The WA Strata Magazine | June 2024

The WA

STRATA MAGAZINE June 2024

Strata manager will not disclose their insurance commission Page 10 | Bugden Allen Graham Lawyers

Can an owner who rents their apartment use resident facilities?

Page 20 | B Strata

Trust accounts, pooled accounts and interest Page 28 | Empire Estate Agents

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, a body corporate company in SEQ. Nikki is also 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 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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The information contained in this magazine, including the response to submitted questions, is not legal advice and should not be relied upon as legal advice. You should seek independent advice before acting on the information contained in this magazine.

Strata legislation is updated regularly. The information in this magazine is based on the legislation at the time of publishing. www.lookupstrata.com.au

Contents 4 Planning Major Works – What gets you the best return?

Lannock Strata Finance

6 Our project manager has never inspected the site Edwina Feilen and Bruce McKenzie, Sedgwick

8 Can the strata company prevent owners from making a claim?

22 An owner bypassed the strata repair process and now wants reimbursement.

Should we refuse to pay?

Jamie Horner, Empire Estate Agents

24 Cultivating a culture: Empowerment and resilience in strata management teams ESM Strata

26 Is your property accurately insured?

Rawlinsons WA

Tyrone Shandiman, Strata Insurance Solutions

10 Strata manager will not disclose their insurance commission

28 Trust accounts, pooled accounts and interest Jamie Horner, Empire Estate Agents

Carolyn Meighan, Bugden Allen Graham Lawyers

12 Disclosure and your strata insurance policy

30 Providing easy access to the electricity box ESM Strata

Leonie Milonas, Lync Insurance Brokers

14

ave inflation fluctuations caused H more cases of over or underinsurance?

32 Are owners responsible for maintaining water valves?

Tyrone Shandiman, Strata Insurance Solutions

Zac Gleeson, GQS

16 Realmark Strata’s new tech integration boosting efficiency and communication

34 Underage people living and staying in an over-55s complex Jason O’Meara, McWilliams Davis Lawyers

Luke Downie, Realmark Strata

18 Who is responsible for upgrading our power board?

36 Understanding Strata Insurance Disclosure Strata Community Association (WA)

Damien Moran, Energy-Tec

20 Can an owner who rents their apartment use resident facilities?

38

The WA LookUpStrata Directory

Melanie Duryea, B Strata

Thanks to our sponsors

Planning Major Works What gets you the best return?

Paul Morton, subject expert and founder of Australia’s leading strata lender, Lannock Strata Finance, shares some insights into how to approach your decision-making for major works projects.

These are just some of the questions to ask when considering major works. But before we consider your major works, let’s look at a range of reasons you might need to invest in common property works:

How do you decide which major works project is most appropriate? What are the available sources of funds, and how do you make the best choice? Is the cheapest quote the best quote? How does tax affect your decisions?

• Reducing legal liability from accidents

• Legal duty to “repair and maintain” • Risk to maintaining insurance cover if property is not maintained • Occupational Health and Safety considerations

And reasons you may want to invest in works: • Return on Investment (ROI) – Increased asset value or increased occupancy rates • Personal satisfaction (e.g. is this a place I want to live in)

Value in Major Works Projects – Price, Quality and Time We all know the idea of the Project Management Triangle, where achieving equilibrium between speed, cost and quality is impossible. But strata is more complex because everyone will have a different idea of what “value” is. What is important to you? Is it functionality?

Is it aesthetics? It is important to consider that you may not just wish to replace something that needs replacing, but to also improve it and to improve the return on your overall investment.

All of this sits alongside the core decision-making matrix for price, quality and time. What if some council members value price, others value time and the rest value quality? If not everyone agrees with the decisionmaking priorities, then you may find the council is not aligned on what they value. Getting agreement is extremely hard, so in our experience, it is important to work out the agreed objectives at the very beginning.

In the council, it’s important to have a shared understanding of how you’re looking at ROI. Are you all considering it in post-tax dollars? Or are some council members looking at ROI in pre-tax dollars? Taxes can make a big difference to net returns. To avoid misunderstandings and to ensure everyone’s on the same page about the project’s value, it’s best to calculate ROI in post-tax dollars. This way, you’re all comparing apples to apples.

Fast, Good, Cheap Increasingly we see first-hand the problems caused by the pursuit of “any product at the cheapest price”, particularly with the cladding and defects problems across the country. In some cases, different Governments have stepped in to assist, but it all comes back onto the owner.

You get what you pay for in terms of price, quality and time. Almost everyone focuses on price – and why not! But you don’t want cheap and nasty (truth is, you can’t actually afford that in the long run), you need to think about value for money. This is where Lannock’s experience becomes useful. It is not just about cost and expense.

I think we need to replace the words “expense” or “cost” with the word “investment”. Whether you are fixing some pavers, replacing your cladding, or putting a penthouse on top, restoring value lost or creating value, you are investing in your property. This helps you to start seeing the opportunity of a return on your investment.

