The QLD
STRATA MAGAZINE NOVEMBER 2021
Does Our Insurance Policy Cover Volunteers? Page 10-11 | Strata Insurance Solutions
Investing the Sinking Fund for Higher Returns Page 16-17 | Strata Guardian
Does Replacing Some Balustrades Set a Precedent? Page 32-33 | QIA + Mahoneys
About Us LookUpStrata is Australia’s Top Property Blog Dedicated to Strata Living. The site has been providing reliable strata information to lot owners, strata managers and other strata professionals since 2013. As well as publishing legislative articles to keep their audience up to date with changes to strata, this family owned business is known for their national Q&A service that provides useful responses to lot owners and members of the strata industry. They have created a national network of leading strata specialists across Australia who assist with 100s of the LookUpStrata audiences’ queries every month. Strata information is distributed freely to their dedicated audience of readers via regular Webinars, Magazines and Newsletters. The LookUpStrata audience also has free access to The LookUpStrata Directory, showcasing 100s of strata service professionals from across Australia. To take a look at the LookUpStrata Directory, flip to the end of this magazine.
Meet the team
Nikki began building LookUpStrata back in 2012 and officially launched the company early 2013. With a background in Information Management, LookUpStrata has helped Nikki realise her mission of providing detailed, practical, and easy to understand strata information to all Australians. Nikki shares her time between three companies, including Tower Body Corporate in SEQ, and is currently in her third term on the SCA (WA) Education and Professional Development Committee. More recently Nikki has become known for presenting regular strata webinars, where LookUpStrata hosts a strata expert to cover a specific topic and respond to audience questions.
Nikki Jovicic Owner / Director
Liza came on board in early 2020 to bring some structure to LookUpStrata. She has a passion for processes, growth and education. This quickly resulted in the creation of The Strata Magazine released monthly in New South Wales and Queensland, and bi-monthly in Western Australia and Victoria. As of 2021, LookUpStrata now produce 33 state based online magazines a year. Among other daily tasks, Liza is involved in scheduling and liaising with upcoming webinar presenters, sourcing responses to audience questions and assisting strata service professionals who are interested in growing their business.
Liza Jovicic Sales and Content Manager
Learn more here → https://www.lookupstrata.com.au/about-us/ You can contact us here → administration@lookupstrata.com.au
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Contents 04 The Future of Energy in Strata
ENM Solutions
06 What Type of Motion is Needed to Replace ALL Windows?
Will Marquand, Tower Body Corporate
08 Are Acoustic Tests a Requirement for Hard Floor Noise?
Ross Palmer, Palmer Acoustics
10 Does Our Insurance Policy Cover Volunteers?
Tyrone Shandiman, Strata Insurance Solutions
12 Our Caretakers Sold Our Trailer!
Frank Higginson, Hynes Legal
14 Employing a Resident as the Gardener
Will Marquand, Tower Body Corporate
16 Investing the Sinking Fund for Higher Returns
Tim Fuller, Strata Guardian
22 When the Caretaker Says ‘That’s not in my contract’
Jessica Cannon, Cannon + Co Law
24 Should We Engage a Project Manager?
Will Marquand, Tower Body Corporate
26 What Access is Required for Fire Safety Checks?
Stefan Bauer, Fire Matters
28 What is a VOC and When it is Required?
Charlotte Divall, SSKB
30 Encouraging Lot Owners to Install Separate Water Meters
Michael Kleinschmidt, Stratum Legal
32 Does Replacing Some Balustrades Set a Precedent?
QIA Group + Todd Garsden, Mahoneys
34 Who Pays for Repairs to Pipes?
Karen Thompson, Vision Strata
SCA (QLD)
20 Approvals for Splitting a Lot into Two Units 36 New President Kristi Kinast
Todd Garsden, Mahoneys
Thanks to our sponsors
ENERGY MANAGEMENT
The future of energy in strata The energy landscape within strata title communities is often overlooked, difficult to navigate, and expensive. The conversation to define your Energy Strategy is more important now, than ever before. What is Energy Strategy in Strata? Energy Strategy for strata title communities (Strata) is the collaborative process of planning, executing, adapting, and managing energy infrastructure, investment, and compliance requirements for the future. Collaboration It is no secret that Strata can be slow and reactive when it comes to making decisions. With the multitude and variability of stakeholders, this is understandable; however, not reason enough to fail in meeting your Energy Strategy obligations.
The process of collaboration captures the broader economic, social, technological, environmental and compliance related issues and opportunities early and ensures all relevant stakeholders are involved and informed. The engagement of all relevant stakeholders ensures that with regular communication and review, planning can be adapted swiftly and effectively. Consider forming a subcommittee that can work through your Energy Strategy. Planning The first step in the planning process is to evaluate and define the current ’state of play’. This establishes the starting point from which to build your Energy Strategy, and asks questions surrounding how your Strata will report and evaluate performance and consideration on whether a private electricity network (Embedded Network / Microgrid) is required. Microgrid
Solar Panel
Inverter
Embedded Networks An Embedded Network is a cornerstone of energy management in Strata. It is a privately owned and operated electricity network at a site that has multiple customers and are frequently found in strata title communities. Many readers may have had negative experiences with these networks; however, when the Strata is in control there are a plethora of benefits. These include, greater visibility of consumption, utilising common areas for the benefit of all occupiers (by installing Solar Generation, Battery Storage and EV Charging), and a clear transition to a Microgrid. For more information on Embedded Networks, visit www.ENMSolutions.com.au.
