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The official newsletter of Unit Owners Association QLD

APR 20122011 MARCH

DON’T DIG YOUR OWN GRAVE IS OWNING A UNIT IN QUEENSLAND KILLING YOU?

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EST. 1978


UOAQ - Become a Member Today! From the Editor www.uoaq.org.au Unit Owners Assocation QLD 6th Floor. 333 Adelaide St, Brisbane Q 4000 E help@uoaq.org.au P 3220 0959 uoaq.org.au

Brisbane

P 3220 0959 or www.uoaq.org.au and request to communicate to a particular person Sue Ekert, Bob Boundy, Elle Young, Paul Cassels. Published by Unit Owners Association QLD Editor Paul Cassels

Gold Coast

Wayne Stevens, Greg Carroll, Roger Dearing

Paul Cassels

The Unit Owners Association of Queensland has been trying to have the use of Class 2 buildings for short term rentals addressed for some time. Class 2 residential buildings have been built under the assumption that they will be occupied by permanent residents and have not been built to commercial occupancy standards. Therefore, they should not be used for short term

rentals. Fire evacuation routes in Class 2 buildings have not been built to the standard required in a Class 3 building. The safety of all residents is put at risk when apartments in Class 2 buildings are occupied as described in the article about teenage sporting teams being inappropriately supervised while staying in an apartment complex. It can only be imagined what would have happened if there had had to be a fire evacuation of the building. Town planning legislation should be amended urgently to stop the practice of short term rentals in Class 2 buildings before there is a loss of life because of this practice.

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Members of the UOAQ are welcome to contact committee members of the association for any help on any body corporate matter.

Disclaimer

Articles contributed to this newsletter are published as a service to members and do not necessarily reflect the opinion or policy of this Association. To contact the committee of the UOAQ for assistance with a body corporate matter please e-mail help@uoaq.org.au

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DON’T DIG YOUR OWN GRAVE April 2012 The title to this article was prompted by the oft repeated comment of unit owners: “Owning a unit in Queensland is killing me.” This may be stated as a figurative expression or as a statement of fact. There have been some committee members who have suffered heart attacks from the stress of fights within committee. Or more likely with Resident Unit Managers (RUMs) who want contract extensions, contract renewals or change of management modules to increase their potential contract from 10 years to 25 years. These requests are of course against the best interests of the body corporate, and committee members are bound by their code of conduct to recommend against the requests. Some new unit owners are driven to distraction by holiday rentals when they thought they were buying a residential unit. The use of residential buildings for transient short term accommodation creates both a health and safety risk for occupants of the buildings. Permanent residents in residential buildings used for transient accommodation suffer stress, anxiety and social alienation. This situation is a serious health problem for many unit owners who are unable to escape the environment in the building, and cannot afford to sell and relocate. The first step in buying a unit is of course finding a unit you like, but that is the easy part. Next find what BCA classification the building is, class 2 or class 3. If it is a class 2, it should be a residential building, but check and see how it is being used, or get a written statement from the real estate agent if you are buying off the plan. If it is a class 3 building you know it will be a holiday letting building. Of course that may be what you are looking for if you intend to short term rent. Also check the Development Approval (DA) and local council zoning. There have been some purchasers caught by Council Zoning banning permanent residents. Check the type of title you will get at settlement – for your unit, your parking spaces and common property. If all of that works out and sounds OK, ask what caretaking contract has been sold to the RUM. If it is a 25 year contract – WALK AWAY. Otherwise you will be stuck with an annual inflation clause of at least CPI and possibly 5% or greater. This will ratchet your caretaking costs every year for 25 years. You can also bet that the contract will be sold every three years or so, and the body corporate will not have any control over who is appointed as the new caretaker.

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Then check the Community Strata Plan or Community Titles document. What is your unit’s contribution lot entitlement and does it appear to be fair and equitable compared to the other units? Read and understand the by-laws. Can you keep a pet if you want? The Caretakers contract, see what he is being paid and what annual inflation factor applies. Is the payment reasonable for the duties to be performed under his contract? Then check the body corporate financial state. The Sinking fund provisions and the Administrative fund. If it is an existing building search the body corporate records, look at how many disputes have been lodged and check how much the Body Corporate Manager is being paid and does he have a one or three year contract. What is the unit owner turnover rate – high turnover can indicate an unhappy building or other problems that have not been disclosed. Get an experienced body corporate lawyer to help you. If you are purchasing off the plan or a new building, ask around about the developer and the builder. What was their last project and are the purchasers happy with the product. Is the developer financially secure. Recently there have been some problems with the air space above the building being owned by others thus preventing the building owners ever developing a higher building on the site. Also check the ownership of the land below the lowest basement level. You do not want a train tunnel under your feet. Check the local area flight paths for aircraft arriving or departing the local airport and the potential that they may be changed. All airports are increasing the frequency of aircraft movements and are expanding with new runways. Has the price of the developers last project inflated or deflated – this will give you some idea of value of prices being asked. Now have a building inspection completed – even if it is a new building. • Check the soil the building is being built in. • Check the plumbing standards. • Check the 100 year flood levels. • Is the basement likely to flood? • Are the electrical power rooms high and dry? • Are the other services well designed and disaster proof? • Are the fire services in compliance with the Building Code Australia and State regulations. • Is the building sealed for water leaks – roof membrane of the best quality and

