Podcast: Contract concern as plan nixed in the bud

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There’s an air of cynicism – or maybe it’s just weary experience – around this week’s Flat Chat Wrap podcast, but we only have ourselves to blame.

Last week we were touting the potential for a mandatory strata management contract – like the residential tenancies lease in that the legal conditions would be fixed, but the financial terms would be variable – and realised we were joining a chorus of support for the idea, notably promoted by the Owners Corporation Network.

What we and they didn’t realise is that Fair Trading has already nixed the idea in its review of strata laws that will occur this year.

Citing the views of the ACSL (which turns out to be the Australian College of Strata Lawyers, something we didn’t know when we recorded the podcast), the Law Society, the Urban Development Institute of Australia (developers) and PICA, the strata and building management giant, the policy wonks have decided that they won’t have a mandatory contract but they will come up with conditions that must not be in contracts and clauses that must.

We’re calling BS on the proposal, not least because there is already a mandatory contract – the one issued by strata managers on a take it or leave it basis.


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After years of saying we should have a strata commissioner, it seems we already have one.  The published remit of the Property Services Commissioner includes strata, it seems.  Does that John Minns is the Strata Commissioner?  We’re going to track him down and find out.

We also explore the idea of subsidised private rentals for frontline workers like nurses, ambos, teachers and police.

And we chat about some bizarre tribunal cases from Queensland, including a block that wanted residents to carry pets in cages up 16 floors in the fire stairs and another that tried to ban doormats.

And final our friends at Strata Answers are looking into the successes and challenges of strata owners who want electric vehicle charging in their blocks – how they succeeded if they did get it in,  and why they failed if they didn’t.

All that and more in this week’s Flat Chat Wrap.

If you enjoyed listening to this podcast (or reading the transcript), please share it with your friends using the social media buttons on this page.

TRANSCRIPT IN FULL

Jimmy 00:00

I’ve got a feeling we’re going to be disappointing some of our listeners this week. 

Sue

Oh no, why?!

Jimmy  00:04

Because we’ve been talking about the strata management contracts and how a lot of us think there should be a standard strata management contract.

Sue  00:14

Oh, yes.

Jimmy  00:15

The same way as there is a prescriptive one for rentals. Everybody has to use that contract and even if they don’t use that contract, the law says well, that contract applies. Even if you’ve got a verbal contract and nothing on paper, that contract still applies.

Sue  00:32

Yes, we were hoping the New South Wales government was going to bring that out.  For strata residents?

Jimmy  00:35

Yes, so we have some updated news on that. And, we’re going to talk about pets in Queensland and doormats in Queensland. We’re going to talk about the new Property Services Commissioner, John Minze and, we’re going to talk about some research into electric vehicles. For strata residents. So, a lot to talk about; we’d better get on with it. I’m Jimmy Thomson, I write the Flat Chat column for the Australian Financial Review.

Sue  01:04

And I’m Sue Williams. I write about property for Domain.

Jimmy  01:06

And this is the Flat Chat Wrap. We’ve been having a debate in the Flat Chat forum… Somebody wrote and said they’d just had a look at their strata management contract, and they couldn’t believe how one-sided it was. Basically, the problem is there are so many provisions in there that say that the strata manager isn’t liable for anything that they’ve ever done and even in the unlikely event that you do find that they were liable for something, then that liability is limited to how much you have paid them in the past two years. We discussed this last week. Basically, your strata manager could come in, screw up horrendously and cost you a couple of $100,000 and then turn around and say “well, you only paid me $5,000, so that’s all I’m going to pay you back.”  That’s not the only thing (and people have been talking about this for years). The problem has always been that when anyone goes to try and change it, the strata managers say “nope, this is a standard contract. It’s a fixed contract; you cannot change it.” When people try to rewrite the strata managers contract, SCA say “well, that’s our copyright, so anything that is in an existing contract, you can’t use it.” Because everything is so bound up with legal terminology, it’s almost impossible to adapt that.

Sue  01:46

That seems very unfair, doesn’t it?

Jimmy  02:45

Yes, so you think, what we need is a standard, set, prescriptive, strata management contract, like we do for residential rentals.

Sue  02:54

And is the New South Wales government going to give us one?

