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Hi Darnell,
It is a sad reality of strata that no matter how blatant the breach of strata laws, fairness and equity by one or more strata committee members, the only way to stop them is for other owners and strata committee members to stand up to them.
The sort of lobbying mentioned by Cosmo can help achieve change, if it opens the eyes of others to what is going on and how things could be done a lot better.
Applications to NCAT may address the more egregious actions of a bullying few, but a campaign to engage owners and open their eyes to what is going on is the only way to deal with a pervasive culture of self interest and non compliance.
If to begin with you only have one or two allies, you can build on this by together creating a newsletter with a positive message about how your scheme could be transformed eg. Putting more of the levies into the capital works fund to pay for essential maintenance and improvements that will help maintain the value of your building. Include some pictures.
Resist the temptation to explain to owners what is wrong with the current committee and the inequity of the actions of one or two members. This will just lead to threats of legal action for libel, probably unfounded but distracting. Remember…Owners do not want to hear bad news, no matter how bad the bad, and you will get more support in painting a vision for a better building.
You won’t change hearts and minds in a single newsletter but regular contact with other owners can win support for your thinking. Many will be coy about being outspoken but they can help your case when it comes to the AGM.
You mentioned that the AGM is well overdue – it has to be held once in every financial year – If you can alert the strata manager towards holding this, think about motions that you, and those of like mind, can put on the agenda eg. That the strata committee does not depart from the budget / exceed budget estimates without the explicit agreement of owners. And…. most importantly stand for election to the strata committee not as single person who can be outvoted, but as a group of 2 or 3 like minded owners bent on change.
On a more hopeful note, it is amazing how often strata bullies collapse when they sense they have more than one person against them
Kind regards
John Hutchinson
m: 0418 797470 e: john.hutchinson@strataanswers.com.au
S T R A T A A N S W E R S PTY LTD practical solutions for strata living
abn 11 600 590 083
http://www.strataanswers.com.auThanks for your articles in the weekend Fin Review – very good. I refer to the article on this about a month or so ago.
You mentioned 3 schools of thought on this, but no one has mentioned the actual pets themselves – although point one may be linked to it.
While I believe some animals (birds in cages, lizards, some snakes in empty dry fish tanks, etc.) are ok in flats, the most common animals such as cats and dogs simply should NOT be allowed in any apartment.
This is something I have noticed in Asia and unfortunately it is creeping in here. There it is sadly common to own a dog (or cat) in a high rise and once a day (usually late afternoon) the owner brings it down to a small common lawn area, where everyone gathers to chat (and smoke) and let the animal have limited exercise for about half an hour. It then goes back up to the apartment, where it stays (often while the owner is at work) until it comes down again the next day, and so on.
It is a cruel and boring existence, as they need plenty of fresh air and outside space to run around. Not to mention the probability of dogs barking as well as the hygiene issue (worse with dogs than cats). Quiet simply it is cruel and should not be allowed at all.
It is very pleasing that the NCAT senior members recently ruled against pets in apartments – for normal, decent minded citizens, and domestic pets this must continue and be supported.
You don’t say what sort of acoustic test was agreed at mediation.
Acoustic testing in this context is typically conducted using a tapping machine on the hard surface floor and the sound measurement would be made in the apartment below. So as the affected neighbour you will be very much witness to the process.
There are different types of noise – what needs be measured is the noise transmitted through the floor with the ambient noise generated within the apartment above being of no direct relevance.
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How to reduce levies in this Covid 19 World ? or indeed should levies be reduced at all ?
We are starting to see job losses impacting on the ability of both owner occupiers and landlords to pay their levies – owner occupiers who have lost their jobs and landlords whose cash flow from tenants they cannot evict dry up.
The core question for Committees is …..Should any levy relief be universal for all owners or selective for only those demonstrating financial hardship ?
If universal relief is required, then schemes need only to call an EGM to rescind past levy resolutions and resolve upon a new levy structure.
Only an ordinary resolution is required (same as when levies were originally resolved ) but the greater challenge might be how to hold an EGM with appropriate social distancing.
If the OC has already resolved to hold electronic meetings, then this is straightforward, but if it has never passed this resolution then it needs an “in person” EGM to resolve to permit electronic general meetings ! ( Chicken and egg situation…. but fortunately there is a neat work around for this involving the SM holding proxies and being the only attendee in person at an EGM ! )
So back to the issue of reducing levies….Reduce them for all owners or just recognise the financial hardship of certain struggling owners – the latter avoids giving relief to your scheme’s “serial recalcitrants”.
