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  • #67797
    Erte
    Flatchatter

      THE CONTEXT: A 6-unit strata building in NSW. It’s over 80 years old and for the past few years has been in increasingly urgent need of a roof replacement.

      THE STORY SO FAR: The need for the roof replacement became apparent in early 2020, but the pandemic complicated and delayed the process. Finally, in early 2022, a work order for a full roof replacement was issued to the winning bidder, who promptly failed to actually schedule the work and who has been unresponsive to emailed follow-ups from our strata manager. (And yes, shame on us, the OC, for not following up more assiduously. One factor might be that the two apartments on the top floor, and therefore most directly affected by roof leaks, are tenanted rather than owner-occupied.)

      Today, our strata management company recommended we abandon the original plan and start over: obtaining new quotes and issuing a new work order to a new company. This seems like an excellent idea.

      In addition, at some point this week, prior to this recommendation, one of the lower floor units was announced as sold. (We’ve been aware for a month that the apartment was up for sale; my source re news of the sale itself is the selling agent’s website.)

      As part of the process a year ago, we raised a special levy to help cover the cost of the complete roof replacement. Now it appears we’ll be starting over from scratch with new bids and it’s almost certain that the original special levy won’t be sufficient to cover the cost of the new quote. So another special levy is in store for us…

      THE QUESTION(S): What would be the obligations for the new owner? Would they be liable for their approx. 1/6th share of any new levy that might need to be raised? Or does the fact that, technically, it’s a work in “progress”, exempt them from responsibility since it predates their acquisition of the unit? (Meaning that any new levy would need to be split five ways – not a pleasant prospect.) And/or does the selling owner have any lingering financial responsibilities in a scenario like this?

      • This topic was modified 1 year, 6 months ago by .
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    • #67817
      kaindub
      Flatchatter

        The new owner is responsible for any special levies passed and not collected yet, and any future special levies.

        You are worrying unduly. Just treat it as if the unit was never sold. It’s up to the solicitor of the buyer to negotiate any monetary differences at the time of sale.

        #67815
        Flame Tree (Qld)
        Flatchatter

          Hi, I think you will find that due to no work starting after the first special levy you have essentially gone no where so are free to ditch the last bloke, who has done nothing by the sounds of it so should have no claim, and restart with a new bloke at a new price, if not spec of works required. You might need to vote on the new blokes works and cost to get it all official. The incoming new owner won’t be up for the money the former owner already contributed, but will be required to stump up for anything further – which was collected for the roof now, but they will be for whatever comes next whenever that may be. The incoming owner’s conveyancing solicitor should have picked up on anything of note but if it is as you have explained it the new buyer was made aware of thus or was felt not needed to be, and on we all go.

          #67986
          Erte
          Flatchatter
          Chat-starter

            Thank you kaindub and Flame Tree. I had a feeling I might be worrying unduly, as you say, but it was a scenario I’d not encountered before.

            #68029
            86_strata
            Flatchatter

              Reply from Victoria.  It seems to be the same down here too re: new owner takes on any special levies declared after the date of sale as detailed on the contract of sale.  The seller is liable for normal levies up to the date of settlement, and the seller is also liable for their backdated portion of a declared increase in normal levies if those are declared as ‘smoothed over the year’ as opposed to just a simple increase from a fixed date.  A conveyancer or solicitor will sort it out for the buyers and sellers, and there is absolutely zero need for any other owners to worry.

              #68185
              Erte
              Flatchatter
              Chat-starter

                An update: our contact at our strata management company (who has admitted to me on the phone that they are “new to strata”) is providing advice that doesn’t make sense to me. They are insisting that the roof replacement is a “pre-existing matter” and that the new owners of the unit “are not required to contribute or be involved” for that reason. [That could be ambiguous, but in the context I’m interpreting contribute as “contribute funds”.]

                As has been pointed out, much may depend on the date of settlement (if six weeks after sale it’s probably imminent) and how that aligns with our current decision-making (quotes have been received for consideration, we will shortly need to work what new special levy will need to be raised, so also imminent). Given past experience with the speed at which our SC moves, the levy discussion will likely follow settlement, so – for the sake of discussion – let’s say the new owners would be installed.

                Given that, I can’t see how it would be right for the cost of the roof to be split between five owners rather than six, which is what the strata manager seems to be saying, simply because the roof’s bad state of repair was known prior to the sale and the process of having it replaced (but not the work itself) had begun.