Jimmy  02:56

No! I was talking to somebody at OCN recently, and they’ve been wrangling with this for a while. They said they hoped and believed that that was what was going to happen and under the current review of 139 things in Strata Law and Regulations, they thought that a standard strata management contract was going to be included. But, I drilled down into those Regulations (it’s a huge document; it comes under I think, the old saying of ‘baffled and was bullshit and blinding them with science,’ because there’s so much information in there). Let me just read what they say….
‘Having considered the feedback, the review considers that prescribing a standard form agreement in legislation at this point, may not be necessary.’ It notes that the PSA (the Property Services Act), ‘does not impose standard form agency agreements on other agents regulated under that Act (real estate agents and stock and station agents). There are other ways to improve the regulation of contractual arrangements. Moreover, based on the feedback received, it appears that the key driver for much of the support for standard agreements, is a concern with what are perceived to be unfair clauses in some strata management agreements.’ Looking at the stakeholders, the Law Society, Pica, the strata management company; they were the people quoted. There’s the ACSL and the UDIA and I have no idea who those people are; I will dig it out…

Sue  04:37

The UDIA are the development people.

Jimmy  04:40

They’re developers?

Sue  04:41

Yes.

Jimmy  04:41

Okay. Who’s ACSL?

Sue  04:43

Urban Development…

Jimmy  04:44

Institute of Australia?

Sue  04:45

Yes.

Jimmy  04:46

And ACSL?

Sue  04:47

I have no idea what that is.

Jimmy  04:49

We’ll find that out; it will be in the show notes for this. The recommendation, at the end of all this, is ‘the inclusion of additional mandatory or prohibited terms for strata management agency agreements should be considered, as part of the remake of the Property and Stock Agents Regulation in 2022.’ They’re already going to revive the Property and Stock Agents Regulations.

Sue  05:13

So, they’re looking at maybe, cutting out those unfair clauses, later on?

Jimmy  05:17

Yes, maybe, but here’s the thing (and this stuck out for me); they note that the Property Services Agency Act does not impose standard form agency agreements on other agents, regulated under that Act… What is the Residential Tenancies, then?

Sue  05:35

Yes! Does that come under that Act?

Jimmy  05:38

They’re real estate agents.

Sue  05:40

Oh, yes, you’re right! Oh, gosh, you’ve gone through 139 and you found a mistake!

Jimmy

A big hole! A big, giant, messy, stinky, hole. I’m sure they would say “oh, no; the Residential Tenancy Agreement is between landlords and tenants… It’s not between real estate agents and tenants.”

Sue

Yes, but it’s looked after by real estate agents, isn’t it?

Jimmy  06:04

That’s what I would be saying. I would be saying “come on, just let’s stop messing around!” From past experience, when they sit down to discuss ‘what clauses will we have in the Agreement, and what clauses will we not have in the Agreement,’ it’s all going to get watered down and whittled down and guess who’s going to suffer at the end of it? Strata owners, of course. But look, there is the promise of progress, so let us not be negative and there is another option open to strata owners and that is Owners Corporations. The OCN, the Owners Corporation Network, who have been working on this for years, have decided the best way to deal with this in the interim, is to provide a kit to strata committees, so that they can go into a negotiation with their strata managers, and say “we don’t want that clause. Take it out.”

Sue  07:02

 That’s a great idea.

Jimmy  07:03

“And put this one in, instead.” Now in the past, what has happened (as we’ve said), the strata managers will go “no, we’re not changing anything. It’s take it or leave it.” Obviously, if you are an Owners Corporation in a building with 150 or 200 units, you’ve got a lot of power; financial power.

Sue  07:21

And as well, with the OCN getting involved, their members can go back to them and say “this strata management company refused to budge, so we’ve gone to this strata management company…”

Jimmy  07:31

Because they were reasonable.

Sue  07:32

Yes. “They were open to what we were saying,” so then the OCN convers, “well, this group is saying ‘yes,’ this group is saying ‘no,'” so it maybe, spreads the load a little bit.

