 10% increase then s/he is up for an $880 a year impost.  Another owner whose property is worth a similar amount but pays $900 a quarter in levies only pays an additional $360 a year.  As the years go on the differential becomes more and more.  The above is based on an actual situation where the initial valuations by the developer, ten years ago, were clearly skewed.  Yes the owners can seek recourse but very often they don’t and they quietly stew – the process for UOE review is daunting and very expensive (in this case the quote was $16,000).

 

Eventually, in the above scenario, you have a situation where the gap between similarly valued properties is enormous and if enough lots are affected passing budgets where an increase is necessary becomes a nightmare.

 

I think there has to a better way to review UOE as a matter of course.  We have periodic review of land for rating purpose – why not for units?

[easty]

My view is that complaints to OC’s should not be acted on unless they are reduced to writing.  The written complaint should be a contemporaneous account, as much as possible of actually what happened, what has given rise to the complaint with objective full details, including any evidence such as photos, police report, building report, other owners/occupants experience etc to allow the OC, through the EC, to take appropriate action.  “It has come to the attention” is a cop out and meaningless and has no real factual basis.

Similarly any complaint the OC resolves to make directly to an owner/occupant should be in writing with the same components as above and must give the person about whom the OC is complaining the opportunity to respond.  Such a process can apply when an owner/occupant has a genuine fear of harassment about whom s/he is making the complaint.  The initial correspondence from the owner/occupier in these instances should be kept confidential.

If is also a good idea to formally let all owners and occupants know of the OC’s policy  i.e. that no complaints will be acted on unless received in writing.  Furthermore if complaints are lodged in writing with the OC the complainant will receive a response.  There can be some exceptions such as emergencies or when immediate action is needed so the above is a general rule.  Such notice should also inform complainants that if they have concerns about making a complaint against someone the OC will act on their behalf, provided they let the OC know in writing of the actual complaint.

 To facilitate lodgement of complaints a pro forma “Building Incident” report form which can be emailed, posted etc. would assist.  Such a form could be used for a whole range of building related issues e.g. security breaches, building faults, non compliance with by-laws; safety concerns, general queries, suggestions etc.  Many people are not good at writing letters so such a form should be easy to understand and complete, concise, flexible, available as an online tool and be able to be integrated into your building log.

 In addition to the above a correspondence register should be maintained by the OC where all items to and from the OC are recorded – this should include emails, letters, faxes, legal notices etc. The correspondence register should be tabled and be open for discussion at each meeting of the EC  i.e. a standing item on all agendas for EC meetings.

 With the above procedures everything is above board, all correspondence is open for discussion, all correspondence is recorded and acted on and you have a permanent record.

 

[easty]

I think it is important to realise the Owners Corporation can only insure the common property, which does not include paint, carpet, wall mounted TV's, pictures, internal walls, furniture etc.  It follows then that if the OC can’t insure contents it would open the OC to unlimited liability because owners do not need permission to change the contents in their lot.  For example they can do anything they like to the internal walls so long as they don’t damage the common property.

 

If a water pipe burst within the common property of a lot and destroyed all or most of the items in that lot or any other lot (including the paint) potentially the OC, according to the advice you received from the strata lawyers, would open the owners collectively to an unlimited claim because there is no practical way the OC would know what was their risk – i.e. what was in the lot; for example the lot could have had an very expensive paint finish or even an artwork painted on the wall.  Would the OC be obliged to replace this, even though the leak was an accident.  I would suggest no and they would only be liable (possibly) if the OC it were negligent i.e. knew about the leaking pipe and did not repair in a reasonable time.

 

I think this is were the Act is quite elegant in some respect (although it does have many deficiencies) because it has, under section 62, removed protection from the OC if it does not maintain the common property e.g. does nothing to fix a problem once it becomes aware.  Severe penalties, quite rightly apply to the OC that sits on problems hoping they go away.  But an OC doesn’t sit on a bust pipe – this is part of modern living and these things happen without warning.

 

I know this is a difficult concept for some who think that if they have property ruined by someone else or some external event through no fault of their own why should they have to pay for its repair or replacement.  But I reiterate that is what insurance is all about.  All owners should have contents insurance and the issue of repainting would not be a problem if you are insured.  

 

I would also suggest that even if my personal property was destroyed by a negligent OC I would still claim under my contents insurance and leave to my insurance company to decide if they will pursue the OC for recovery of the cost of repair.

 

The lessons –

• Individual owners and tenants cannot rely on building insurance alone, they should have contents insurance,
• Owners Corporations must react as quickly as possible to repair common property once being made aware of a problem and
• You cannot reasonably expose an OC to an unlimited claims against which it cannot insure because that would be in no individual owners interest.

[easty]

Jimmy T

I actually don't agree with this unless the Owners Corporation were negligent, knew about the leak and did not move to fix.  Accidents happen all the time and the leak as described was an accident.  

Forexample if this owner had a very expensive painting worth hundreds of thousands damaged by this leak the owners be responsible for its replacement.

I agree however if the lot owner advised the owners that there was a leak and the owners did nothing to repair the leak then that would be an entirely different story.  In this situation the Owners would be liable and that is why any notification to the owners of a problem with common property must be acted on without delay.

The owner should ensure thier contents, which includes paint and carpets (and paintings).  Contents insurance would pay for the repainting of the room which probably means the entire room.

In a nutshell you cannot hold the owners financially responsible for replacement of these items when the cause of the damage was not due to any negligence.  That's why we have insurance to cover accidents.

[Author]

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