flexible paint to the other external surfaces. • Does the soundproofing, up down and sideways, comply with BCA and Australian Standards. How long are the warranty periods for the construction, water proofing, plant and equipment, carpets, painting both internal and external and the elevators. • • • • •

Is the garage venting system running 24/7 or does it have CO2 monitors to turn it on only when needed. Is the basement below the water table requiring pumps to run 24/7 to keep it dry? What is the fail safe system in the event of power failure? Is the bulk water storage on the roof or in the basement? If it is in the basement the body corporate will have to pay to pump the water up to the units. What happens when the electricity supply fails? Does the building run out of water?

Who owns the hot water boilers and storage tanks. You may find it is the energy supply company and the unit owners will have to pay higher energy costs to cover the repayment or rental on the plant. Where is the hot water plant located? If it is on the roof? Pumps will be required to pump all the hot water to the units. Is the building energy efficient. Does it have solar hot water and solar electricity boosting? Is each unit separately metered for • • • • •

electricity gas cold water hot water air conditioning

Of course you will not find a building in Queensland that has all the desirable features listed in this article, but we hope you can find a unit that you like where the building has many of the desirable features. Remember always that when you buy a unit you also buy the building and you must contribute to the running costs. Don’t dig your own grave by buying into a building that has the potential to have excessive repair costs (and maybe a special levy to fix the faults) or excessive running costs that you cannot afford to support with your body corporate levy contribution. Happy unit hunting! We at UOAQ hope this article helps you avoid some of the mistakes that we have made. Remember – do not dig your own grave!

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Under Siege in your Home Hartley’s Body Corporate Management ‘Looking after all your Body Corporate Needs’

UOAQ recommends residents contact police when managers rent residential units to groups of under 18 teams of teenagers who are not appropriately supervised by a responsible adult. Following are details of a complaint made recently by a member to a Body Corporate Committee. We strongly recommend members contact the police if they are not happy with the behaviour of junior sporting teams who may occupy units in their complex on a short term basis. UOAQ also agrees that this type of occupancy is inappropriate in Class 2 residential buildings. Apartments in a short term letting pool in a large CTS complex were occupied for a week by male teenagers under 18 years of age attending an interstate sporting tournament. These teenagers were 15, 16 and 17 years of age and no responsible adult occupied each of the apartments with these teenagers. The building is a class two residential building and the teenagers coaches and managers were accommodated on other floors to the ones on which the teenagers were accomodated. On one occasion some of the teenagers concerned were observed kicking a football at the glass on the balcony of one apartment. On another occasion a large group of teenagers were playing what appeared to be touch football in the common area hall way on one floor. Because of the possible damage these teenagers could cause, the member spoke to the teenagers concerned about their behaviour and reported the matter the next day to their sporting association. The building manager’s representative on site at the time of the latter incident had been unwilling to attend to the teenagers concerned when the incident occurred. The Child Safety hotline was also contacted who advised that the police should have been notified as it was a child protection issue and the teenagers parents had the right to know that their children were not being appropriately supervised.

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On another occasion, all the front doors (which are fire doors) of the apartments the teenagers were occupying were chonked open. The fire evacuation sign was removed from the lift lobby area of another floor. Discussions with one of their coaches indicated that they were unaware of any of the Body Corporate bylaws and had not been given a copy of the by-laws by the building manager who, as the rental manager, should have provided them with these when the sporting association rented the apartments. The building is a Class 2 residential building which was not built for the type of occupancy that was occurring. The practice of letting apartments to under 18 or lower teenage sporting teams when there will not be a responsible adult also residing in each of the apartments occupied should not be allowed. Class 2 buildings are built on the assumption that permanent residents who are familiar with the layout of their building reside in the building. If there had been a fire evacuation of the building it would have been dangerous for large groups of unsupervised teenagers to be entering the stairwells at the same time.

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2 Part Series

Two-lot schemes regulation 2011 The Body Corporate and Community Management (Specified Two-lot Schemes Module) Regulation 2011 (the Two-lot Module) commences on 28 February 2012. This fact sheet provides information on the application of the Two-lot Module. However, it is not a comprehensive guide. Please consult the legislation for in-depth information about the regulations.

