Flat Chat Strata Forum Living in strata Current Page

  • This topic has 6 replies, 5 voices, and was last updated 4 weeks ago by .
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  • #61635
    peterepete
    Flatchatter

    Hi All,

    major repairs required to Strata building. Weighting up various solutions.

    1 Q : This relates to implementation of a Strata Loan.

    The O.C agrees to cost of repairs. Not all can stump up there share and propose a Strata loan. Some owners are wealthier and would rather pay up front. How is the matter progressed from here ?

    Is the solution that some Owners pay their quarterly Levy plus a  Loan repayment surcharge ?

    Is the belief of a Owner who thinks the sale price of their Lot would be adversely affected whilst a

    Loan is in place, justified ?

    Your input appreciated.

    Peter

     

    • This topic was modified 4 weeks ago by .
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  • #61641
    Jimmy-T
    Keymaster

    major repairs required to Strata building. Weighting up various solutions.

    1 Q : This relates to implementation of a Strata Loan.

    The O.C agrees to cost of repairs. Not all can stump up there share and propose a Strata loan. Some owners are wealthier and would rather pay up front. How is the matter progressed from here ? Is the solution that some Owners pay their quarterly Levy plus a Loan repayment surcharge ?

    This is a vexed question as strata law says that levies have to be charged on the basis of unit entitlements alone. What this means in a case like this is that either everybody pays for the loan or everybody pays a special levy.

    Is the belief of a Owner who thinks the sale price of their Lot would be adversely affected whilst a loan is in place, justified?

    It depends on the owner and prospective purchasers. What might be more off-putting to prospective purchasers would be knowing that work needed to be done and an unspecified special levy was coming down the track.

    Prospective buyers will factor levies into their purchase budgets.  It’s all swings and roundabouts but there are moves in the current review of strata laws to quarantine strata loans from the levies rule to give owners more flexibility and choice.  However, that’s not going to happen overnight.

    #61643
    peterepete
    Flatchatter
    Chat-starter

    Yeah, thanks Jimmy.

    The Strata Loan idea (for some) is now canned. Due to the reasons you highlighted.

    Supplementary Question.

    So, the O.C (4 of us with equal entitlements) reach a consensus as to the total Cost and choice of Contractor/s, and that it will be paid for by a Special Levy.

    Those who stand to be most financially disadvantaged by the amount of their share, argue that the agreed repairs do not require to be undertaken altogether at once. Owners wishing otherwise, with the motivation of having the Strata spick n speck for sale disagree.

    Two of these are big ticket items, replacement of  tiled roof and building wiring. Which have both been inspected and reported as requiring replacement.

    In the absence of a Strata Loan what next ?    Tribunal adjudication ?

     

    #61654
    kaindub
    Flatchatter

    So if the OC has been keeping minutes as required, then any prospective buyer will see that major repairs are required and mark down the value of all units. Even if a partial fix is made, the prospect of major upcoming repairs that need to be funded will still devalue lots.

    It is an obligation of the OC to repair and maintain common property.
    If there are grounds to repair and some owners are holding out, any other owner can go to the tribunal and get an order.

    As an aside, the argument thst either the OC or an owner does not have the money is not reason for the tribunal to make the order.

    Its then a matter to figure out how to pay and when it’s to be done.

    Some owners don’t get the major difference between strata and owning a freestanding home, is thst an individual can make all their own decisions and assume all risks in regards to repair and maintenance, whereas in strata you are part of a collective, where one’s interests are subsumed to those of other owners.

    #61656
    Jimmy-T
    Keymaster

    The Strata Loan idea (for some) is now canned. Due to the reasons you highlighted.

    I really feel for the owners who are already doing it tough for whom strata loan repayments might be manageable but a special levy would be disastrous.

    It may be a generalisation but the wealthiest in a strata block tend to have the larger apartments and therefore the most power (and the higher levies).

    The State government needs to pull its finger out and change the law to allow for a split payments system that allows some owners to contribute a lumps sum while others add repayments of a strata loan to their levies.

    Maybe our invisible Fair Trading Minister will suddenly reappear and make this happen.

     

    #64136
    David_Aus
    Flatchatter

    Not to contradict the posts above, but there is a product in the market which allows for some lot owner to borrow and others to contribute upfront.  The rules of the forum don’t allow me to identify the product or lender.  But FYI.

    #64144
    strataact
    Flatchatter

    I understood that an OC is able to offer discounts to encourage early or on time levy payments.  I wonder of it would be possible to somehow construct a levy payment process such that the total cost plus interest is calculated, and then those who want to pay up front get a “discount” for that, that equals the  interest they are not paying.  Owners not paying in full could then go on an OC approved payment plan, and would be paying the amounts as specified that covered interest, as they are not getting the early payment discount.

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