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  • #10694
    TrulEConcerned
    Flatchatter

      At a recent AGM, the majority of owners decided to repair a balcony.

      1. REPAIRS

      The balcony is leaking.

      The balcony is not common property.

      Presumably, regardless of ownership, the leaks have to be fixed.

      (a) Can the EC merely present 2 quotes – for a gold plated repair job costing approx $6,000 per lot owner – to the OC?

      (b) Can my request for an independent engineer/plumber/handyman etc to establish the actual (not assumed) cause of the leaks (and who will not be enriching himself by both diagnosing and doing the repairs) be rejected? (Note in this strata most folk are old and are easily led. Sweet music to the EC).

      (c) If originally the balcony was erected with tiles assuming the role of a membrane, must the OC NOW lay down a new membrane (as is being demanded by interested parties) or can it limit its responsibility to fixing the leaks, perhaps by cheaper means?

      2. COMPENSATION

      The owner of the balcony sought and was granted compensation by the OC for “inconvenience” to him while the balcony repairs take place. Is this legal? And if so, is their a limit to what he the OC can pay him?

      Please advise. Thank you.

    Viewing 15 replies - 1 through 15 (of 22 total)
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    • #25646
      Jimmy-T
      Keymaster

        Are you sure the balcony is not common property.  If so, why is the Owners Corp fixing it?

        The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
        #25656
        TrulEConcerned
        Flatchatter
        Chat-starter

          Thanks for your feedback.

          The strata plan clearly shows the balcony as part of the lot. Most lots have balconies and all are part of the respective lots.

          You ask why the OC is paying for the repairs? I suspect because he doesn’t want to pay for the repairs himself and not only is he on the EC, so are his mates.

          #25736

          That’s strange. Balconies are typically part of common property.  When was your building constructed and when was the Strata Plan registered?  

          It would seem sensible to have an independent Engineer Consultancy Company investigate and write a scope of works.  Once the scope of works have been written, they will tender the work to 3 or 4 contractors.  The Strata Committee can then decide which contractor they will choose.  All transparent, all independent, and clear to all owners that a diligent process has been followed.

          The engineer consultancy will cost around 8 % of the cost of the works, but they may save you much more by ensuring you have a competitive tender and quality assurance.  They will also be the on-site works supervisor to ensure the work meets BCA and AS throughout each phase (demolition/removal of tiles etc, waterproofing, resurfacing…).  It takes stress out of refurbishment or repair work.

          I’ve seen the headaches and over spends that occur when Strata Committees try to project manage common property works.  There are always one or two ‘experts’ on the Strata Committee that think they know best, and want to help save the owners corporation money.  But, their knowledge shortcomings get found out by the owners corporation in the form of excessive costs, draining sinking funds dry or requiring special levies.

          As I understand it, unlike large strata schemes (greater than 100 lots), the committee on small schemes in NSW have no spending limits and don’t need to get more than one quote, unless there are special restrictions placed on the committee at a General Meeting.  Best to ensure a clear process has been executed.

          #25740
          scotlandx
          Strataguru

            I am baffled as to why the owner is being paid money for “inconvenience”.  In some circumstances where an owner can prove a financial loss or cost incurred due to works etc., it may be appropriate that the OC pay an amount (there have been cases where an owner has been awarded financial compensation, those cases are generally pretty extreme).

            However – the owner has to prove that they have or will suffer a financial loss or incurred a cost.  Inconvenience of itself is not compensable.  For example, if the repairs are confined to the balcony and the owner can use the rest of their apartment, then why should they be paid compensation?

            I am about to have several of the ceilings replaced in my apartment, which is being paid for by insurance held by the OC.  I am not claiming money from the OC for the inconvenience to me in having the work done (which is considerable), I just want the work done.

            The EC is spending the Owners Corporation’s money.  It is not their money.  They have a duty to spend that money appropriately.

            This leads on to the next question which has already been asked – if the balcony is not common property why is the OC paying for the repairs to it?  If it is the case that the balcony is the owner’s property, the OC is not liable for the repairs, and they certainly shouldn’t be paying any money for a vague concept of inconvenience.

            If it were me I would be making an application for an order to stop the OC proceeding with the works or any payment to the owner.

            #25741
            TrulEConcerned
            Flatchatter
            Chat-starter

              WilliamW

              You make sense when you wrote, “it would seem sensible to have an independent and transparent Engineer Consultancy Company investigate and write a scope of works. Once the scope of works has been written, they will tender the work to 3 or 4 contractors. The Strata Committee can then decide which contractor they will choose”.