Recognising straightened financial circumstances can be as simple as the Strata Committee resolving not to proceed with recovery (for now at least) on a case by case basis and need not involve formal payment plans. There is no obligation on a Strata Committee in NSW to collect unpaid levies; likewise there is the discretion to waive statutory interest ( some would hold that the waiver of interest can only agreed by owners in general meeting, but that still allows interest waiver to be used as a tool for financial relief ).
Whether it is a general levy reduction or recognition of individual financial hardship, a scheme’s cash flow will be impacted and, as Jimmy notes above, it may mean dipping into the Capital Works (Sinking) Fund pot. Just remember to fix up the Capital Works Fund Plan so that it aligns with the new levy realities
S T R A T A A N S W E R S PTY LTD practical solutions for strata living
e: solutions@strataanswers.com.au. m: 0418 797470
http://www.strataanswers.com.auThe usual process for managing levy resolutions is for the levies for the 4 quarters of the Financial Year to be resolved upon and for the levies for the first following quarter to also be resolved. In addition the Resolution will incorporate wording to the effect that this quantum of levies CONTINUES until otherwise resolved.
Did your last levy resolution incorporate this wording ?
Hopefully it did, so you are covered until the next general meeting.
If you DO NOT have this continuity wording, the owners corporation ( obligations & rights fall on the OC not the strata manager) cannot raise levies until a meeting is held to raise the levies and that of course means there is no authority to send out levy notices.
I think you are very aware of the measures the OC will have to take to manage cash and for the urgent need for a general meeting, which is great.
Hope this assists
S T R A T A A N S W E R S PTY LTD practical solutions for strata living
e: solutions@strataanswers.com.au
m: 0418 797470The link above has now cropped up for us and a decision has to be made shortly . Has anyone seen just what the costings are for the various options open to us to ensure it’s user pays as it should be?
You are in NSW. So just too give you the NSW perspective…
Following on from Jimmy’s advice you do indeed need to call a General Meeting to establish a new committee.
You are presumably secretary but just in case there was an irregularity in the way you were appointed. ??? , best if 25% of owners ( by unit entitlement) requisition a General Meeting – now you have allies getting the signature of 2 others as well as yourself to make this qualified request should not be a problem.
You are certainly entitled to the contact details of other owners and armed with these you could send out an agenda notice to all the Owners. Otherwise you can ask the SM to do it, but they will probably charge the OC extra.
Remenber you need
- To resign your position (otherwise there has be to a special resolution to “spill” you from your committee of one !
- A Motion to determine the number of members on the committee – Jimmy suggests 3 is an effective number for decision making
- A Motion to call for nominations and elect a Committee
Maybe your new committee can get better value out of your strata manager as Magpie suggests.
Good luck
S T R A T A A N S W E R S PTY LTD practical solutions for strata living
abn 11 600 590 083
http://www.strataanswers.com.ausolutions@strataanswers.com.au
Pro Bono Strata Management ?
Not sure how ready the SM industry is for this…not sure whether at $200 per hour charge rates SM’s have the wiggle room / capacity for pro bono work that lawyers have with their $400 per hour rates……What’s missing is the Partnership between SM’s and Owners / Committees.
Too many owners corporations / bodies corporate view their strata manager as someone they can delegate all responsibilities to, washing their hands of responsibility for their building’s future. Uninformed expectations of strata managers from unengaged owners & committees fuel tensions and help perpetuate the blame game that we are all spectators to.
It is indeed hard for small schemes to find the money to pay for an effective strata manager.
If owners thought about exactly how they spent their $5000 per year, then they could make the money go further.The SM industry needs to look more closely at client needs and figure out where at $200 an hour they can offer value and where owners and committee members need to step up and contribute to some of the work.
The first thing that lawyers, doctors and other professions do, is to get a feel for their clients and their client’s needs; the SM profession needs to look more to this model and move away from offering a generic commodity called strata management.
SM’s genuinely partnering with schemes can make the money go further.
S T R A T A A N S W E R S PTY LTD practical solutions for strata living
abn 11 600 590 083
solutions@strataanswers.com.au
http://www.strataanswers.com.auPutting aside for the moment the questions around the relatively high interest rate charged on Strata Loans, having your Owners Corporation / Body Corporate borrow to pay for defects seems the most equitable method of paying for them.
We are used to putting aside funds every year to pay for major expenses that will crop up in the Future. The Capital Works Fund is not only a useful way of ironing out the “lumpiness” that occurs when large expenses have to be paid at irregular intervals, but it is also a means whereby “Today’s Owners” contribute to the wear and tear on everything from pumps to carpets that their ownership & occupation necessarily involves.