Defining what you want to achieve by evaluating ‘non-essential’ upgrades, such as solar generation, battery storage, lighting and electric vehicle (EV) charging; and, ‘essential’ upgrades, including switchboard and wiring (for safety and amperage requirements), roofing membrane (for installing solar generation), and Heating, Ventilation, and Air-Conditioning (HVAC). The next step is when the challenge really takes shape, addressing the ‘how’ rather than just the ‘what’. Working backwards from what you want to achieve, by defining goals and setting stage gates, will help set your budget and allocate responsibilities. Failing to plan can lead to unexpected costs, safety and compliance issues, lost value, and profit that could have been invested. Executing and Adapting Having taken the time to ask the necessary questions you can comfortably and confidently begin to execute your Energy Strategy. Working with specialist partners ensures your vision is executed within a defined scope, keeping sight of the goals set by the Strata.
As technology progresses, regulations change and opportunities continue to be realised; adapting, and refining the Energy Strategy, to remain current and optimised, is crucial. Although a plan has been agreed, it must be made clear from the start that the plan could change, and you may need to adapt your strategy. Managing Owners, committee members, and other stakeholders can be transient and lose interest over time. Who will be managing the progress over the following weeks, months, and years? Are they an independent and qualified party, without a conflict of interest?
Case study – Energy Strategy in action In 2018, ENM Solutions was approached to conduct a business case and feasibility study to determine the suitability of an Embedded Network with solar generation for an apartment building in Queensland.
Built in the 1960’s, the building required significant upgrades to the wiring and electrical switchboards to improve power quality/amperage, and to comply with safety and compliance requirements. This triggered the replacement of electricity meters which provided the added benefit of clear visibility of consumption for both the consumers and owners corporation. ENM Solutions was engaged to procure electricity metering and project manage the brownfield retrofit of an Embedded Network which required approval from the Australian Energy Regulator (AER) through an Individual Exemption. Achieving the exemption required a thorough and rigorous process to obtain “Informed Consent” from all Occupiers at the site. We received consent, submitted the application, and gained approval in less than 12 months from commencement. With solar generation as the next step for the site, the ability to store energy in an onsite battery and how EV Charging will be incorporated is being discussed. This is an example of how a collaborative, well planned, adaptable Energy Strategy, including an Embedded Network, can provide a path to the future of energy in Strata. Should you or a project you are involved with be interested in discussing Energy Strategy, including consideration of an Embedded Network or Microgrid, please contact us for an informed discussion about your Energy Strategy.
PROJECT TIMELINE Dec 2017 Nov 2018 Jan 2019 Apr 2019 Jun – Sep 2019 Sep 2019 Sep – Oct 2019 Dec 2019 Feb 2020 Ongoing
Client first approached ENM Solutions Business Case information received Business Case completed ENM Solutions formally engaged EN retrofit consent campaign AER Individual Exemption submitted AER Public Consultation AER approved Individual Exemption Physical retrofit completed Sustainable transition to Microgrid
The responsibility to keep stakeholders informed and stay up to date with the changing rules, regulations and technologies is an important one. ENM Solutions is an independent expert and leading provider of energy and Professional Services in Embedded Networks and Microgrids. Our expertise in defining your Energy Strategy ensures your Strata is not only prepared to address these challenges, but to optimise the value and opportunities they present.
AEMO Accredited Embedded Network Manager. 1300 000 366 Info@ENMSolutions.com.au www.ENMSolutions.com.au
Helping your Strata with its Energy Strategy. Our suite of Professional Services are tailored to help with every step of your future or existing Embedded Network, Microgrid & multi-tenanted building.
Start Your Energy Strategy Today 1300 000 366 Info@ENMSolutions.com.au
Speak to us about: Compliance & Audits • Project Management & Consulting • Feasibility & Business Cases •
ENMSolutions.com.au 5
Replacing ALL Windows What type of motion is needed?
In this case, there are 66 lots so if the cost of the project exceeds $132,000, which you suggest it does, a special resolution at a general meeting would be required. A special resolution requires that the motion is only passed if:
We’d like to replace all windows. What type of motion will be required and how many votes are needed for the motion to be passed? Our committee is working on a proposal to upgrade the exterior of the building by replacing all windows, which will incur a cost of several million dollars. There are 66 apartments. The work is NOT essential and window replacement for common use areas is already provided for in the Sinking Fund Forecast. What type of motion will be required and how many votes are needed for the motion to be passed?
The type of approval required will depend on the cost of the works. The type of approval required will depend on the cost of the works. There are three improvement limits that apply in the standard and accommodation modules:
Basic Limit
Financial Limit
Resolution Required
$200 times the number of lots or up to $300 times the number of lots if the committees spending limit has been increased.
Committee resolution at a committee meeting.
Standard Limit
Up to $2000 Ordinary times the number resolution at a of lots in the general meeting. scheme.
Other
More than $2000 Special resolution times the number at a general of lots. meeting.