              I mentioned a similar opinion to one EC member and he seemed agreeable. But soon after he was clearly influenced by two EC members who benefit from the OC paying for the repairs of one lot’s balcony. These EC members convinced the “independent” EC member that the balcony is common property (which worries me a bit) and that the damage sustained is to be repaired at OC’s cost (this worries me more as it has not been proved). It is the absence of a report from an independent authority on the alleged damage that I find most objectionable.

              I then asked the “independent” EC member that we need to have an EC meeting and I will table one item to discuss:

              Would the EC please advise (a) who owns the balcony in question? The lot owner or the OC? And (b) why was the leaking not subject to an independent investigation instead of asking tillers and concreters to quote for a gold plated job?

              The “independent” member does not want to ‘rock the boat’ and said he will ask the others about this, but doesn’t want it in writing. He said he “will not push for  meeting to discuss this if I am convinced that the EC members are genuine”.

              It amazes me how easy it is to dupe some people.

              I agree that most often balconies are part of common property, but when I asked my solicitor to investigate this issue, he confirmed that the lot connected to the balcony owns the balcony. This is clear on the strata map.

              The SP was registered in 1983.

              #25742
              TrulEConcerned
              Flatchatter
              Chat-starter

                Hey scotlandx

                You ask why the chap asked and will receive compensation. Simple: he claims that his tenants will be inconvenienced with tradies coming and going through his lot to fix an OC asset (the balcony). I didn’t buy that argument, because

                a) there is nothing in the Act about such payment;

                b) he wants to be paid the number of weeks allegedly inconvenienced multiplied by the weekly rent. That is, he wants to tell the OC how long the work took place AND wants the weekly rent paid by the OC for the period the works take placeH

                c) He says that he will need to offer some compensation to his tenants and (with his EC pal) insists the OC to pay for that

                d) He forgets to remind the OC that he is adding furniture to the balcony, which in due course will be enjoyed by his tenants and that a small inconvenience (without he rent being compensated) is reasonable. To have the OC pay for repairs on the balcony and to allow him to add furniture to the balcony allowing him to raise his rent while his tenants’ alleged inconvenience is compensated by the OC is something I find objectionable.

                e) He refused a transparent investigation into the source of the leaks.

                f) I did not carry on with my objections because my view is irrelevant when there are 5 lots in all and 4 are on the EC. Guess who was not asked to join the EC?

                 

                You say that you would complain and seek an order to stop the works. My question is: how would Fair Trading or NCAT consider the matter if 4 out of 5 owners agree to the payment, even if it’s not in the Act.

                 

                I ask because, let’s say that the OC can do whatever it wants if it has the numbers, what is to stop an OC compensating an owner a limitless sum?

                #25744
                Jimmy-T
                Keymaster


                  @TruleEConcerned
                  said:
                  I did not carry on with my objections because my view is irrelevant when there are 5 lots in all and 4 are on the EC. Guess who was not asked to join the EC?

                  You say that you would complain and seek an order to stop the works. My question is: how would Fair Trading or NCAT consider the matter if 4 out of 5 owners agree to the payment, even if it’s not in the Act.

                  That is exactly what NCAT is for – to stand up for the law and individuals who are being unfairly treated by those who ignore it to their own advantage. It doesn’t matter if it’s 4 to 1, or 400 to 1, if they are in the wrong and you are in the right then NCAT should find in your favour.

                  ScotlandX has given excellent advice. But if you really just wanted to vent your frustration but not actually do anything, that’s your prerogative

                  The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
                  #25761
                  scotlandx
                  Strataguru

                    As Jimmy has said, it doesn’t matter how many people decide something, if it is illegal or contravenes legislation, or even in some cases cuts across someone’s rights then it can’t/shouldn’t proceed.  

                    The other owners could resolve to remove my front door – that doesn’t mean they can actually remove my front door.

                    1. Threshold question – is the balcony common property or is it on the owner’s title?  If it is not common property then the OC should not be paying for it at all, and you have a good case for seeking an order to stop it.

                    2. If the balcony were common property and an owner was seeking compensation for purported loss or costs incurred due to works, the owner would have to quantify that loss, or provide evidence of those costs.  If the owner were to claim for loss/reduction of rent, they would have to provide evidence of that, e.g. agreement with the tenants, in writing.  It is then up to the OC to determine whether they believe it is appropriate to pay the owner anything.    

                    The reduction would also have to be reasonable taking into account a range of factors including the size of the balcony relative to the apartment and the inconvenience (if any) to the tenants.

                    If an OC is responsible for carrying out repairs they have full control of those works, including any investigation and obtaining reports etc., following through to determining scope of works etc.  If it is the OC’s money then it should not rely on reports of the owner.  Note that the OC has the right to enter the premises to carry out repairs.