Paying for Defects or the consequences of a fire order is different. These are often very large costs that relate to Past events (construction negligence) – quite likely to a time before any of the current owners became owners. It seems most equitable that the burden and pain of paying for these costs should not fall on “Today’s Owners” alone, but be spread across all those who will be owning / occupying the complex for years to come.
If the OC borrows for a term of 7 or 10 years the repayments may start almost immediately but the financial impact of these repayments will be spread across more than one generation of owners – a more equitable way of paying for the costs of “legacy” issues like defects
S T R A T A A N S W E R S PTY LTD practical solutions for strata living
abn 11 600 590 083
http://www.strataanswers.com.auEmail. Solutions@strataanswers.com.au. Tel. 0418 797 470
Great to hear that Flatchat has Embedded Networks in its sights for 2020. Many strata residents wouldn’t know what an embedded network was, let alone having had to live with one.
It involves strata buildings purchasing their utilities – electricity, gas, internet etc – from a single source not just for common property but also for individual apartments.
In theory this opens up opportunities for apartment residents to share in the financial benefits of group purchasing and the discounts that go with it. The only problem is, as Flatchat points out, the process has been hijacked by developers.
It is the developer who pockets the benefit upfront from selling the supply contract whose value is in direct proportion to the profit that can be made from selling utilities to strata residents in years to come. As Flatchat also notes, the developer leaves the business of installing the infrastructure to distribute / meter the electricity etc to the embedded network supplier. The owners are left locked into a contract for a supply, which they could in theory forsake for another more competitive supplier, but in practice would have to pay for separate infrastructure for any new supplier they chose. The practical hurdles for any apartment resident or owner changing to another more competitive supplier are just too great – and that’s assuming that apartment residents understand what’s going on – which most would not.
Not everything about embedded networks is bad. They could be used to empower the owners corporation to centrally purchase utilities not just for the common property but for individual apartments. The combined utility needs of the common property and apartments could give the OC some leverage in negotiating utility prices. But that is only going to happen if it is the OC that is in control, and not some outside Embedded Network Supplier, and any costs savings flow back to owners.
Those of us who are fortunate to be in buildings that have installed solar pv to cater for our common property electricity needs should now be thinking about how we can share the benefits of cheap and clean solar power with our residents & owners. Expanding our solar pv installations to provide electricity not just for common property needs but to individual apartments could be the way to go. An embedded network owned and controlled by the owners corporation for the benefit of owners could be the answer to bringing the benefits of solar pv electricity to our apartment residents.
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Practical Solutions for Strata LivingWhy have investors been able to reap the returns from their properties for so long whilst remaining disengaged from the planning and decision making so essential to a functioning strata building ?
In a nutshell …they have been freeloading off the efforts of a few committed owners who volunteer their time and energies to make their buildings attractive places to live and in so doing valuable investment propositions for others.
Don’t expect that we can go forward for ever relying upon the efforts of volunteers to man our Committees. The bush fire crisis reminds us we cannot expect our bush fire brigade volunteers to give up hours, days & weeks of their time without some reward. Perhaps we also need to be reminded that there is a small band of strata owners out there serving on Committees and doing the heavy lifting for all those passive investors and owner occupiers who year after year fail to put their hands up to serve.
The volunteer strata committee model is broken. Our strata buildings now demand greater technical understanding, the acumen of a business operator and a time commitment that few could come up with. As long as a few engaged owners are expected to work unpaid for the benefit of everyone else, any pool of talent a building has will go largely untapped.
If a building is fortunate enough to have talented people amongst its owners, then it should be paying them, not through the vagaries of a golden handshake the year after next, but properly for the value they add.
It’s hard to say if any investors would step up for Committee duties, but at least they would be contributing to the costs of safeguarding their investment.
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Practical Solutions for Strata LivingJimmy T’s post opens our eyes to how important it is to be alert to the opportunities for upgrading our buildings. Planning a new kitchen or bathroom in your apartment and dreaming of the rewards from resale is easy – planning what is necessary to move your building upmarket is a lot harder and, unless you do it, that extra investment in your apartment may not pay off.
Strata Committees struggle to get owners to understand the need for proper maintenance let alone get them enthused by visions of something better, but buildings get tired and what was top of the market ten years ago may look very dated in the face of what’s on the market today.
The price of doing nothing to upgrade your building is definitely not nothing. Keep your vision alive and, if you don’t have the funds, think seriously about a strata loan for your building; the borrowing process is very simple and whilst rates may be more than what you are used to paying on your mortgage, the loan can be paid off from levies over the next 7 years. Those owners who benefit from the increase in value from a smart new lobby or revitalised façade will be those paying off the loan via their levies – seems pretty to fair to us.
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