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1. At least two-thirds of the votes cast are in favour of the motion 2. The number of votes against the motion is not more than 25 per cent of the total number of lots 3. The total contribution schedule lot entitlements of the votes against the motion is not more than 25 per cent of the total contribution schedule lot entitlements for all lots in the scheme. All three conditions must be met for the motion to pass. Depending on your entitlements and number of people attending the meeting, that may need some mathematical configuration to work out but that is the formula to follow. Your body corporate manager should be able to calculate these for you at the meeting – although sometimes this takes some time and careful checking. You also ask how many votes would be required. A standard quorum requirement would be 25 per cent of owners, but plans have had the capacity to change this since March this year so you should check the exact number with your body corporate manager. Check the BCCM website for more information on this subject: Improving common property and lots. READ MORE ON THIS TOPIC HERE
William Marquand | Tower Body Corporate willmarquand@towerbodycorporate.com.au
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Hard Flooring
Are acoustic tests required?
Is it mandatory to conduct an acoustic test when there are noise concerns due to hard flooring? After gaining approval from the then Body Corporate Committee 4 years ago, we installed a floating wooden floor on a 1st level apartment using noise-reducing underlay as recommended by the manufacturers – Compliant below the 62 noise level. Part of the approval advised we needed to carry out an acoustic test, which required gaining access to the apartment below. After discussions with the owner at that time, he was not keen to allow access. I advised the then body corporate of this. During the first year or so, we discussed with our neighbour who had experienced no noise issue, so would still not agree to access. We had no issues or complaints during this time. Last year, that owner moved and rented the property out. The person who rented has continually complained about many different noises, which has been discussed amicably. We have tried to accommodate their concerns by keeping as quiet as possible for an older couple.
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The tenant has now purchased the below apartment and has continued to complain regularly about all sorts of noises, believing it all comes from our apartment. We do not agree and think they should just accept this level of noise as part of apartment living! We received a complaint about “continual clomping and stomping”, scraping of furniture etc during a time when our apartment was empty as we were away. Are we obligated to go to the expense of this acoustic test, as I do not think this will solve his issues? Is it mandatory that we have to carry out this test just to satisfy this sensitive owner’s concerns?
These range from LnTw 45 (very difficult to achieve) to LnTw 55, which is often considered as a good balance between acoustic amenity and practical noise control treatments. The LnTw number is a room corrected noise level from a tapping test, with a lower number showing better acoustic insulation and lower noise levels. An Lntw 55 is considered to provide a 3 star level of acoustic amenity.
READ MORE ON THIS TOPIC HERE
Ross Palmer | Palmer Acoustics ross@palmeracoustics.com
Does the By-Law require you to carry out aa acoustic test, or has this been a request from the Body Corporate? There are two issues of concern here. The first and most critical is what the By-Law requires. Does the By-Law require you to carry out a test, or has this been a request from the Body Corporate? These matters should be clearly defined so that there are no arguments or misunderstandings. ByLaws often required that after the floor has been replaced, the floor owner arrange for a floor impact insulation test to confirm that the specified limits have been satisfied. The second issue is the number 62. This is an LnTw 62 from the Building Code, which sets an absolute minimum standard. At 62, the noise level is such that many lower occupants will complain bitterly about the noise. It means that children playing, ball impacts, foot-fall, and scraping furniture will be quite audible in lower areas. Many Body Corporates understand this and set much lower performance requirements.
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Does Our Insurance Policy Cover Volunteers? 10 www.lookupstrata.com.au
How do we know that our QLD insurance policy covers volunteers? If someone receives a small remuneration as a volunteer, are they still covered? What needs to be done to ensure volunteers are covered?
Generally, “Volunteers” are only ever people who are engaged in work on behalf of the body corporate without promise of reward or remuneration. You should seek specific advice in relation to your insurance policy as no policies are ever the same. Generally, “Volunteers” are only ever people who are engaged in work on behalf of the body corporate without promise of reward or remuneration. If they do receive payment they are no longer a volunteer and the only cover that can be considered is point 2 above “Public Liability (Injury to Volunteer)” on the proviso they are not an employee (which is covered by workers comp).
READ MORE ON THIS TOPIC HERE
Tyrone Shandiman | Strata Insurance Solutions tshandiman@iaa.net.au
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Our Caretakers Sold Our Trailer Can we charge them cost of replacement? The new caretaker sold the body corporate’s box trailer and pocketed the money. Can we invoice them the cost of a replacement trailer? A new caretaker has just started at our complex. Without permission, they sold the body corporate’s box trailer that was located on common property and pocketed the money. Can they do this? If not, can the Body Corporate Committee invoice the Caretaker for the replacement cost of the box trailer?
The caretaker may be under the (mistaken) assumption that it was theirs to begin with. No – they can’t. But the difference between the caretaker doing it and a lot owner is the caretaker may be under the (mistaken) assumption that it was theirs to begin with because it may have been mentioned on the inventory to the management rights contract when they bought – by mistake or otherwise, it is very common for the management entity to 12 www.lookupstrata.com.au
supply caretaking equipment like this, so it is not unnatural for a caretaker to think it might be theirs to sell. So I think the best way to approach it is to:1. Review the caretaking agreement to see who supplies equipment 2. If the body corporate bought it, get a copy of the evidence of that (because bodies corporate sometimes make the same mistake the caretaker has been accused of here) 3. Raise the issue with the caretaker to have a chat about it.
READ MORE ON THIS TOPIC HERE
Frank Higginson | Hynes Legal frank.higginson@hyneslegal.com.au
13
Employing a Resident as the Gardener
What are the requirements?