                    #25769
                    TrulEConcerned
                    Flatchatter
                    Chat-starter

                      Jimmy

                      Thanks for your advice.

                      I am not here to vent my anger but to get some idea how to stop the EC. In a way that doesn’t cost too much and gives me reasonable chance of success.

                      For your reference, last year I took the OC to NCAT because as a member of the EC, I was denied time and time again access to the financial records and to the transaction a/c bank statements. The exercise of applying for a s.162 (compulsory manager) cost me $300 or so and was dismissed by NCAT.

                      None of the 4 EC members were concerned with the lack of transparency. Only I was. I asked under s.105 and then under s.108 (as Fair Trading suggested)  to see who was in arrears and to what extent. (I am still waiting for that information).

                      At NCAT  I also wanted to see how many instances of unauthorised spending took place. In my application to NCAT I identified at least 2 instances. (In addition, some years ago, one office bearer was found to have used OC money to pay for another lot’s kitchen stove, when that should have been paid by the relevant lot owner himself. I still have a copy of the invoice he paid and the butt of the cheque he drew.  I recently asked the managing agent but neither the agent, nor the EC member who spent OC funds on a kitchen stove – and is still on the EC – has confirmed that the money was repaid the OC).

                      After my NCAT application and appeal I was given access to the strata’s records but mysteriously the papers I wanted were unavailable.

                      As you know, the s162 order to have an agent manage the strata without reference to the EC meant written submissions and not a hearing was the modus operandi. My submission (and subsequent appeals) were rejected by NCAT because the OC in its response undertook that I would get access to what I wanted.

                      That was 10/2015 and still to date I have not received the papers I want to see.

                      The 2015 AGM agenda and minutes did not include what I thought was mandatory: the lot balance reports.

                      At the 2016 AGM held recently, neither the agenda nor minutes included the lot balance reports. And last week I chased those reports up. You guessed right…no response from the managing agent.

                      Thanks for pointing out ScotlandX’s reply. I will look at it.

                      #25772
                      TrulEConcerned
                      Flatchatter
                      Chat-starter

                        ScotlandX

                        Thanks for the reply.

                        I will think through your suggestions. Meanwhile, I want to clarify:

                        A) The ownership of the balcony: my solicitor says it is part of the lot and is not common property. This is clear from the strata map.

                        B) As to who should pay to fix the leaks and the compensation, the crux of my argument, let me enlighten you about the dynamics of the strata, which (regardless of the law) seems to be dictating who the EC wants to pay:

                        There are 5 lots:

                        (1) Chairman (2) Me (3) Secretary (4) Former Treasurer (5) New Treasurer

                        Until recently there were 4 EC members (1), (3), (4) and (5).

                        Now there are 3 EC members (1), (3) and (5).

                        The balcony belongs to (5) who is friendly with (3). (3) is also friendly with (4).

                        As an aside: For your guidance, (3) and (4) used to manage the strata before we got an external agent. The impetus in 2004 to appoint the external strata agent was because the OC discovered that some years earlier (3) spent OC funds without approval on a kitchen stove in (5). I recently asked if the funds taken were repaid to the OC and was told by (3) that records are kept for only 5 years. I can only infer that he did not repay.

                        Regarding the $25,000 works on the balcony that may have started already as well as the $5,000 rent compensation, (3) and (5) did NOT obtain independent advice on what needs to be done on the balcony. They obtained advice from parties with a conflict of interest.

                        Tradesmen were approached.

                        Two quotes to fix what the tradesmen think needs to be done. Or were told by (3) and (5) to be done. Who knows? The quotes which were shown at the AGM are in the main for the laying of a membrane on the balcony. (I understand that no membrane was ever laid when the building was erected in the early 1980s).

                        So you see, you’re right. The EC should have engaged an independent person to diagnose the problem and prescribe a solution, which would be put to tender, instead the EC it seems hired contractors and told them what they wanted. Regardless of whether the job could have been fixed for a fraction of the $25,000 quoted. And that assumes the problem in the privately owned balcony stems from a common property source.

                        #25773
                        scotlandx
                        Strataguru

                          If the balcony is not common property the other matters such as independent advice are irrelevant, so I suggest you get a definitive answer on that.  Good luck.

                          #25774
                          Lady Penelope
                          Strataguru

                            In most strata schemes, the lot owner owns the inside of the unit but not the main structure of the building.

                            The balcony may be on the lot Title but if it a structural part of the building then its structure will be common property. Balconies in multi storey buildings are part of the slab between the Floors therefore would be structural.

                            The basic rule is that everything inside the airspace of the unit, including all internal walls, fixtures, carpet and paint on the walls is usually the lot and therefore the responsibility of the lot owner.