What else do you need to consider in terms of getting the best value? Should you manage the project yourself/ yourselves? Now, this is a tricky part of the decisionmaking, which has huge potential or unexpected implications – often in cost, time and quality.

Potential project managers are council members, members with special interests, your strata manager or a third-party project manager. The challenges of selfmanagement include accountability, resource allocation, legal liability, skill requirements and role clarity.

We often see a lack of good project management which can mean more problems. Understandably, the council often feel they can save money, depending on the situation and the council, but what if something goes wrong? There is also a legal liability to be considered.

And the human impact of stress should not be underestimated, particularly for owners living “on-site” in the property.

Whatever you do, we recommend you don’t delay your decision when it comes to major works, as delays add significantly to the cost.

Financial Solutions for Major Works Lannock Strata Finance provides flexible funding solutions to alleviate the financial burden on strata communities. These options allow for works to be carried out immediately, avoiding the risk of further damage caused by delay, whilst smoothing the cost impost on owners of having to fund the full costs of repair upfront.

Understanding the challenges of the work you need to be done and the financial solutions offered by Lannock to help you achieve this is essential for individual owners and strata communities.

We can tailor a flexible funding facility to suit your project-specific needs.

Mikayla Tritico Business Development Manager WA

P 1300 851 585 E mikayla@lannock.com.au W lannock.com.au

With Lannock Strata Finance, you will have a dedicated relationship manager through all stages of this decisionmaking process and through the project.

Our project manager has never inspected the site

The project manager employed by our council to oversee the repairs of lot bathrooms has never been on site. Is it usual for a project manager to rely on information provided by the council?

Our council employed a project manager to oversee the repairs of lot bathrooms. The project manager has never been on site, and there’s just so much misinformation from different council members that it’s becoming unworkable. Is it usual for a project manager to never inspect the site and simply rely on information provided by the council?

In simple terms, no.

Bruce McKenzie In simple terms, no. It’s not usual. It would come back to the terms of the project manager’s engagement and understanding of the agreement. Were they expected to come

6 www.lookupstrata.com.au

to the site, or perhaps it was what we call a light touch arrangement, where they were only assisting at a high level?

Ordinarily, any project manager should go to the site. It’s the definition: the project manager is managing the project hands-on, on the ground, and making sure things are right.

You could contact the project manager to clarify whether this is driven by their understanding of the original agreement.

Edwina Feilen: If you’re not getting the service, you shouldn’t pay those fees until you actually get that service.

One key aspect of a tendering or project management process is that every time a fee is submitted for payment from a contractor, we need to ensure that the fee for service is for works that have been completed or provided.

In this instance, maybe get a second opinion.

Edwina Feilen & Bruce McKenzie | Sedgwick bruce.mckenzie@au.sedgwick.com READ MORE HERE

Can the strata company prevent owners from making a claim?

Q

A

Can the strata company structure the strata insurance so a lot owner cannot claim under the policy? Is this a viable way for strata companys to manage the claims history and the adverse impacts of claims unrelated to common property?

Someone who pays for insurance and is an insured party has a right to make a claim on that policy.

8 www.lookupstrata.com.au

A lot owner is an insured party to the policy.

They contribute to their building’s insurance and have an insurable interest in the property.

When you buy a strata property, you purchase the claims history of the building. This is simply one of the things that you can’t avoid. The only way to prevent this is to not own in strata.

It’s crucial to understand that someone who pays for insurance and is an insured party has a right to make a claim on that policy. However, the strata company also has a role to play.

They can negotiate specific excesses, such as in the case of water damage issues, where they can request voluntary higher excesses.

Alternatively, they can recommend owners take action to maintain their property to reduce those claims.

Tyrone Shandiman | Strata Insurance Solutions tshandiman@iaa.net.au READ MORE HERE

9

9

Strata manager will not disclose their insurance commission

10 www.lookupstrata.com.au

We have repeatedly asked our strata manager to disclose the insurance premium and their commission. We’ve failed to receive satisfactory supporting documents.

What is the best approach in regard to this matter?

Obligations are limited to disclosure of the amount or value of the benefit (and do not arise if the amount is less than $100).

The Strata Community Association has recently published it’s “Best Practice Strata Insurance Disclosure Guide” which you might want to mention to the strata manager as setting out what the industry considers to be best practice in relation to this issue.

A strata manager’s obligations in relation to disclosure of any remuneration or other benefits they receive are set out in section 147 of the Act and regulation 100 of the Regulations. Those obligations are limited to disclosure of the amount or value of the benefit (and do not arise if the amount is less than $100). Therefore, they do not necessarily have to disclose any further information.

From the information provided, it is difficult to say whether or not the strata manager is in breach of any of its obligations under the Act, Regulations or their contract with you. If they have and they do not respond to a formal written request, then you may have grounds to commence a SAT application.

The contract you have with the strata manager might also contain terms that are relevant.

Information about the insurance premiums that a strata company is paying (as opposed to any commission that the strata manager is receiving in relation to that insurance) is information that belongs to the strata company and should be provided if requested.