Can a body corporate employ a resident for a small amount of hours as long as they have workers compensation and taxation requirements in place? We are a 9 villa complex under the standard module. We are considering appointing a retired resident living in our complex to undertake care of our common area gardens consisting of maintaining a small garden area and a limited amount of mowing. The resident has volunteered to do the job. He is 70 years and very physically able to do the work as it should only be around 3 hours a month. This would be ideal for our situation. Can a body corporate employ someone for a small amount of hours a month as long as they have workers compensation and taxation requirements in place. What other requirements are needed in these circumstances?
Insurance and taxation should be confirmed as part of any agreement depending on the scope of works. 14 www.lookupstrata.com.au
It’s fairly common for body corporates to engage a resident to do work like this around a scheme and it can be a benefit for all parties as costs tend to be reasonable and the quality of work good. As you indicate, the main concerns tend to be around insurance and taxation. These should be confirmed as part of any agreement depending on the scope of works. The contractor is responsible for the legal compliance, workmanship and safety of the work they do and their insurance should cover this. For tax purposes, the contractor should have an ABN. They will also need to invoice appropriately. See this resource from the ATO for more information: Working as a contractor. There are certain types of work where a contractor has to have a licence. This can be if the cost is over $3300 or if a specific skill is required such as plumbing, gas fitting or termite management. It doesn’t seem like one is required here, but you can check the QBCC website to be sure: When is a contractor licence required? READ MORE ON THIS TOPIC HERE
William Marquand | Tower Body Corporate willmarquand@towerbodycorporate.com.au
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Investing the Sinking Fund for Higher Returns Good news for Queensland sinking funds
Can the committee put some of their accumulated funds into Australian shares to achieve higher returns and better tax treatment? We are preparing our sinking fund forecast. Our assumptions provide for a 2% return (or 1.4% after tax) on accumulated unspent funds put aside for future expenditure. This is less than the 3.5% we have assumed for inflation. Can the committee put some of the accumulated funds into Australian shares to achieve higher returns and better tax treatment?
Australian shares are one solution but bring many questions that need to be answered responsibly. This is a terrific question as it exposes several looming issues that all strata financial controllers will need to consider and grapple with within the coming years. 16 www.lookupstrata.com.au
Inflation
Let’s look at inflation first. Without this article becoming an economics 101 lesson and risking your eyes glazing over, let us look at the key driver of inflation and use this to help answer the question. If a person’s income steadily increases, they can accept rising prices on everyday goods and services increases. Therefore, Consumer Price Inflation estimates can be more reliable. Even before the pandemic, Australia’s annual wage increases have been steadily declining (see this recent RBA paper, Graph 4.16), indicating a shift in power from labour to capital over the last two decades. While the unemployment figures have recently improved (which is remarkable given the pandemic period), this has not translated into higher wages in aggregate. Where the rub lies, however, is that whilst we may see lower levels of inflation in consumer goods and everyday items, we have also seen more focused inflation on things like building materials and imported hardware goods, which have particular relevance to the items required throughout your sinking fund forecast. So what does this mean to your estimates of inflation? Whilst the above points to lower than ‘usual’ inflation over the medium term, you should still account for a reasonable level of inflation to ensure your projections stay on the right side of it. 3.5% p.a. sounds reasonable given the factors above.
Estimated Return
Estimating returns for your strata or sinking fund was no doubt more straightforward in the past. Term deposits and cash at call rates were at levels even five years ago, now seen by much riskier assets as we shuffle into a new world of much lower returns on traditional safe investments. So conventional measures are simply not going to provide the returns required to meet a long-run inflation ‘cost’ of holding long term cash in an underperforming environment. The financial controllers of strata organisations must seek alternatives to correct this. As you have
mentioned, Australian shares are one solution but bring many questions that need to be answered responsibly. Knowing the right companies, how much weighting to invest, and the periodic maintenance of the portfolio is essentially a funds management role, and professional expertise is highly recommended. If it is done correctly, higher returns over the long run are to be expected, but as we know, they can also be calamitous if mucked up. The prospect of a bad investment not only brings embarrassment to those in charge but also may open up legal issues, which is never a good thing. From a legislative perspective, there is some good news for Queensland sinking funds. Section 96(2b) of the BCCMA 1997 (QLD) allows body corporates to invest amounts not immediately required for its purposes in a way that a trustee may invest trust funds. So that’s a start, over to part 3 of the Trust Act 1973 (QLD) for more information. In a similar vein to NSW, Sections 21, 22 and 23 of the Trust Act 1973 (QLD) offers a series of confirmations and considerations when working through some alternatives for your longer-term savings as a trustee: • An initial review of your trust deed is required to ensure no limitation on the allowable investments above and beyond what is prescribed in the Act. • Notwithstanding the above, the ability to invest in ‘any form of investment’ and at any time vary any investment is then permissible. • A duty to invest trust funds in investments that are not speculative or hazardous. • Exercise the care, diligence and skill that a prudent person would exercise in managing the affairs of another person. • Implement annual performance reviews of the trust investments. • Provisions to seek advice and use trust capital to pay for this advice. Like all well-considered investments, Section 24 of the above Act details a list of further
factors that should be addressed to ensure the validity of the decision when exercising the power of the investment. Here are a few points of note, but not all of them:
Matters to which trustee must have regard in exercising power of investment • The purpose of the trust and circumstances of the beneficiaries. • The desirability of diversifying the trust’s investments. • The nature of and accompanying risks of the proposed investment. • The potential for capital appreciation, along with the prospect of capital loss. • The length of the term of the proposed investment against the probable duration of the trust. • Consideration of tax liabilities, likely income return and timing of this income • The liquidity and marketability (i.e. ability to sell) of the investment. • Costs and fees of the investment – are they reasonable? • The likelihood of inflation affecting the value of the trust and its investment.