                            The following is a checklist for common property (from NSW Office of Fair Trading):

                            • floor includes a ramp or stairway
                            • boundary wall includes any door, window or other structure within the wall and their working parts
                            • ceramic tiles originally attached to a common property surface (eg. the floor or boundary wall)
                            • pipes in the common property or servicing more than one lot
                            • electrical wiring in the common property or servicing more than one lot
                            • parquet and floor boards originally installed
                            • vermiculite ceilings, plaster ceilings and cornices
                            • magnesite finish on the floor
                            • balcony doors are usually common property if the strata plan was registered after 1 July 1974
                            • the slab dividing two storeys of the same lot or one storey from an open space roof area or garden areas of a lot (eg. a townhouse or villa), is usually common property if the strata plan was registered after 1 July 1974, unless the registered strata plan says it is not.

                            For more information on common property in strata plans that were registered before 1 July 1974, please visit the Land and Property Information website at: http://www.lpi.nsw.gov.au

                            I would investigate whether the Owner of the balcony contributed in any way to the leak in the balcony. If the lot Owner has interfered with the membrane in some way such as by piercing it then the Lot Owner would be Contributory Negligent and should pay a proportion of the repair.

                            See here for NSW Office of Fair Trading opinion on balcony ownership:

                            https://www.fairtrading.nsw.gov.au/ftw/Tenants_and_home_owners/Strata_schemes/Repairs_and_maintenance.page

                            #25776
                            TrulEConcerned
                            Flatchatter
                            Chat-starter

                              Hi ScotlandX

                              Thanks for your reply. Sorry for the numerous emails, but I really want (from you and Jimmy) all the ammunition I can have to go to NCAT, ideally with 1 other owner and have a chance to win. If I go alone to NCAT, NCAT and the strata mgr may reasonably consider me as a pest when really I alone want the EC’s conduct to be transparent.

                              In your email, by “definitive” I assume you mean to definitively know

                              a) who owns the balcony and

                              b) what the problem is that has created the leaks from the balcony.

                              a) There is no doubt in my solicitor’s mind the balcony belongs to the lot. This is clear from the strata map which lists the lot area as including the balcony’s area.

                              b) I recently asked the Chair to support me by demanding an Extraordinary General Meeting and at such a meeting to insist on an independent investigation into the leaks. One idea of mine is to hire an engineer to investigate. Another idea is to get a plumber to subject the balcony to a pressure and or a dye test which would prove where the water leaks came from.

                              Before agreeing to consider my request, the Chairman discussed the matter with the Sec. and Tsr and instead of defending the OC, she surrendered to lies and half truths. She came away from meeting them, telling me “they say the balcony is common property even though you say it isn’t.” Note, no proof was given to her that it is common, unlike me who explained to her what the solicitor told me about how strata plans are read. She could not explain to me the reasons the others had for refusing an independent assessment of the leaks.

                              I always thought that if the leaks are from within the concrete slab (which is common property) it could be argued that the OC should pay for repairs or restoration. But (i) no independent person, in fact no person at all stated where the leaks came from. Hence I doubt they arise from common property. Also, if we NOW hire an independent person, who is to say the balcony has not been tampered with by special interests so as to exacerbate the leakage?; (b) even if an independent person confirmed the leaks arose from common property, surely the OC does not have to supply the lot owner with a membrane where none was previously supplied. Surely the OC’s liability, if there is one, is to ensure the leaks stop. Any economical way we can.

                              In conversation with me the Chair was dead against the $5000 in rent compensation which the OC (not me) voted for at the Sept 2016 AGM, she has caved in on that as well. I told her Fair Trading thought it “odd” that such compensation is to be paid.

                              #25777
                              Lady Penelope
                              Strataguru

                                Maybe this comment below could provide a cheaper option than $25K and will save the rental inconvenience? Also check whether the building insurance will cover the rental inconvenience.

                                See this solution from another forum re leaking balconies and lack of a membrane: 

                                Have just found this thread but wanted to confirm that Megasealed definitely do external areas including outdoor balconies as well as bathrooms. They completely seal over the top of the tiles so no water can penetrate. Visit the website for more information.

                                #25778
                                scotlandx
                                Strataguru

                                  No that is not what I said – I have now twice said that your threshold question is whether or not the balcony, including the slab and the membrane, is common property or if it forms part of the lot.  That then determines if the OC is responsible for any repairs or the owner.

                                  I don’t know if your solicitor is an expert on strata, but you need to get an answer to that question before you start worrying about what the problem is with the balcony.  If your solicitor is not a strata expert I strongly suggest you seek advice from an expert.

                                  It doesn’t matter if you seek an order by yourself or with another person, if you are right then you have grounds to seek an order.

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