Jimmy  07:42

And that’s for the smaller strata schemes, especially if you’ve got a 12 or 20-unit strata scheme, and you go to your strata manager and say “I want to change it,” they’ll just say “no” and you have no power. But, if you are part of a consumer movement, where some smart strata manager has said “hang on, we’ve got all these unhappy people here who just want a reasonable deal… Let’s go along with this OCN thing and we can get more customers; we can just hoover up all those small strata schemes.” But you know, the big strata managers and the big strata schemes, they’re the ones who will be bashing heads, come September, when they’re going to review the Legislation. The Owners Corporation Network (ocn.org.au); I think it’s $65 to join. Once you’ve joined, you’ve got access not just to this kit (which they will provide for free), but they will also put you in touch with other Owners Corporations, who can support and assist and advise. So, that’s something to look forward to. When we come back, we’re going to talk about (briefly), the new Property Services Commissioner.

[MUSIC]

Jimmy

Also, while I was digging around, looking for stuff to write about, over Christmas and New Year, I found the original documents, setting up and proposing the appointment of a Property Services Commissioner. His name is John Minns; he’s is now in place and we bumped into him at a strata management function. He seems like a very nice chap. I hadn’t realised;  see what happened was they set up the Property Services Committee Council Panel (I think they’re calling it), and they’ve got everybody… They’ve got the sheep shearers (or whatever they call them), they’ve got…

Sue  09:39

The station owners.  So they’ve got everybody who’s remotely connected with property, including real estate agents and strata managers and people like that.  Except, owners!

Jimmy  09:50

 Apartment owners and house owners and tenants are also not..

Sue  09:56

So the main group; the users of the service, are not included? Really?

Jimmy  10:00

It says strata is one of his responsibilities. Now, we’ve been going on for ages, saying, “why don’t we have a Strata Commissioner?”

Sue  10:00

No, and we pointed this out at the time.  I remember getting the same reaction from both the OCN and the Tenant’s Union, which was “we really don’t need to sit on any more committees, but we should be on this one.” So, then along comes the appointment of John Minze as Property Services Commissioner. I’ve just realised, after digging through all this stuff that they send out, that he is a Commissioner for Strata. And we’ve got one; we just never knew!

Jimmy  10:41

He just sneaked in.

Sue  10:42

That poor man, if he’s listening to this now! Well, let’s hope he isn’t, because we’re going to try and get him in and have a chat to him, in a few weeks.  That’ll be a good idea. 

Jimmy  10:53

Look, it’s a big remit.. I noticed that our new Fair Trading Minister was active over the weekend, handing out money to small businesses who have suffered during the pandemic (which is great, it’s fine, it’s terrific); but you think, we already have people not focused on strata at all and now, we’ve given somebody even more to think about, apart from Fair Trading and the broken toys, and dodgy mechanics, and strata. Maybe, the Property Services Commissioner is going to quietly take all that stuff away and deal with it.

Sue  11:30

That will be interesting.

Jimmy  11:31

It’ll be very interesting.

Sue  11:32

I look forward to talking to him.

Jimmy  11:34

I look forward to the huge shit-fight that there will be at Fair Trading, when some of the ‘mandarins’ feel that they’re having their power diminished. It would be worthy of a whole season of ‘Yes, Minister,’ that one. It’s a big job; it’s a challenging job. I was just reading today, that property prices and rents are going up at the same time, so people who are stuck trying to find affordable homes, are even more stuck. Somebody made the very valid point, that the Australian Defence Force provides housing for their staff… That housing comes from the normal housing stock. You or I could hand over an apartment to the Defence Force, and they would manage it and we will be guaranteed rent and the rent is kept down and it’s a great thing. Somebody was saying “well, what about the frontline workers, like nurses, police officers and teachers; people like that? Shouldn’t we have a similar setup for them, where there’s an agency that will take in your rental property, guarantee rent and subsidise it for the people who need to be living in the areas where people are?”

Sue  12:47

That’s a really good idea! It’s another way of social housing, isn’t it really? So if you own a property, you can put it into that and kind of feel like you’re doing some good as well. And you get your returns and you get your tax benefits.  It’s like investing in NDIS housing as well, for exactly the same reason… You kind of get that feel-good feeling as well; that you’re doing some good with your property, too.