Going about it
Suppose you feel that your trust has met the above criteria (or have had it confirmed through legal advice, highly recommended), then great! All that is left is a committee resolution approving the decision, and the world of broader investments awaits. We are happy to say that help is at hand, however, so if you feel you would like to explore some options, feel free to reach out to Strata Guardian and see if our investment service can help your strata savings diversify away from negative real returns and the prospect of rising strata levies. READ MORE ON THIS TOPIC HERE
Tim Fuller | Strata Guardian contact@strataguardian.com
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Helping to fight low returns and rising levies for the Australian Strata Community.
A fresh solution to the new world of low returns, for your strata savings.
Book a call to discuss how we can help CLICK HERE
Contact Us Today 1300 482 736 www.strataguardian.com contact@strataguardian.com 25 Palmerston Crescent, South Melbourne 3205 Strata Guardian Pty. Ltd. ABN 20 646 722 518 is a Corporate Authorised Representative of Strata Advice Pty Ltd - AFSL 528306
18 www.lookupstrata.com.au
Strata Guardian offers a proven, diversified, and riskadjusted investment service to help combat the effects of inflation on your building’s savings over the long term.
Your source of reliable Strata news and information since 2013 Providing detailed, practical, and easy to understand strata information to all Australians.
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19
Renovations
Without Approval
Splitting a Lot into Two Units One owner in our three lot scheme has split their lot and created two units. As far as I know, no approval was sought or provided. Is this lawful? I recently purchased a 3 level townhouse in a small complex. We are self-managed by one of the three owners. The person undertaking the manager’s role has split their lot into two units by enclosing part of the garage and office/bedroom on the ground floor, creating a separate unit with its own entrance, kitchen/ living area, laundry, bathroom and bedroom. The owner now lets out the upstairs threebedroom townhouse and the separate ground floor unit. There is no Body Corporate Committee approval for this change and the body corporate records provided at the time of purchase show no reference to this structural change or change of material used. 20 www.lookupstrata.com.au
I have requested access to the body corporate records to review whether this structural change was approved by the body corporate and I have been refused access. Is there anything in the BCCM Act or Regulations that would cover such a material change of use in converting a single lot into a multi-use dwelling? What effect would such change have on the levies and would the body corporate need a new community management statement and bylaws to cover the change? As the next step, am I best to lodge a dispute?
You may need to obtain a copy of the development approval conditions and planning overlays. There are a few points here: • Firstly, an owner cannot be refused access to body corporate records. That may be worth following up on to facilitate any further action to be taken.
• There is nothing necessarily in the body corporate legislation that would prevent the works or use of the lot in that way. However, this will depend on what the by-laws provide for and the type of survey plan. Once that is known, there may be an angle to take in that regard. • Whether the use of the lot in that manner is lawful depends on what council’s requirements are. To check this, you may need to obtain a copy of the development approval conditions and planning overlays.
Todd Garsden | Mahoneys tgarsden@mahoneys.com.au
READ MORE ON THIS TOPIC HERE
Experts in Body Corporate Law and Dispute Resolution Mahoneys has a dedicated team of lawyers with experience in assisting bodies corporate with: management rights assignments and variations
debt and levy recovery
common property subdivision and sales
lot entitlement issues
general disputes and advice
building defect disputes
community management statements
building management statements
by law enforcement and by law reviews
LAAN access notices
selling schemes to developers
defamation
caretaker performance issues
neighbouring development issues
www.mahoneys.com.au
Brisbane office L 18, 167 Eagle Street Brisbane Qld 4000
Gold Coast office L 2, 235 Varsity Parade Varsity Lakes Qld 4230
p 07 3007 3777
p 07 5562 2959
When the Caretaker Says
'That's not in my contract' Dealing with a vague scope of works
A caretaker contract with a vague scope of works may lead to disputes over the quality of work being done. When approaching this, what is a good response if the caretaker says ‘that’s not in my contract’? Many caretaker contracts have a vague scope of works. They may say the driveway should be cleaned once a week but there is no reference to the standard. This can lead to disputes over the quality of work being done. How should Committees approach conversations like this with caretakers? What is a good response if the caretaker says ‘that’s not in my contract’?