Carolyn Meighan | Bugden Allen Graham Lawyers carolyn@bagl.com.au READ MORE HERE

Disclosure and your strata insurance policy When you buy insurance there are matters that may affect insurance, but unless you disclose it to the insurer, they will be unaware. As you have not clarified this matter with the insurer, you have no way of knowing that in the event of making a claim, your claim may be affected by the non-disclosure of this matter. Insurers may be able to refuse to pay a claim or part of a claim under an insurance policy if the policyholder has not complied with their duty of disclosure under certain circumstances, and then non-disclosure has prejudice the insurer. See below for a duty of disclosure statement.

MATTERS THAT MAY REQUIRE DISCLOSURE An example of such a matters that relate to typical strata insurance disclosure matters include; CLAIMS

WHAT CLAIMS HAVE YOU MADE IN THE LAST 5 YEARS?

Commercial Tenancy

Commercial tenants occupation is required to be disclosed with new business and every renewal as this can affect the risk.

Construction of your building

Whilst commonly it might be concrete, brick, wood or other, building cladding is now very topical. The existence of any cladding of whatsoever nature should be disclosed as part of your building construction description. Non-compliant cladding is an issue for insurers, due to fire safety aspects.

Building condition reports

Usually building reports will highlight potential maintenance issues. > Mainly for older buildings an example is a wiring condition report that illustrates you have an issue with electrical wiring in the building. > Roof report that states the roof timber beams have rotted. > Concrete cancer on balconies Any matter that highlights adverse matters about your build-ing could be considered a defect to be disclosed.

Defects that are known

A Defect can arise in many ways, such as; > Design – poor design can lead to issues > Materials used – example is non-compliant cladding –the cladding used safely is okay, but not used correctly can cause major fire hazards. Other materials and products may actually be cheap and not perform well on the building > Workmanship – poor building techniques and lack of experienced tradesman > Serious lack of maintenance that leads to a defect

Structural

Such as earth movement of movement of foundations, lead-ing to cracks in walls etc.

Disclosure around what the strata company is doing to proactively fix any known issues, such as the appointment of specialists, like engineers or specialist builders to determine the cause and what can be done to fix the matter. Scope of works and plan to attend repairs.

This will have a positive effect on your insurance, by demonstrating to the insurer that the matter is not being ignored.

Disclosure and your strata insurance policy

TYPICAL DISCLOSURE QUESTIONS SHOWN ON APPLICATIONS INCLUDE: 1. Is the Strata Community aware of any building defects?

2. Has an insurer declined an application or refused to renew a policy for the Strata Community?

3. Has an insurer imposed special terms or conditions to the Strata Community insurance?

4. Has an insurer declined or refused any claims?

5. Attach the claims history to this quote (Up to 5 years)?

6. Any other questions that are asked, must be answered, whether they are an application or not, but must be in writing? *Note not are all matters that relate to disclosure are asked as questions within an application.

YOUR DUTY OF DISCLOSURE Before you enter into a contract of general insurance, you have a duty, under the Insurance Contracts Act 1984, to disclose every matter that you know or could be reasonably expected to know, is relevant to the underwriters’ decision whether to accept the risk of insurance and if so, on what terms. You have the same duty to disclose those matters before you renew, extend, vary or reinstate a contract of general insurance.

NON-DISCLOSURE If you fail to comply with your duty of disclosure, the underwriters may be entitled to reduce their liability under the contract in respect of a claim or may cancel the contract. If your non-disclosure was fraudulent, the underwriters may also have the option of avoiding the contract from its beginning.

N.B. The disclosure required is especially important in matters relating to the physical risk, past claims, declined cover at renewal leading to a cancelled policy, the imposition of increased premiums and application of higher excesses etc. and any matters that might affect the acceptance of the risk such as insolvency or criminal convictions.

General Disclosure; The information provided by Lync Insurance Brokers in this article is for general purposes only, and it is not a substitute for professional or legal advice. You should always consider the PDS/Policy wording before making a decision.

Coverage may differ based on specific clauses in individual policies.

Refer to the FSG on our website or by requesting a copy of our services and remuneration details. Lync Insurance Brokers is an Authorised Representative (AR 001306015) of PSC Connect Pty Ltd ABN 23 141 574 914 (AFS No. 344648).

Your duty, however, does not require disclosure of a matter > that diminishes the risk to be undertaken; > that is of common knowledge; > that the underwriters know or, in the ordinary course of business, ought to know; > as to which compliance with your duty is waived by the underwriters.

GET IN TOUCH P 1300 127 503 E info@lyncinsure.com.au claims@lyncinsure.com.au 1/905 Hay St, Perth WA 6000 lyncinsure.com.au

Have inflation fluctuations caused more cases of over or underinsurance?

Q

A

Because of recent inflation fluctuations, should councils arrange insurance valuations more regularly instead of waiting the typical five years? How have market fluctuations affected the insured amount?

Could we see more than usual cases of over or underinsurance?

Yes they should be arranging more regularly than the 5 years due to the recent construction market fluctuations.