Jimmy  13:13

It’d be a terrific thing and it would overcome the one thing that you cannot do, which is advertise your house for rent, or your apartment for rent and say “I will only accept applications from teachers, or nurses or police officers.” I think it’s a really good idea. Somebody suggested it, and these ideas get floated and they get picked up and I mean, who doesn’t want to help out our frontline workers, especially after the last two years that we’ve had? When we come back, we’re going to go north of the border. We’re taking advantage of the open borders, to go and find out what’s happening in Queensland. It’s all about pets and doormats.

[MUSIC]

Jimmy

Every so often, I get an email from the Unit Owners Association of Queensland, about stuff that’s going on up there, which never fails to amuse and surprise.

Sue  14:14

It’s always a bit left-field, isn’t it really, the stuff there?

Jimmy  14:17

This particular one refers to two separate apartment blocks, but they’re close to each other, somewhere on the coast and both have gone to the Tribunal there. One of them was about doormats outside the doors of apartments. Now, we kind of feel like we’ve been through all that here in in New South Wales, ages ago and the general opinion was, you cannot leave doormats outside the front door of your apartment, because there’s a fire risk; people might trip over it. That was the argument that was used, in this case. Where, in the building, a lot of people… I don’t know; I might be wrong…. I just imagine all these people are coming home with sand in their shoes and they want to brush them off.

Sue  15:07

That’s reasonable.

Jimmy  15:08

Yes, so a whole bunch of people had doormats outside their doors. The Body Corporate (because that’s what it’s called in Queensland), said “you’ve got to get rid of them” and most people did, but about 12 people said “no, we want to have doormats.” Then the breach notices came out, and they’re full of things like ‘the doormats could move in a breeze and fold up and trip somebody up.’ There was one resident who was a bit unsteady on her feet, who worried about having to walk over doormats and then the member of the Tribunal said that the Body Corporate does not own common property; the owners who are in the Body Corporate, own the common property. So, there’s a limit to what the Body Corporate can tell owners to do, on common property.

Sue  15:09

That’s weird, isn’t it? I mean, the owners are the Owners Corporation. How do you distinguish between the two, like that? Well, I think basically what they’re saying is that the Body Corporate can look after, or control common property, insofar as it affects the Body Corporate, but the owners own that piece of ground; that piece of land, outside their door. It doesn’t affect anyone else. That’s very interesting, isn’t it? I wonder if that will be the same interpretation in New South Wales and Victoria?

Jimmy  16:40

Absolutely not, no way. But, these people were told to remove their doormats, their pot plants, their shoe racks and all artworks, or furniture.

Sue  16:57

Oh, no!

Jimmy  16:57

So you think about this place, where the lift lobbies are all identical; they’re stark, they’re empty and you think, really? I think it’s a nice idea and I know we’ve never got around to it, but other people in our building have. You open the lift door and there’s a nice table and a nice piece of art on the wall and you think “yeah, I’m home.” Even though this is a shared lift lobby, I feel like the lift doors have opened and I’m home. They just want everything to look exactly the same, like a hospital or a prison, or something like that. So, that’s one thing and then the other one that’s come up, I think it’s a 15 or 20-storey apartment block, where pet owners have been told they’ve got to take their pets down the fire stairs.

Sue  17:53

 Not to be allowed in the lifts?

Jimmy  17:55

Because there is a resident of this building, who apparently is very sensitive; allergic to pet hair, so to remove the chance of that resident coming into contact with a pet, or pets, they have to go down the fire stairs and come up them.

Sue  18:11

Is there only one lift?

Jimmy  18:13

I don’t know.

Sue  18:13

Because if there were two lifts, you can understand people saying “okay, if you have a pet, just go in the left lift, or just go in the right lift;” that would make sense. But, to make people walk with their pets, up 12 or 15 flights of stairs? That’s absolutely crazy!

Jimmy  18:29

 Ludicrous.

Sue  18:30

I mean, the person, obviously; one feels very sympathetic to anybody who has an allergy… And allergies are real.  Yes, but could they get an N95 mask? I mean, we’ve all got them… Well, we’re looking for them at the moment, but we’re all going to end up with them, I suppose, when the government finally imports them and gets them through the TGA and… And the supply chain networks. But you’d think an N45 or N44, P2 masks should be… I mean, that’s hospital grade, so that should be good enough.