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Consider engaging an independent management rights expert to do a common property condition report. This is a great question and one that we find a lot of because the common themes that we see in caretaking agreements is that the older the agreement, the more vague, the more broad and ambiguous the terms or the duties are. The more modern agreements have what we call a specified duties list and that specified duties list really does give the prerequisite particularisation, but also, frequencies built in there. To answer the question, ‘How can a committee approach these type of conversations?’, it will depend on whether they’ve been approached previously with the caretaker. If they had been approached and the caretaker has essentially responded with ‘That’s not included in my contract. I’m not going to be doing that’, then the next step for the committee to consider
would be to get an independent management rights expert in to the scheme and to do what’s called a common property condition report. I think it’s safe to say that most committee members would not have the prerequisite skill and knowledge that a management rights expert would have. The difficulty we see is that there is always this argument of nitpicking. The caretaker says ‘The committee’s nitpicking. They’re being subjective in how they’re scrutinising our performance’, and then the committee says ‘No, we just want it to be of the standard that we expect’. So having a management rights expert come in and do a common property condition report. It takes away that subjectivity. It takes away that argument of nitpicking in the committee can say ‘Okay, so it’s not us that is scrutinising you. We’ve got somebody independent in. This has been the report about the standard of this scheme and the condition of the common property, can we table it and have a discussion with you about how we can go about fixing this? There are two very different interpretations of your duties, and unless we work together to resolve them, we’re going to continue to have these arguments about what you are or are not required to do’.
Now, depending on how those discussions go; If they go poorly, the committee might need to consider issuing a remedial action notice, but if they go well, the committee might engage in some private negotiations with the caretaker to say, ‘Okay, let’s tidy this up. We don’t agree. Let’s get a specific schedule of duties prepared by an expert that ultimately says what you’re required to do with a good satisfactory level of particularisation and the frequency in which you’re required to do it. And let’s do a deed of variation and put it to owners so that we can resolve this moving forward’. That, to me, would be a pragmatic commercial outcome for both parties. It’s all about how you communicate it and it’s all about making sure that what starts as a performance based issue doesn’t escalate into a personality based issue because of poor communication there as well. That’s probably how I would deal with it first and foremost. Obviously, my opinion with specific schedules of duties is that they work for both sides. The caretaker knows what he/ she/it is required to do and the committee knows what is required. Then there is an ability to tick check things off and not have different interpretations of things as well.
READ MORE ON THIS TOPIC HERE
Jessica Cannon | Cannon + Co Law jessicacannon@cannonlaw.com.au
Should We Engage a
Project Manager? Painting the building and other maintenance and repairs...
24 www.lookupstrata.com.au
Is it a requirement to engage a Project Manager to paint the exterior of the buildings or for any projects or repairs? Depending on the size of the project, an independent project manager may help ensure that any works you are arranging are progressed smoothly and correctly. It’s not a requirement. Depending on the size of the project an independent project manager may help ensure that any works you are arranging are progressed smoothly and correctly.
With any repair and maintenance works, it is important that owners review the scope and contract fully in advance and make sure that their expectation for the works is in alignment with what the contractor is expecting to deliver. Then, it is a question of checking the works while they are in progress and signing off on completion. A Committee can fulfil that function, but an independent project manager will have the expertise to give you confidence that everything is being handled correctly. Otherwise, most contractors for major works will appoint their own internal project manager for any job. They will be managing and assessing the work of their own company so that needs to be taken into consideration, but their job is still to ensure the works are completed to a satisfactory level.
READ MORE ON THIS TOPIC HERE
William Marquand | Tower Body Corporate willmarquand@towerbodycorporate.com.au
Remedial repairs & cost management Management of remedial works can be challenging at the best of times and may cause considerable financial stress as owners try to navigate the minefield of complexity of Strata repairs. Value vs competitiveness is the driver to desired outcomes. Defining your objective and the extent
First time complete and defined scope of works •
Only 1 quote required
•
Minimise scope creep and variations
•
Empowering owners with information to obtain like for like quotes
of works is critical. Be clear in what you expect: •
You require repairs to be all inclusive
•
You need it to conform to statutory requirements
•
Pay the right price for works required
•
You need a warranty of guarantee
•
•
Extent & cost are balanced with the benefits.
Professionals to negotiate cost on your behalf
Value for money
Engaging experts is highly recommended. A building cost validation process allows you to take control and achieve desired outcomes you’re looking for.
Peace of mind •
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25
Fire Safety Checks What access is required?
Can our body corporate enter our lot for a fire safety check whether we are home or not? As a lot owner, we’ve been informed that fire safety checks will be carried out in our building on a particular day. We cannot refuse entry to our apartment or change the date or time. They will knock before entering but will enter, whether we are at home or not. Most owners were surprised to find that the body corporate has keys and supposedly the right to access our properties without our permission when we are away. Is this legal? There could be kids home alone. Last time these checks were done, someone’s wife was asleep in bed and was woken by random people wandering through her bedroom.
Routine maintenance is mandatory under the legislation and how compliance is achieved differs between Body Corporates. Without the information about the equipment that is meant to service it is difficult to comment. 26 www.lookupstrata.com.au
However, in most apartment buildings, this relates to Fire Doors or it could be the buildings Fire Detection System if installed to AS1670. In regards to access to the units for testing smoke detectors, this can not be avoided as 50% of smoke detectors and 25% of thermal detectors must be tested each year. This is usually arranged by testing odd unit numbers one year and even the next. In respect of the fire door maintenance, this should not require access to the internal part of the unit i.e. bedrooms etc as this only requires the inspection of the entry door and should not take more than a few minutes. We can not comment on the legality of the Body Corporate having keys to an apartment or demanding access. However routine maintenance is mandatory under the legislation and how compliance is achieved differs between Body Corporates.
