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I totally agree that extra transparency is required.
Insurers should offer a lower premium for direct (non-broker) policies.
SMs should credit their share of the commission to the strata, and not cross subsidise low management fees by insurance commissions.
But, if they can’t do that, at least they should show the commission in the Income and take it straight out again in the Expenses, like they do with Certificate Fees and Inspection Fees.
Why don’t they?
Because owners would start asking questions about such a large amount when all the SM does is pay the annual premium invoice from the owners’ funds.
And submit claims when required, but that’s part of their job.
Rita,
If you’re confused, spare a thought for the people trying to help you with this problem, as we may not have all the facts yet.
1) You mention the Home Building Regulation 2004. Are you in NSW?
2) How old is your building?
3) How many storeys does your building have (excluding basement parking levels or ground level if it’s purely garages)?
4) Are you under the mistaken impression that the remedial builder’s warranty insurance will cover your alternative accommodation? His policy will only cover any defects he creates, and he hasn’t started yet. It’s the original builder’s policy under which any claim for alternative accommodation would have to be lodged. And, depending on the circumstances, there may not have been one.
5) Everyone, feel free to jump down my throat if I’m wrong on that.
6) What is the nature of the “building defect”. Yes, I know the result is water penetration, but what is wrong on the roof, and how are they going to fix it?
7) What has your EC advised you?
JT’s suggestion is brilliant.
It will probably solve Rita C’s problem, as she maintains they are covered by home warranty insurance.
But, if that’s the solution, why don’t the insurers admit defeat and offer to pay either alternative accommodation or loss of rent?
Perhaps, like me, they thought she was asking for both.
Might be worth clarifying it with them.
Rita C … you didn’t actually answer my first question. Are you the landlord of the top floor unit? That is, are you asking out of self-interest, or are you one of the EC trying to sort out this mess?
Landlord2’s case may be different.
Builder’s warranty insurance may have expired as he states the building is 10+ years old. Unless of course, they’ve been complaining to the builder for much of that 10+ years.
Even though “this roof defect was as a result of construction” (i.e. poor original workmanship), if you don’t discover it within the statutory warranty period, you’re not covered.
And then, in NSW, there’s the question of whether “poor workmanship” is covered at all.
So, the original question may still need an answer. Is the OC “liable” for consequential loss?
And now some unsolicited advice to Landlord2.
For a real estate investor, you don’t seem to know very much about your investment.
1) There are 4 to 5 units on the top floor? I’m pretty sure there would be an exact number.
2) There are 18 units or so in the building? I’m pretty sure there would be an exact number.
3) The building is over 10 years old, but was first occupied in 1996? That would make it at least 16 years old. I doubt that builders warranty insurance still applies.
Perhaps I was a little facetious in my first reply, so let me try again.
First, some questions to ensure you’re on safe ground.
a) You say you have “approved cats”. Do the scheme’s By-Laws allow pets? Do you have permission in writing for them? Is the number of your cats within any specified limit? If you have EC permission in writing, then there’s not much the Chairman acting alone can do.
b) Are your cats de-sexed, micro-chipped and registered with local Council (if required), in case he catches one and sends it to the pound.
c) Do take photos of your cats’ markings. It will prove him wrong if he takes photos of other roaming cats.
Once you’re on safe ground, why don’t you write him a letter, copying all EC members (you say they’re on your side), telling him you support his efforts to address the stray cat problem. Tell him:
d) He’s welcome to take photos on common property but not of your lot or any area of which you have exclusive use. Because he won’t get one of your cats, will he?
e) He’s welcome to set cat-traps (if it’s legal) on common property but not on your lot or any area of which you have exclusive use. Because he won’t catch one of your cats, will he?
I feel very sorry for you.
First and foremost, take some good quality photos of the “laundry nook”, the pipes under the basin, and the floor drain.
How old is your unit?
Your description sounds like a clear case of amateur renovation and sub-standard plumbing.
Which “Managing Agent” did you phone on the weekend this happened? The Lease Manager (to whom you pay the rent) or the Strata Manager?
If the Lease Manager, and they refused to help, then you took the correct step (by calling an emergency plumber) to mitigate further damage to the owner’s unit.
If the Strata Manager, then they were correct in saying it wasn’t their problem (unless the water was leaking into a downstairs unit), but they could easily have given you contact details for one of their preferred pumbers.