We’re recommending annual updates at the moment due to construction market fluctuations which have been significant since the pandemic.

It’s really important to have a valuation done more regularly and at the moment, five years is way too long. It’s an added expense, but it’s better than being underinsured by a significant percentage.

Inflation within the construction market directly affects the building sum insured / insurance valuation for a strata property. Media has drawn 14 www.lookupstrata.com.au

attention to 20% annual increases which have been relevant in some areas, this however is not applicable to all areas. On the other side of the coin some properties have been inflating their building sum insured / insurance valuation amount by the 20% per annum seen in the media which may not be relevant to their area, or property, resulting in significant overinsurance as well.

We can bring your sum insured back in line with what’s actually happening in the market for your property, not just based on the insurer’s automatic indexation. Prior to the pandemic the insurer’s automatic indexation was typically too high, but generally since the pandemic it has been too low and it cannot be relied upon. Also, what is the basis of the number that the insurer is automatically indexing? Is it correct, current and relevant to your property?

An independent valuation for your property rather than being based on what has been read or seen in the media is key, especially at the moment in a rapidly moving market.

Zac Gleeson | GQS zac@gqs.com.au READ MORE HERE

2024.

Realmark Strata’s new tech integration boosting efficiency and communication Realmark Strata is excited to announce the integration of cutting-edge technology from MRI Real Estate Software and SMATA at Realmark Strata.

Realmark Strata is excited to announce the integration of cutting-edge technology from MRI Real Estate Software and SMATA at Realmark Strata.

This upgrade brings new capabilities such as real-time updates on maintenance and administrative tasks, a chat function between committees, strata managers, and building managers, as well as easy access to financial reports.

“With this new technology, we can provide even more effective support to our clients,” says Luke Downie, head of strata and business development at Realmark Strata.

“It allows us to streamline communication and processes, making it easier to address your needs promptly and efficiently.

“By combining our team’s expertise with these innovative solutions, we can enhance our service and better support our community of strata owners.”

REALMARK STRATA

With features such as a document library with a search engine, simplified invoice management and approval processes, and a building noticeboard for centralising important notices, owners and committee members will find the new system highly beneficial.

The enhanced system offers contractors direct communication with committee members, strata and building managers, easy document uploads, and efficient management of updates and scheduling.

Streamlining these processes is crucial for effective property maintenance and ensuring timely responses to maintenance issues - benefiting all stakeholders involved.

These advancements aim to create a more efficient, transparent, and user-friendly property management experience.

By integrating these advanced solutions, Realmark Strata is enhancing its superior service to ensure the smooth operation and upkeep of strata properties, ultimately enhancing the value and experience for all stakeholders.

To learn more about how Realmark Strata can support your strata management, contact us on 9328 0999.

www.realmark.com.au/strata-management

WINNER.

2023 REIWA Strata Management Agency of the Year.

WINNER.

2023 SCA (Australasia) Strata Community Management Medium Business Award.

WINNER.

2022 REIWA Strata Management Agency of the Year.

WINNER

2022 CHU SCA (WA) Strata Community Management Medium Business Award.

WINNER

2022 CHU SCA (WA) Support Team Member Award.

Whilst we’re absolutely delighted to win awards, we judge ourselves only on our strata owners’ satisfaction. Our clear commitment to managing strata properties goes beyond the everyday practicalities and compliance of property management. It is to work with the community of strata owners and advise them on how to achieve the best of outcomes.

To learn more on how Realmark can help create a better result for strata owners, simply get in contact with Luke Downie Head of Realmark Strata Management on 0479 095 889 or 9328 0909.

REALMARK STRATA

www.realmark.com.au/strata-management

Who is responsible for upgrading our power board?

We are commercial tenants of unit A in a commercial strata complex. According to a licensed electrician, for safety and compliance reasons and to ensure sufficient power without interruption, the power board for our lot is full and requires an urgent upgrade. Unit B’s power comes through our power board as well.

Unit B has a meter and contributes to power usage but has no power source of its own.

This is noted on the Certificate of Title.

Is the strata company or the owner/landlord responsible for the cost of the upgrade?

A

The electrical provision to the tenant should be detailed within the lease agreement.

In regards to the power board being full, this could be one of two situations: •

Is it that the power board is spatial/ physically full? Or

•

Is it that the electrical capacity of the board is full?

The electrical provision to the tenant should be detailed within the lease agreement. The lease agreement is with the property owner.

Therefore, once the lease has been reviewed, you should raise the situation with the owner.

Q

We are tenants in a commercial strata complex.

Who is responsible for the necessary cost of upgrading our power board, considering that a neighbouring unit also utilises it for its power? Is it the strata company or our landlord?

18 www.lookupstrata.com.au

A meter audit and capacity review can be undertaken to determine the power board upgrade requirements. If the power board is just spatially/physically full, this is a smaller upgrade project. If the electrical capacity has been reached, a full switchboard design upgrade and Western Power Submission and Approval are required.