READ MORE ON THIS TOPIC HERE
Stefan Bauer | Fire Matters sbauer@firematters.com.au
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What is a VOC? And when it is required? Does all committee expenditure need to be recorded formally by a VOC? Is it necessary that all expenditure approved by the committee, even within a spending limit, be recorded formally by a VOC? We have been told by our Strata Management Company that this is required by QLD Legislation. How is this possible with an emergency e.g. a burst pipe requiring immediate repair?
Although the answer is yes, there is more to it. As always, there is never a straightforward yes or no answer in Body Corporate world! Although the answer is yes, there’s more to it than that. Everybody corporate decision, including expenditure, requires the relevant resolution. The legislation allows for the committee to approve certain expenditure, otherwise, 28 www.lookupstrata.com.au
approval must be sought from owners at a general meeting. A Vote Outside Committee Meeting, or VOC, is the quick way for the committee to make a decision. Holding a formal meeting means providing the relevant notice period to owners, whereas with a VOC the notice goes to the committee and owners at the same time, and minutes are subsequently sent to everyone. For an emergency repair that is within the committee’s spend limit, the VOC notice can go to committee members that it is practical to contact, which may be by phone or an app. The notice is given to owners as soon as it is reasonably practical to do so. The committee can act on the resolution straight away in an emergency, as long as it is within their spend limit. If it is not, the body corporate would need to seek an order from the office of the Commissioner for Body Corporate and Community Management. In practical terms, some committees proceed with emergency repairs as the need arises and
then ratify this at their next committee meeting, however, this is not specified in the legislation and may be open to challenge. The other point to note is when a committee can act on a committee resolution, and this differs depending on which module your body corporate operates under. For those under the Accommodation or Commercial module, you can act on the resolution once it has been made. For those under the Standard Module, there is provision in the legislation for a notice of opposition. This gives owners the ability to contest a committee decision, however, the committee may proceed with a resolution if it is of a routine administrative nature, perhaps sending a letter for example, and if the cost is not more than the greater of $200 or $5 multiplied by the number of lots in the scheme. All VOC motions must be confirmed at the next committee meeting.
READ MORE ON THIS TOPIC HERE
Charlotte Divall | SSKB cdivall@sskb.com.au
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Encouraging Lot Owners to Install Seperate Water Meters Can the body corporate offer a loan?
Our body corporate is encouraging lot owners to install separate water meters. Can they incentivise this by offering a loan? We have a situation where the Body Corporate committee wants to put water meters into each individual lot but some can’t pay for it upfront. To try to convince these owners to approve the installation (which is on each owner’s private lot) there have been rumours that they will be “helped” to pay presumably by the Body Corporate. I am speculating that this will be some sort of loan from the Body Corporate. Is this legal? If so, what are the procedures and limitations? I can’t find anything in the laws or searching on the internet about this. 30 www.lookupstrata.com.au
It is not uncommon for bodies corporate to want to encourage lot owners to buy and install their own water meters Individual water meters are a great way to ensure that the ‘user pays’. It has however only relatively recently become standard development practice for individual meters to be installed. Older schemes may have anything from 1 meter for both all lots and common property, though to almost (but not quite) complete coverage; i.e. 1 lot = 1 meter. Where there is complete coverage, s195 of the Act provides that the lot owner is liable to pay for the water their lot consumes if it is
That can be done in two ways. Firstly, through the normal (administrative fund) contributions. That may be appropriate where no lots have meters and all lots are similar. The second method, however, is for the Body Corporate to raise a water levy: a. f or lots which have a meter – based on the water use; and b. for lots that don’t have a meter – either in equal shares, or pro rate the contribution schedule lot entitlements of the lots who don’t have meters. Given those advantages, it is not uncommon for bodies corporate to want to encourage lot owners to buy and install their own water meters. It is not for the Body Corporate to do this, in the normal course, because individual meters benefit individual lots, and not the Body Corporate. Bodies Corporate may borrow funds (for example see s171 of the Standard Module) but there is no direct regulation of the Body Corporate loaning money. The Body Corporate must not be in the business of loaning money (s96 of the Act) but it may invest monies not immediately required for its purposes in the ways that a trustee may invest trust funds (s96(2) of the Act). separately measured, charged to the lot owner and charged other than based on the value of the lot; i.e. kilolitres consumed. In schemes where there is less than complete coverage, s196 of the Act provides that each lot owner is liable to the utility provider (e.g. Unity Water), for water consumed in the community titles scheme, pro-rata their contribution schedule lot entitlement. Lot owners with water tanks or who consume less water are often, understandably, dissatisfied with this arrangement. Fortunately, there is an alternative. Under s196(4) of the Act, the Body Corporate can take on liability for owners or occupiers. The Body Corporate then pays the utility provider and recoups the money from the owners or occupiers.
Accordingly a prudent, compliant Body Corporate could, after taking legal and financial advice, invest funds not immediately required, by offering loans, with appropriate interest and other terms, to lot owners for the specified purpose of installing a water meter for their lot. Indeed, the Body Corporate could arrange for multiple installations, to secure a favourable rate, after obtaining the relevant lot owners agreement (see s210 of the Standard Module), including to pay for the installation by entering into the loan arrangement.
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Michael Kleinschmidt | Stratum Legal info@stratumlegal.com.au
31
Replacing Some
Balustrades
Does this set a precedent?
Approval has been granted to replace three of our building’s balcony balustrades. Now work is complete, is it reasonable to expect approval for future motions to replace the remaining balustrades?