• All co-owners of a lot have entered into the lot owner agreement, provided it complies with the provisions of TLM, s5(3). (TLM, s5) Owner’s representative The owner of a lot may be represented by an authorised person. A person is a representative if:

Simplifying two-lot management

• •

The objective of the module is to make the day-to-day management of two-lot community titles schemes less complex for owners.

The person representing the owner must give the owner of the other lot:

Applying the Two-lot Module

• •

References below are indicated as (TLM, s(number of section)) for the Two-lot Module and as (BCCM Act, s(number of section)) for the Body Corporate and Community Management Act 1997.

The Two-lot Module applies: • if there are only two lots in the scheme • if the community management statement (CMS) for the scheme identifies that the Two-lot Module applies • to a community title scheme (CTS) if the lots are residential lots. The Two-lot Module will not apply: • if there is a letting agent for the scheme • if the scheme is part of a layered arrangement of community titles schemes. Note: • The body corporate for a scheme under the Two- lot Module is comprised of the owners of the two lots. • A residential lot is a lot that is used for residential purposes including short or long term leases for residential accommodation. Exceptions Provided the scheme meets the above provisions, the Two- lot Module may still apply even if the lots are not residential. For the Two-lot Module to apply, one of the following conditions must be met: • •

the lots were intended to be residential but are not, and the first CMS specified the Two-lot Module as the applicable module; or the lots in the scheme were, but no longer are, residential lots. When they stopped being residential lots, the CMS indicated that the Two-lot Module applied, and each subsequent CMS indicated that the Two-lot Module applied. (BCCM Act, s111C)

Lot owner agreements Unlike other regulation modules where decisions are made either at committee or general meetings, a Two-lot Module body corporate make decisions by lot owner agreements. • • •

Lot owner agreements must be in writing, contain evidence of agreement date and detail agreed matters. The owners of the lots in the scheme must sign a written agreement. If the agreement is an electronic communication, there must be evidence of approval or consent of the owners. An electronic communication must be consistent with the Electronic Transactions (Queensland) Act 2001.

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the person is a guardian, trustee, receiver or other representative authorised to act on the owner’s behalf; or the person is acting under a power of attorney given by the lot owner and is not the original owner, except if acting under a power of attorney given under sections 211 and 219 of the BCCM Act.

a copy of the instrument that authorises the representative capacity; or satisfies the other owner of the person’s representative capacity, and their residential or business address, in writing. (TLM, s7)

Note: • A person representing the owner of a lot has the functions and powers of the owner, and may do anything the owner may do, or is required to do, under the Act in relation to relevant body corporate matters. • A relevant body corporate matter means a matter related to the carrying out of the functions given to the body corporate under the Act or the CMS. A person representing an owner of a lot has authority to act under the instrument by which the person is authorised to act as representative. (TLM, s9) Engagement of a body corporate manager or service contractor The body corporate may, by a lot owner agreement, engage, or amend the engagement of a person as a body corporate manager or a service contractor. An engagement must: • • • • •

be in writing state when the term begins and ends state the term of any right or option of extension or renewal of the engagement state the functions the body corporate manager or service contractor is required to carry out; and state the basis for calculating payment for the services.

Note: • The term of engagement of a body corporate manager or a service contractor must not be more than one year. • The body corporate may, by a lot owner agreement, terminate a person as a body corporate manager or a service contractor. (TLM, ss11 - 18) Agreed body corporate expense An agreed body corporate expense is an item of expenditure that the body corporate has decided to incur, by a lot owner agreement. Certain expenses will automatically be agreed body corporate expenses, such as:

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Feature Quick News Story • • • •

2 Part Series - Continued next month

an item of expenditure that the body corporate is required to incur under the Act, or the regulation a statutory order or notice given to the body corporate an order of an adjudicator judgements or orders of a court or an order of the Queensland Civil and Administrative Tribunal (QCAT). (TLM, s23)

Contributions • Each owner of a lot is liable to pay a contribution for an agreed body corporate expense. The contributions must be proportionate to the contribution schedule lot entitlement of the lot, except if the contributions are for insurance or any other matter. In that case, under the Act or the regulation, the liability attaching to each lot is calculated differently to the lot’s contribution schedule lot entitlement. • Contributions for insurance are generally based on the interest schedule lot entitlements; however, there are some exceptions noted under the ‘Insurance’ section below. • Contributions must be paid on or before the date fixed by a lot owner agreement, a statutory order, an adjudicator’s order, or a judgment/order of a court or QCAT. • If no date has been fixed, the contribution must be paid on or before the date stated in the contribution notice for an agreed body corporate expense. (TLM, ss24 and 25) The notice of contribution •