Jimmy  19:06

If I were on that committee, I’d be saying “look, let’s establish a protocol. If you have got a pet and you’re about to get in the same lift as a person, anyone can say “would you mind not getting in?”

Sue  19:18

Yes, sure, of course. But you know, if you have an elderly lady living on the top floor, with a chihuahua…

Jimmy  19:24

Or, a doberman…

Sue  19:28

I mean, how is she going to get up there? Probably, a chihuahua wouldn’t cope with the steps…

Jimmy  19:30

There’s a suspicion that this is an anti-pet movement, rather than a ‘pro-resident with allergy thing.’

Sue  19:34

Sure and maybe, we shouldn’t actually publicise it, because there may be copycats in New South Wales and Victoria, who want to not have pets, for non-genuine reasons; who kind of see that as a way of getting around the new Regulations. 

Jimmy

People are trying that all the time and they’re coming up against the thing where, you know, they’re telling people “you’ve got to do this, you’ve got to do that.” There were people who were going “nope, I’m not following your rule, because the law has changed,” and they’re getting breach notices, and then the Owners Corporation sit down with their lawyers, and their lawyers say “if we go to NCAT on this, you will probably lose and it will cost you a lot of money. So, just don’t.” You might think you’ve found some clever ‘Rumpole of the Bailey’ way of working this in your favour, but there are certain fundamental things… If you’re allowed to have a pet in your apartment, then you cannot be prevented from gaining access to your apartment, with your pet. It’s not written out in those words, but if you put the Regulations and the Act together (various bits of it,) that’s what it comes down to. Even if that’s not 100% true, it’s a very strong argument against forcing people to walk up and down stairwells, carrying their Alsatians. When we come back, we’re going to have a very quick chat about a project, related to electric vehicles. That’s after this.

[MUSIC]

Sue

I did a story about electric vehicles in strata buildings and how lots of strata are now kind of rushing to include the charge points for electric vehicles, because lots of their residents now, are wanting to get electric vehicles, even if they haven’t got them yet. I got an email from a company called Strata Answers (which happens to be one of our sponsors). But just apart from that, they’re kind of an advice service for apartment owners and renters and they said they’re actually putting together a project, where they look at EV ownership and EV charging options and then they’re talking to different areas of government; local councils and state government. If they can provide all the information that apartment buildings need to make the right decisions about EV charging stations and the right solutions for them, then that could be a real advantage to the buildings and also, a boon to the environment; a really green move.

Jimmy  22:27

Now, from what I understand at the moment, what they want is to hear the experience of people who want to put the electric vehicle charging in, or have already done it, or have come up against problems. Because I think Strata Answers are very much about real-world experience, and applying information and common sense to problems that sometimes, get away from us a little bit, especially if there’s different information around. I think at the moment, they are gathering together as much information as they can. We will have a link on the show notes, that go with this podcast to them. Strata Answers have got an ad on the website, anyway. But look, if anybody wants to talk to them about their experience with electric vehicle infrastructure, then I’m sure they’d be really happy to talk to them. Alright, we’ve covered everything. We’ve covered politics, we’ve covered Regulations, we’ve covered pets, saving the environment, doormats; everything… Everything you could possibly ever want to know, about living in apartments, it’s all right here, on Flat Chat Wrap. It’s really hot in this room! I’m going to try and filter it out, but  if you’ve been hearing a faint whirring sound, it’s our fans going full blast here, to try and keep us cool. It’s a choice between the noise from the outside and the heat on the inside and on that note, I think we should probably go Thank you, Sue.

Sue  24:06

Thanks, Jimmy.

Jimmy  24:07

And, we’ll talk to you all again soon. Thanks for listening, bye.

[MUSIC]

Jimmy

Thanks for listening to the Flat Chat Wrap podcast. You’ll find links to the stories and other references on our website flatchat.com.au. And if you haven’t already done so, you can subscribe to this podcast completely free on Apple podcasts, Google podcasts, Spotify, Stitcher, or your favourite podcatcher. Just search for Flat Chat Wrap with a W, click on subscribe and you’ll get this podcast every week, without even trying. Thanks again. Talk to you again next week.

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