The reason I say not the Strata Manager’s problem is that your description seems to involve only (owner’s) fixtures and fittings damaged by an “overflow” event, not a “burst pipe” event.
The Strata Manager was also correct in saying this wasn’t a “building defect” unless your unit was brand new.
A bit strange that the Agent brought the Strata Manager with them when they finally came. Probably the Agent’s attempt to stick the OC with the cost.
$1000 sounds a bit high to me, but it was an emergency visit. How many plumbers came and how long did it take to suck up all the water?
Do not arrange or pay for re-carpeting.
Do not be afraid of the Agent taking you to the Tribunal.
In fact, I think you have good cause to reverse the situation. You take the owner and Agent to the Tribunal (the Tenancy division, not the Strata division) and ask for a refund of the full $1000. Name both of them in your complaint to give extra incentive for them to settle the dispute.
1) Take photos of your cats, so that any markings are obvious.
2) Let him take photos, he will only prove himself wrong.
3) Dye your cats’ fur blue, or at least a big obvious streak.
4) Walk around in your bikini all day (sorry it’s winter).
5) Accuse him of perving.
6) Take out the PVO.
Cosmo said
Our OC self manages and has insurance through a broker. The broker gets a commission of 20% but it doesn’t cost the OC anything. The commission coming from the insurer profit margin.
I believe the “industry standard” is 20% shared between the broker and the Strata Manager. Of course, some (most?) Strata Managers have set up their own brokerage company, so in effect they get the lot.
There is no such thing as a free lunch.
If you think the insurer hasn’t inflated the real premium by 20% so that they can pay the broker and still make a decent (indecent?) profit, then think again.
When insurers tell you “it doesn’t cost you anything, we pay it out of our profit”, what they mean is “if you bypass the broker and deal with us directly, we’ll still charge you the same premium”.
A decade or so ago, we actually had a (mostly) honest Strata Manager, whose policy was to credit clients with any brokerage he received.
It is bloody stupid to place anything on top of the balcony rail or to hang anything from it over the outside.
Hope your public liability insurance is current.
Our insurance premium rose by 15%+ last year (2012).
When I asked the SM to find out why, the answer which came from the insurer was that all insurers were increasing premiums by at least 10% (but in some cases up to 45%) for the following reasons:
1) Global catastrophic weather related events (of which the Qld floods was but one). [Hello, global warming].
2) The increased frequency and cost of non-catastrophic claims, such as broken glass, malicious damage and burst pipes.
3) High risk tenants. I think they were referring to short-term rentals and student accommodation.
You might consider asking for an increased excess to keep the premium down, but then you’ll have to pay it when anything happens.
You refer to “Strata Manager / Chairman”.
Is this the same person?
Do you have an external Strata Manager?
Scotlandx is correct … whilst the Act requires EC minutes to be put on the noticeboard within 7 days, there is no requirement for GM minutes to be distributed until the notice of the next GM.
This is probably something the Strata Review will fix, but who know when that will happen … certainly not by March 2013 as promised.
Your Strata Manager is sh*t. A good SM will distribute the (draft) minutes within 7-10 days of the meeting, even though the Act doesn’t (yet) require it.
So, what can you do?
1) Inspect the strata records. Small cost, $30. Minutes must be made available.
2) Get 25% of owners (10+ in your case) to request an EGM. The minutes of the last GM must be attached to the Notice of Meeting for the requested EGM.
3) Of course you must submit a motion to be voted on at the EGM. How about “That the Owners Corporation resolve to erect a flag pole on the common property”. No wait, the meeting might just vote yes. How about “That the Owners Corporation resolve that red is a nicer colour than blue”. Who cares if you lose, you get to see the minutes. Who cares if the Chairman rules the motion “out of order” as frivolous, the meeting must be called, and you get to see the minutes.
I don’t know what other postings you’ve made, but there is insufficient information here to give informed advice.
Harrassment is sometimes in the eye of the beholder.
Yes, unfortunately there are some ECs who are power-hungry vindictive psychopaths.
But there are also strata residents who didn’t realise there are rules to strata living and/or refuse to be told anything.
What are the details?
This is an interesting but perplexing question.
First, I don’t think Boronia’s comments should be so easily discarded. Legal questions are often resolved (and sometimes justice delivered) by reference to analogous situations.