Damien Moran | Energy-Tec damien.moran@energy-tec.com.au READ MORE HERE

EnergyTec: The Same Trusted Service, Now with a Fresh Look!

While our appearance has changed, our mission remains the same: to be your expert partner in delivering viable, smart, and practical solutions for your sustainable and compliant embedded and private utility networks.

Our Services include:

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Can an owner who rents their apartment use resident facilities?

Our by-laws state facilities are for the use of residents. Can an owner who rents their apartment use the facilities? Can we deny them access?

I live in an apartment building with a pool, spa, gym and sauna. Our by-laws state these are for resident use only, and guests must be accompanied by a resident when using the pool and spa. An owner rents their apartment and doesn’t live at the building but insists on the right to use the facilities. Are the facilities for the use of residents? Where do we stand in regards to denying the owner access?

A custom residents-only by-law for common property facilities restricts access to owners who do not reside at the building.

Where the standard Schedule 2 Conduct bylaws for “Use of common property” have been replaced with a by-law stating the common facilities are for residents’ use only, the owner who rents out her apartment does not qualify as a resident and is, therefore, not able to use the common facilities.

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To address the matter: 1. R aise the Concern: Bring this issue to the attention of the council of owners, as the strata company is responsible for upholding the scheme by-laws.

2. I nitial Conversation: An appropriate strata company representative should have a conversation with the owner to highlight the issue and explain the by-law.

3. B reach Notice: If the issue persists, the council of owners can issue a written breach notice outlining the specific breach and prescribing the corrective action required.

Note: Under the Strata Titles Act 1985, physically denying access is typically not an option.

Enforcement usually involves issuing breach notices and potentially seeking resolution through the State Administrative Tribunal (SAT). Each case is unique, and consulting a legal professional familiar with your specific scheme by-laws for personalised advice is always beneficial.

Melanie Duryea | B Strata Melanie.Duryea@bstratawa.com.au READ MORE HERE

An owner bypassed the strata repair process and now wants reimbursement.

Should we refuse to pay?

22 www.lookupstrata.com.au

Our strata company has a process for organising repairs to common property. Without notice, an owner organised repairs and requested the strata company contribute to the invoice. Should the company refuse to pay?

Our strata complex has a priority list to repair and maintain the common property. We organise repair quotes, and the council of owners picks a suitable contractor to complete the work.

One of the council of owners members decided to hire a contractor to do work, and they are asking the strata company to pay a portion of the invoice.

The owner submitted to the strata company an unpaid invoice for the full amount and a quote for the full work, including a section of the scope of works to be paid by the strata company.

If the owner hasn’t followed the correct procedure, is the strata company obliged to pay?

If the owner did organise works that were not approved, the strata company may not be liable for payment.

In regards to decision-making by the council of owners, it first needs to be as per the approved works and budget from the last Annual General Meeting. If the item is not an emergency, the owner should follow the process of noting the quotation to the council of owners and await a majority approval.

If the owner did organise works that were not approved, the strata company may not be liable for payment. The council of owners would need to decide if the works completed were required at the scheme and if the cost was reasonable and, therefore, if they want to make payment or negotiate a payment amount. If payment is not made, it is imperative to view the contractor’s terms and ensure the account has not been made in the name of the strata scheme.

Jamie Horner | Empire Estate Agents JHorner@empireestateagents.com

We are a proudly Western Australian firm that advises on strata law Our experienced team assists strata managers, council members and individual lot owners with clear and practical advice.

Call us today to find out how we can help you resolve your strata issues.

Contact us Call 9200 4900 or email Elizabeth at admin@civiclegal.com.au civiclegal.com.au

READ MORE HERE

Cultivating a Culture Welcome to the ESM Strata Community

EMPOWERMENT AND RESILIANCE IN STRATA MANAGEMENT TEAMS In the evolving landscape of strata management, cultivating a culture of empowerment and resilience is essential. As the number of strata-titled properties in WA continues to grow, so too does the demand for skilled strata management professionals. This surge presents both an opportunity and a challenge for the industry, making it critical to create an environment that fosters innovation, teamwork, and a positive workplace culture.

T H E N EE D: THE HIGH-STRESS REALITY OF STRATA MANAGEMENT Strata management is inherently demanding. Strata managers juggle a multitude of tasks daily, from interpreting complex strata laws and managing financial reports to mitigating conflicts between owners and chairing meetings. Their role extends beyond office hours and often involves dealing with emotionally charged situations. This stress can lead to burnout and high turnover rates, affecting job satisfaction and performance.

THE VICIOUS CYCLE OF EMPLOYEE AND CUSTOMER EXPERIENCE A critical issue in strata management is the direct impact of employee well-being on customer experience. When strata managers are overwhelmed, their ability to provide high-quality service diminishes, leading to frustrated clients and more negative interactions. This feedback loop exacerbates stress on managers, further affecting their performance and job satisfaction. To break this cycle, improving the work environment and support systems for strata managers is essential.