If the body corporate or a lot owner receives a notice of an agreed body corporate expense (see above), the lot owner may give the other lot owner a contribution notice. The contribution notice must state the total amount of the expense payable by the body corporate and the proportion of the total amount to be paid by

• •

each lot owner. Additionally, the contribution notice must state the date on which payment is due. The date must be no later than the date stated in the notice of the agreed body corporate expense. However, if the notice does not state a date for payment, the date should be at least 30 days from the day the other lot owner receives the notice. If an owner of a lot gives a contribution notice, it must be given as soon as practically possible, after the notice of an agreed body corporate expense is received. (TLM, s26)

Payment and recovery of contributions and associated amounts Section 27 of the Two-lot Module introduces two new terms − the defaulting owner and the contributing owner: • A lot owner is a defaulting owner if they do not pay a contribution by the due payment date. • A lot owner is a contributing owner if they do pay a contribution by the due payment date. • A contributing owner may pay a contribution on behalf of the defaulting owner. • The contributing owner may recover the amount from the defaulting owner, as a debt. This includes any penalty and any reasonable costs incurred by the contributing owner. • If the contributing owner does not pay the defaulting owner’s contribution, the body corporate may recover the amount, including any penalty and any reasonable costs incurred by the body corporate as a debt. The contributing owner may start proceedings on behalf of the body corporate to recover the contribution and other prescribed amounts. (TLM, s27)

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Information in this fact sheet relates to the Work Health and Safety Act 2011 which applies from 1 January 2012.

Apartment owner occupiers and bodies corporate Units, apartments and townhouses operating under a community title scheme (sometimes also known as ‘strata title’) have a body corporate established to administer the common property of the complex on behalf of the owners of lots within the complex. While most will be owner occupied or leased to tenants, some complexes will vary by: • • •

operating as holiday rental properties having mixed purpose use, for example shops and restaurants on the ground floor of a high rise residential unit block having on-site management to oversee property management and rental.

Does the owner of an individual unit, apartment or townhouse have a duty under the Work Health and Safety Act? An owner or occupier of a unit, apartment or townhouse used for residential purposes does not have duties under the Work Health and Safety Act 2011 (the Act). The only time they would have duties under the Act is if the premises becomes a workplace on a temporary or ongoing basis, for example, when a contractor is engaged to carry out work at the premises. For more information about this situation, refer to the Residential premises fact sheet. Does a community title body corporate have a duty under the Act? Under the Act, a body corporate responsible for any common areas used only for residential purposes is not regarded as a person conducting a business or undertaking (PCBU). However, if the body corporate engages any

worker as an employee, it will be a PCBU and have duties under the Act, to ensure so far as is reasonably practicable: • • •

the health and safety of its workers in the workplace the workplace, the means of entering and exiting the workplace and anything arising from the workplace are without risks to the health and safety of any person the fixtures, fittings and plant are without risks to the health and safety of any person.

In addition, if the body corporate is responsible for common areas used for commercial purposes (for example, shops or restaurants), then it has duties of care under the Act for these areas. Do the body corporate officers have a duty under the Act? Where the body corporate is responsible for common areas used only for residential purposes (and so is not regarded as a PCBU) then officers of the body corporate do not have officer duties under the Act. However, if the body corporate is a PCBU, then the body corporate officers must exercise due diligence to ensure that the body corporate complies with its duties under the Act. For more information on the duty of officers, please refer to the Due diligence fact sheet. Does an on-site manager for a body corporate have a duty under the Act? A body corporate may decide to engage or employ an on-site manager to arrange for

contractors to carry out maintenance and other work on the common property of the residential complex, and/or arrange for short term property rentals. If the body corporate engages an on-site manager as an employee, the body corporate would have the PCBU duty of care under the Act and other applicable duties. In this case, the on-site manager would be a worker for the PCBU and have a worker’s duty of care under the Act. If the body corporate engages an on-site manager to carry out work as a contractor (not as an employee), and the body corporate is responsible for common areas used only for residential purposes, the body corporate would not be a PCBU under the Act. In this case, the on-site manager would have duties of care under the Act, for example, if the on- site manager is selfemployed. Then the manager would have the duty of a PCBU. When a manager lives on-site, the manager may be a resident using their domestic premises to carry out work for the body corporate or there may be a separate office area for managing the complex. For more information Further information on workplace health and safety and the new laws is available at www.worksafe.qld.gov.au or by calling the WHS Infoline on 1300 369 915. For more information on how the Act applies to domestic premises, please refer to the Residential premises fact sheet.

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