If you owned a free-standing house and this situation arose, you would be faced by two types of cost: the cost of repairs, and the loss of rent while they were undertaken.
In strata living, owners have agreed to share the cost of repairs. That’s specified in the Act. If the roof caves in due to old age, then all owners share the cost of repairs, not just the top-floor people. If white ants start eating their way up from the ground, then all owners share the cost of repairs, not just the ground floor people.
But the Act is silent (lawyer-speak for “d’oh, we forgot to cover that”) on consequential damages.
Consequential damages is a very slippery slope.
Loss of rent is an obvious and quantifiable consequential damage.
But what if this happened to an owner who was about to depart on a 3-month pre-booked non-refundable round-the-world trip, but they had to stay while sudden urgent common property repairs were effected from inside their unit? Is the OC liable for the cost of their cancelled trip?
What if an owner simply had to stay home from work for one day while the outside of their front door was painted? Is the OC liable for the loss of one day’s pay?
I assert that the OC is never liable for consequential damages.
And my circular argument is: If the OC were liable for consequential damages, then insurers would offer cover for it (another way to make money), but if they don’t offer it, it’s because OCs are not liable.
I don’t think the OC should “come to the party” or “offer” to pay for consequential damages at all. Let the owner take them to court to establish liability.
The biggest problem with this web site is that the initial question usually only presents the favourable half of one side of the dispute, but sound advice can only be given when all the facts are known.
So, let me ask some questions.
Rita C
Are you the landlord of this top unit in a complex of 5 units?
Is this unit the only unit on the top floor?
If not, are the other top-floor owners/tenants moving out for the duration of repairs?
I know the standard lease requires “habitable” premises.
Who declared the unit uninhabitable?
Or did the tenant simply prefer to leave to avoid the inconvenience?
Have you checked yet whether the home warranty insurance actually covers your situation?
Did you understand my previous point that the tenant should not get both free alternative accommodation and relief from rent?
Landlord2
You used the plural in regard to the top-floor.
Are the other top-floor owners/tenants moving out for the duration of repairs?
“Defects” has a specific connotation in relation to strata title matters.
Are your “defects” the result of original construction?
If so, the OC should be pursuing the original builder.
What do you actually mean by “roof defect”?
Huh?
There is no loss of rent.
The owner has rented the unit to a tenant.
The unit is temporarily uninhabitable and the tenant is provided alternative accomodation paid for by the home warranty insurance policy (so you say).
The tenant has to continue paying the rent.
The owner suffers no loss.
Otherwise, the tenant is living the high life in a luxury hotel without paying anything for accommodation.
A couple of other points:
1) The OC’s insurance policy usually only provides alternative accommodation for events defined in the policy (eg earthquake, fire, storm, tsunami, etc) and not for defective building work.
2) Home warranty insurance usually only provides alternative accommodation for their defined events which are: “loss or damage resulting from a breach of a statutory warranty (e.g. defective work) because of the insolvency, death or disappearance of the builder or where the builder’s licence has been suspended …”.
You say you’re covered. I’d suggest you re-read that policy.
3) The owner could/should have taken out landlord insurance.
4) Roof replacement does not necessarily make the unit uninhabitable. Our block had the entire pitched roof replaced and nobody had to move out.
Chak,
Strata Rolls can take many forms.
In the old days, they were an exercise book or a loose leaf binder with information written in for each owner (or tenant), usually with old entries simply crossed out.
These days they could still be a hard-copy loose leaf binder with section 118 and 119 certificates filed in each lot’s tab.
Or they could be on their computer.
Just ask for the Strata Roll to be placed in front of you or to be given access to it on their computer. Then you’ll know what to do.
But, do not ascribe to malice that which is adequately explained by stupidity.
The SSMA spells out the information which you have a right to see. It includes the Owner’s name and address.
However, some (most?) Strata Managers record extra information in the Strata Roll such as telephone numbers and e-mail addresses.
As the SSMA hasn’t yet recognised the telephone, let alone e-mail, it doesn’t explicitly give you the right to see those.
So the Strata Manager gets all afraid that they’ll be breaching the Privacy Act if they let you see a Strata Roll which includes such stuff.
Oh Whale,
All “leaking” pipes are “burst” pipes when the attending plumber is the only one who has to decide whether to charge the insurer an inflated price or charge the OC an uninflated price.