THE POWER OF CULTURE IN 2024 In 2024, the importance of culture in driving organizational success is more pronounced than ever. The adage "culture eats strategy for breakfast," coined by management expert Peter Drucker, underscores that a strong organizational culture is fundamental to achieving strategic goals. In high-stress environments like strata management, a robust and positive culture acts as a stabilizing force, empowering employees to navigate challenges and innovate solutions.

PROUD WINNERS OF THE 2023 STRATA MANAGEMENT LARGE BUSINESS AWARDS

SM Team

WHA T WE ’ R E DOI NG :

st Speciali Team

TEAMING APPROACH At ESM Strata, we have embraced a modern organizational

Ldship team

structure that emphasizes teamwork. By integrating our staff into specialised teams and adding further voluntary teams— such

as

Specialist,

Sustainability, and

Technology,

Environmental

Knowledgebase,

teams—everyone

is

connected, supported and encouraged to pursue innovation

SM Team

outside of their day to day role.

ROBUST CULTURAL FRAMEWORK A robust cultural framework is the cornerstone of our strategy at ESM Strata. Our culture is built on shared values and a clear mission, essential for aligning our team members' efforts and fostering a sense of belonging. Regular feedback loops strengthen internal relationships and ensure every team member feels valued and heard. This supportive environment is crucial for maintaining high morale, encouraging innovative thinking, and building resilience.

CONTINUOUS TRAINING AND DEVELOPMENT Investing in training and development is another critical component that we commit to as a company, but that each team member commits to as well. Each team member at ESM Strata has a dedicated training budget to support their professional and personal growth that is prioritised by the leadership team, ensuring we remain at the forefront of industry knowledge and best practices.

FEEDBACK AND ADAPTABILITY We place a high value on feedback from our team members. Regular surveys and check-ins on professional fit, personal fit, cultural fit, training, recognition, mentorship, and financial fit provide us with insights into their experiences and aspirations. This feedback informs our strategies and helps us adapt to meet their needs effectively. By being responsive to their feedback, we demonstrate our commitment to their well-being and professional development. This adaptability is key to maintaining a positive culture.

The future of strata management lies in our ability to create environments where professionals feel empowered, valued, and inspired to innovate. At ESM Strata, we are committed to this vision and are confident that it will lead to a more sustainable and successful industry for all.

esmstrata.com.au | +61 (0)8 9362 1166 15/443 Albany Highway, Victoria Park WA 6100

RAWLINSONS INSURANCE REPLACEMENT VALUATIONS

Is your property accurately insured? www.rawlinsonswa.com.au

RAWLINSONS INSURANCE REPLACEMENT VALUATIONS WHAT IS INCLUDED/EXCLUDED FROM THE VALUATION REPORT? An Insurance Replacement Valuation should INCLUDE the following costs:

The following items are USUALLY NOT covered in an Insurance Replacement Valuation:

Capital Construction Costs of Building, External Works and Services Construction Contingency Demolition Costs Professional Fees Development Application Fees Escalation during the Design and Documentation Period Escalation During the Lapse Period

Loose furniture, fittings and equipment (contents) Tenancy fit out costs Loss of revenue/profit Temporary accommodation costs during the rebuilding phase Legal fees Financing costs

WHY RAWLINSONS? Rawlinsons was established in Perth, Western Australia in 1953 and is currently situated in Rivervale. As the creators and editors of the extensively circulated Rawlinsons Australian Construction Handbook and Rawlinsons Construction Cost Guide, we maintain the most comprehensive and current library of construction pricing information and data sources in Australia.

www.rawlinsonswa.com.au

Trust accounts, pooled accounts and interest

Q

Is it usual for our reserve fund account to sit within the strata manager’s trust account?

Do we get the interest?

Our reserve fund account sits in the strata manager’s trust account. The strata manager sits within a real estate business. The business also has a property management division. I understand that the strata owner’s and rental property owner’s funds are in the same account. Is this legal?

As interest rates have now increased, should the strata manager pass on earned interest to us?

A

From what you’ve described, the funds sit in a ‘pooled’ trust account, which is normal real estate agency practice.

If your strata manager is also a real estate agency, your funds will be held in a real estate agent’s trust account. From what you’ve described, it’s a ‘pooled’ trust account, which is normal agency practice. Real estate agents are licensed and must abide by the requirements of the Real Estate and Business Agents Act. The Real Estate and Business Agents Act and Regulations require the strict maintenance of a formal set of trust account records that, at any time, show the state of a real estate agent’s trust account.

Section 70 of the Act requires persons who carry on a business as a real estate agent to have their trust accounts audited according to the requirements determined by the Commissioner for Consumer Protection and in accordance with accepted auditing practice.

28 www.lookupstrata.com.au

In addition, Section 68B(1) of the Act and Regulation 6F of the Regulations, the financial institutions holding agents’ trust accounts are required under the Act to pay the interest on these accounts to the Department of Energy, Mines, Industry Regulation and Safety (DEMIRS).