                I would have thought that, if a new special levy needs to be raised – post settlement of the sold unit – that the new owners would need to contribute their share. (And if pre-settlement, then the previous owners would be contributing.) I can’t imagine a scenario where it would be appropriate for that levy to be split only five ways. The fact that the roof was in need of replacement at the time of sale (“pre-existing matter”?) or that we’d attempted to take action on the matter would surely not be relevant, especially since we are effectively starting over. Am I wrong to think this?

                I’d like to go back to the strata manager, or perhaps their senior manager, for clarification. My gut feeling is that “new-to-strata” person has misunderstood or even just explained things poorly. But I’d like be better prepared for such a discussion.

                Is there a published source to which I can refer that covers this kind of thing? Or a recommended source of alternative advice?

                [Background summary: Roof in need of replacement. Quotes sought, work order issued, additional funds raised through special levy over a year ago. Work was never begun or even scheduled. We are now effectively starting over, and have obtained new quotes. The money from the original special levy is sitting in the kitty, earmarked for the roof replacement. Looking at the quotes that have come in, we will almost certainly need to raise additional funds with a new special levy. This will be a decision we’ll likely be taking before the end of April or early May. One of the units was sold in early March. Settlement on that sale may be imminent, i.e. also before the end of April.]

                #68188
                Jimmy-T
                Keymaster

                  This is really very simple.  The principle of caveat emptor – buyer beware – applies. If all these plans have been properly documented in previous minutes, the new owner should know that there is a special levy coming. If they didn’t do a proper strata check, presumably to save money, more fool them. If the vendor deliberately misled them, then the new owner can sue.

                  What cannot happen is that the other owners have to pay more than their fair share because the purchaser was badly informed (unless it was by the owners corp).

                  The manager – are they a building manager or strata manager? – is totally wrong and needs to go back to strata school (if they ever attended). I would put them on notice that any further erroneous advice will be taken as a breach of contract. You shouldn’t have to go searching for advice on what is a very basic question.

                  Charge the new owner their share of the special levy and let them chase legal advice if they feel so inclined.

                  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.
                  • This reply was modified 1 year, 6 months ago by .
                  #68191
                  Erte
                  Flatchatter
                  Chat-starter

                    Well… I’m not sure that the buyers would necessarily have known that a second special levy was coming. We only resolved to start afresh and obtain new quotes early in March. And it was only at that point that we realised we’d need more in the kitty to pay for the replacement and thus a fresh levy. At which point the unit had just been declared sold.

                    Minutes from the EGM in early 2022 would have revealed that a special levy had been raised for the roof replacement (obviously with the previous owner paying their share). I can’t recall offhand if the minutes of the AGM four months later documented that the work hadn’t yet been scheduled. The “paper trail”, such as it is, would be in email correspondence between our strata managers (yes, strata not building) and the members of the SC (all owners, as it’s a small building) rather than the annual meeting minutes.

                    I mean, if a buyer sees evidence of a relatively recent levy for a roof replacement, you’d think they’d enquire as to the status of that job, given that it’s a major work. But it’s possible, I guess, that they might have assumed the work was progress, or at least scheduled, and as a result there would be no obligations on their part. I don’t believe the owners’ corp gave out bad info because we weren’t asked, but of course I don’t know what information may have been sought from our strata management company or what questions were asked of the vendors.

                     

                    #68193
                    Jimmy-T
                    Keymaster

                      The purchaser may well feel aggrieved but that doesn’t mean they have no liability.  It’s up to the vendor to provide accurate information about future liabilities and the purchaser to check through strata records (as far as possible) that this is accurate.

                      The strata scheme has no responsibility for assumptions the purchaser makes, whether they are accurate or not.  There must be some record of the failure to complete the work somewhere. It’s sad for the purchaser but this proves the value of a forensic search of strata records before you buy.

                      If the strata manager has told them that they don’t have to pay, that’s on the strata manager, not the committee.

                      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.
                      • This reply was modified 1 year, 6 months ago by .
                      #68202
                      TrulEConcerned
                      Flatchatter

                        Erte, I agree with Kaindub. Treat the unit as never having been sold or alternatively, sold many times. The liability is attached to the unit regardless of owner or sale.

                        Jimmy suggests that a thorough strata records search be undertaken by the purchaser. I agree. But what happens when either the strata records are missing or shed little or no light on this large body of work? To that Jimmy says: “If the vendor deliberately misled them, then the new owner can sue”. I would go further. Deliberate misleading is a definite no-no, but so is the vendor not sharing all the information at his disposal which would influence a sale.

                        As mentioned, the opinions expressed in this forum are products of experiences of owners or residents in strata schemes. They are personal opinions of layfolk and not legal advice.

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