It is not an absolute that prior approvals will result in future approvals. Todd Garsden, Mahoneys:
Approval has been granted to replace an old steel balustrade with a glass balustrade on three balconies.
Any improvement application is required to be considered on its own merits – so it is not an absolute that prior approvals will result in future approvals. However, all things being equal, it would likely be unreasonable for a similar improvement to be refused in the future.
Now work is complete, does that set a precedent for further motions presented?
A few peculiarities that ought to be considered for balcony improvements include:
Is it reasonable to expect approval for future motions?
• certification issues (new standards would need to be met).
An engineer’s report stated there is no reason why a glass balustrade cannot be installed safely on any or all balconies in the future.
• development issues (the council may have restrictions as to what can be installed).
32 www.lookupstrata.com.au
• ongoing maintenance obligations (if the owner is replacing the balustrade they would become responsible for its ongoing maintenance).
QIA Group: Firstly it would depend on whether the Body Corporate replaced the balustrades or the individual owners. If it was the Body Corporate then it would appear that the replacements would be intended to ensure a uniform look for the building going forward. I would also assume that there has been some discussion as to the type of balustrading that would be considered appropriate by the Body Corporate as a whole. The issue for most Bodies Corporate with this type of work is really an aesthetic coupled with a need to conform to By-laws in terms of the outward appearance of the building.
Todd Garsden | Mahoneys tgarsden@mahoneys.com.au
If the Body Corporate is carrying out the work and the Owners have agreed to all do the same then the choice of balustrade should be up to the Owners – provided that building legislation and any planning requirements are met. If the work was being carried out by individual Owners, I would assume that the Body Corporate as a whole would have considered if glass balustrades are appropriate and then when Owners apply, permission is given along those lines – also subject to building and planning requirements and the use of a licensed and insured contractor. Then there would need to be a discussion as to ongoing maintenance responsibilities for the balustrades – which would be simpler if the Body Corporate carried out the works.
READ MORE ON THIS TOPIC HERE
QIA Group
info@qiagroup.com.au
33
Repairs to Pipes Who pays? If the t-piece of the water pipe in the en-suite needs repair, is the Body Corporate responsible for the rectification? Once the pipe enters your lot, it becomes your responsibility. Responsibility for all maintenance including infrastructure (cables, wires, pipes, etc.) is defined in the Body Corporate and Community Management Act. There is also the question of whether your scheme is a Standard Format Plan SFP (previously known as a Group Title Plan GTP) or a Building Format Plan BFP (previously known as a Building Unit Plan BUP). I have provided this response on the basis of your body corporate being a BFP which is your typical three story walk up or multi levy unit block. It could also be a town house development. Section 20 of the BCCM Act provides that utility infrastructure is treated as common property; however, there are exceptions to this. It will not be treated as common property if: • that the utility infrastructure is solely related to supplying utility services to a lot • that the utility infrastructure is within the boundaries of the lot, and • that the utility infrastructure is located other than within a boundary structure for the lot (‘boundary structure’ means a floor, wall or ceiling that is the boundary of the lot with another lot or the common property).
34 www.lookupstrata.com.au
To break this down to more simplistic terminology, if the water pipe or fitting is located within a boundary wall between your lot and another lot, the boundary of the lot being the centre point in the dividing wall, then this would be a body corporate responsibility. Once the pipe enters your lot, it becomes your responsibility. If the pipe or fitting is not in a boundary structure and supplies water to your lot only, the responsibility is with the lot owner to repair. It may be contained in a wall that is within your lot, say your bathroom ensuite wall divides the kitchen from the ensuite. If this is the case, the pipe t-section is contained wholly within your lot and the responsibility of maintenance is with the lot owner. Below is a basic plan of Utility Infrastructure in a BFP. Strata Plan
Utility infrastructure responsibilities • The body corporate • The cold water pipes or cables shown in red on the utility infrastructure plan above, as they are located within a boundary structure. • The lot owner • The cold water pipes or cables shown in blue on the utility infrastructure plan above, as they service Lot 1 only, and are located within an internal wall and not a boundary structure. You have noted that the T-piece of the water pipe is in your ensuite. Without seeing a plan of your unit, I cannot determine who is responsible. However, the above diagram may be of help to you. READ MORE ON THIS TOPIC HERE
Karen Thompson | Vision Strata contact@visionstrata.com.au
35
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Would you like your Strata Story featured in the next edition of The QLD Strata Magazine? We want to share your strata stories with the LookUpStrata community. Some examples of what you may wish to share: • A project you have implemented in your complex that has made a positive impact (e.g a process, community building activities, parking procedure, ect) • Do you have a funny story to share about strata living? • Have you received a response back from one of the LookUpStrata professionals • that has positively impacted you or your complex? • Have you made a change to improve sustainability? (e.g installed solar, swapped over to LED lighting, reduced waste?) • You could even share a photo of the view from you balcony or catching up with neighbours for a coffee. If you would like to share your strata scheme story with the LookUpStrata community, Please send your story and photos to: administration@lookupstrata.com.au
Disclaimer: If you send your strata story to administration@lookupstrata.com.au, you are agreeing to have your story published on the LookUpStrata platform or via social media. We must have written permission from each individual shown in the photo. Submissions may be refused for any reason.
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