This means all interest from this trust account goes directly to DEMIRS. The interest earned on trust accounts is initially credited to the Settlement Agents Interest Account and then credited to the Fidelity Guarantee Account and to the General Purpose Account, which funds various functions performed by the Commissioner under the Act and in relation to the Act under the Fair Trading Act 2010, including education, advice and the investigation of real estate matters. The Fidelity Guarantee Account helps provide financial reimbursement to people who suffer pecuniary loss or loss of property through the criminal or fraudulent actions of a licensed real estate or business agent, real estate settlement or business settlement agent or their employees in the course of a real estate settlement or business broking transaction.

As interest rates have increased over the past few years, you may want to speak to your strata manager about moving some of your funds (surplus funds not required over the upcoming period) into a separate investment account/term deposit where you can receive interest.

Jamie Horner | Empire Estate Agents JHorner@empireestateagents.com READ MORE HERE

Does your strata manager tick ALL these boxes...

Are they fully licenced, trained, qualified and abide by the laws governing licenced agents?

Do they have Fidelity Fund Guarantee?

Do they have independent Trust Account audits?

Can they offer No Lock-in or No Fuss contracts?

Do they have great reviews and reputation?

Do they posess experience impossible to match?

Is their approach hands-on, personalised & dynamic?

If there’s a few boxes unticked give us a call or drop us an email and we would be happy to chat Feel free to speak to our Licensee

Jamie Horner - 9262 0400 - jhorner@empireagents.au

Mastering the Art of Strata Management 966 Albany Highway, East Victoria Park, Western Australia 6101 E: reception@empireestateagents.com W: www.empireestateagents.com Government of Western Australia

Department of Mines, Industry Regulation and Safety Real Estate & Business Agents Licence 81794

Providing easy access to the electricity box

30 www.lookupstrata.com.au

Q

On multiple occasions, owners have cut the padlock on the strata company’s electricity meter box situated on common property. Do other buildings have issues like this? What can we do?

A

Access is important if each unit’s meters are situated in the electricity meter box.

As strata managers, we can only comment on what options the strata company has available to them in terms of the Strata Titles Act (WA) 1985. Without having an in-depth understanding of each incident, it appears from the outside that there may not be adequate provisions for owners to gain access to the meter box. This access is especially important if each unit’s individual meters are situated in the electricity meter box.

Suggestions There are numerous ways this issue can be managed that cultivates a positive community experience. Some suggestions would be: 1. Have a reasonable access policy that all owners, residents, and managing agents are aware of (best practise would ensure this is supported by a scheme by-law): • A single contact point where a key/ device can be obtained within a reasonable timeframe upon request • A secure lockbox onsite, which the access details can be obtained upon request (regular updates of codes assist with security challenges) • Be sure to keep a record of access requests so that any issues can be addressed as required

2. I f access is not required by owners/residents (i.e. strata company meter access) • CCTV, which can be reviewed • The strata company then has evidence which supports the breaching process if required • Adequate scheme by-laws regarding access and the on-charging of cost where damage has occurred • A single contact point for access, which can be assessed on a case-by-case basis by the strata company ESM Strata mchurstain@esmstrata.com.au READ MORE HERE

Are owners responsible for maintaining water valves?

In our building, owners need to check valves annually and replace them every two years at our cost. If we make an insurance claim, there is a $20,000 excess. Is this reasonable?

We own an apartment in a high-rise building in East Perth.

Previous to our purchase, the building experienced problems with water damage from burst water valves that control the hot and cold water coming into the apartment.

32 www.lookupstrata.com.au

Owners were advised to have their valves checked and replaced. Owners of valves that caused damage were informed they were liable for the cost.

We have now been advised that owners need to check valves annually and replace them every two years at our cost. If we make an insurance claim, there is a $20,000 excess.

How is this reasonable? Shouldn’t all internal pipework and valves be a building cost, not a cost to owners?

It’s important to understand the distinctions between “Responsibility to Insure” and “Responsibility to Maintain”.

Furthermore, in cases where damage arises due to a lack of maintenance or failure of these valves, the cost of repairs and any associated claims may be the responsibility of the lot owner, including any applicable excess.

It’s important to understand the distinctions between “Responsibility to Insure” and “Responsibility to Maintain,” which can often lead to confusion.

It is advisable to review the strata plan and by-laws specific to your building for any provisions that might uniquely apply to your scenario. Consulting with your strata manager can also provide clarity and ensure you are fully informed about your responsibilities and rights as a lot owner.

In this scenario, as the valves are considered permanent fixtures, they form part of the building structure. Consequently, the strata company is responsible for insuring them in accordance with the WA Strata Titles Act. However, if the valves form part of the lot, maintenance of these fixtures falls under the jurisdiction of the lot owners. This means that even though the strata company insures the valves, individual lot owners are responsible for their upkeep or for repairs in the event the damage is not covered by the policy.

Tyrone Shandiman | Strata Insurance Solutions tshandiman@iaa.net.au READ MORE HERE

33

Underage people living and staying in an over-55s complex

A tenant’s daughter has been staying in an over-55s complex.

What can be done to stop this?

What can be done with underage people living and staying in an over-55s complex?

Some while back, a tenant’s daughter was staying at the complex. The daughter was told she could not stay at the property.

Over the past month, the daughter is back.

The strata company has spoken to the daughter, but she arrives late and sleeps over every night. What can we do?

34 www.lookupstrata.com.au

Allowing a contravention of a restricted use condition contravenes a development condition or a town planning scheme, and the local government may take action against the strata company for failing to comply.

Unfortunately, this is a common scenario which can cause significant issues for a strata company.

Generally speaking, restricted use conditions (such as minimum age requirements) are noted on a strata plan of a scheme and result from a development condition.

It is an offence under s. 82 of the Strata Titles Act 1985 (WA) for an owner or occupier of a lot in a strata titles scheme to use (or permit to be used) their lot in a manner that contravenes a restricted use condition set out on the strata plan.

There is also a risk for the strata company.

Allowing a contravention of a restricted use condition contravenes a development condition or a town planning scheme, and the local government may take action against the strata company for failing to comply.

should seek urgent legal advice to assist with issuing a contravention notice.

Proceedings may be able to be commenced in the State Administrative Tribunal (SAT) if the contravention notice is not complied with.

Again, the council of a strata company in this position should urgently obtain legal advice for assistance in commencing SAT proceedings.

Jason O’Meara | McWilliams Davis Lawyers jo@mcwilliamsdavis.com.au READ MORE HERE

The action a strata company can take will be subject to such things as the relevant scheme by-laws, development approvals for the strata scheme and town planning schemes.

In this situation, a council should review its scheme by-laws and determine whether a contravention notice can be issued to the owner or occupant regarding the unauthorised use of the lot. The council

35

Understanding Strata Insurance Disclosure wa.strata.community

What you need to know Navigating strata insurance can be complex for anyone, but understanding what best practice is in regard to insurance disclosure can both simplify the process, and contribute towards positive, informed outcomes for strata communities.

Strata Community Association (SCA) is proud to have officially released its ‘Strata Insurance Disclosure Best Practice Guide’, which sets out necessary and critical changes to how SCA members will be disclosing strata insurance practices to strata communities from 1 July 2024.

It is critical that all stakeholders, including consumers, understand the incoming changes, and what is being done to enhance transparency and choice for strata residents, both in Western Australia and across all jurisdictions.

Role of Strata Managers and Insurance Brokers Firstly, its important to understand the role of strata managers in relation to strata insurance, and why they are being remunerated.

36 www.lookupstrata.com.au

admin.wa@strata.community Services provided by Strata Managers in the process of the placement of strata insurance include: Quotation and procurement Placement and renewal of insurance Claims management Record keeping Correspondence and negotiation Providing advice based on insurance knowledge Strata managers bring valuable knowledge of both the insurance landscape and the specific buildings they manage, which benefits the strata committee and policy outcomes. With increasing legislative and regulatory requirements, the expertise of both strata managers and brokers is crucial, working in tandem to provide tailored insurance solutions.

Consumers in strata communities have the right to clear, concise information about their insurance policies and the remuneration involved. Therefore, by adhering to best practices in strata insurance disclosure, SCA aims to provide a transparent and informed experience for all strata communities in Australia.

What is ‘Best Practice’ for Strata Insurance Disclosure?

Empowerment of Strata Committees

To ensure that strata committees are fully informed, it’s crucial they understand their options, the details of their insurance policies, and the breakdown of associated fees. This knowledge enables better decision-making and financial planning.

Positive Consumer Outcomes

Improving the relationship between consumers and insurance providers by fostering clear communication and understanding is a key goal. This leads to better experiences and outcomes for those involved in strata insurance.

Transparency and Choice

Providing clear communication about choices and the specifics of insurance policies, to ensure that consumers are well-informed.

Timely Communication

Strata committees should expect at least three clear points of communication: when they receive a quote, when the invoice is issued, and during the Annual General Meeting (AGM). This ensures that all parties are aware of the details and timing of their insurance policies.

Concise Information

Providing clear, easy-to-understand information about the roles and responsibilities of the strata manager, broker, and insurer is essential. This includes explaining the strata insurance process in simple terms, making it accessible to all committee members.

Clear Financial Disclosure

Consumers have the right to know who is getting paid and why. This information, including the amounts, will be included with invoices, quotes, and discussed at the AGM. Transparency in remuneration helps build trust and ensures all parties are accountable.

The main components of best practice strata insurance disclosure guide have been summarised into three steps:

Disclose Document Communicate

SCA's commitment to best practice in strata insurance disclosure is designed to ensure that consumers have all the information they need to navigate their insurance options confidently.

Upcoming SCA (WA) Events CHU SCA (WA) Owner Conference Date:

14 November 2024

Location: Optus Stadium

Understanding the intricacies of strata insurance can be challenging, but with the right information and clear communication, strata committees can make decisions that benefit their communities.

Cost:

$50 - $75

wa.strata.community/wa-owner-conference

37

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