The official newsletter of Unit Owners Association QLD
A New ERA – Unit Owners Taking Control Story by the UOAQ. On the 14th of March, 2011 at the “Carmel By The Sea” AGM another significant step forward in the quest for true owner control of strata title buildings in Queensland was achieved according to the body corporate committee chairman. Broadbeach apartment building ‘Carmel by the Sea’ owners again voted against an extension of the current Caretaking and Letting Agreements - the committee of ‘Carmel by the Sea’ has been working towards the day when the current agreements expire. AtWritten their previous March Annual General by UOAQ 2010 main account Meeting, the owners authorised the Carmel committee to prepare for this new era by engaging advisers to prepare new agreements for the appointment of caretaker and letting contractors after expiry of their current agreements in 2012. The owners have made it clear they want this to be accomplished through a tender process and that they want “owner friendly” agreements. The enforcement of new pool safety laws will be delayed six months and Queensland’s True owner for control of all aspects of statutoryby land willexisted be postponed ‘Carmel thevaluations Sea’ has not since for three months in the aftermath the the building was constructed aboutof15 floods and Cyclone Yasi. years ago. At the time of construction, the
agreements and should encourage true competition by requiring the contracts to go to tender upon expiry. Governments have not listened and the industry has not moved to more flexible arrangements. Therefore, owners such as those at ‘Mariners Reach’, ‘Palm Springs Residences’ and ‘Carmel by the Sea’ are now leading the way towards a new era of true owner control. Carmel have asked for expressions of interest from experienced building management operators that want to be short listed to tender forBrisbane the caretaking and Skyline letting agent services. Unlike developer arrangements their committee is not selling the “right” to provide these services. It cannot under current legislation. As there will be no cost to purchase, it is expected the successful tenderer will be able to provide these services at a lower cost to both the body corporate and to rental owners. This should result in increased investor returns the new measures could cause delays as the and maybe better apartment prices. The demand forChairman rental properties committee made it increases clear that in the aftermath of “take the current crisis. of the this move to true control” building was not a reflection on the current The enforcement ofpresent new pool safety laws will performance of the caretaker be delayed for six months and and letting agent. What ownersQueensland’s wanted statutory valuations will the be postponed is control land regardless of who existing for three months in the aftermath of floods service provider might be at anythe time. The and Cyclone Yasi. Chairman said “ we want true control over our building through: a maximum three year “The State has been through terrible time agreement, an agreement thataprovides a and now is not the time to stick fair distribution of letting businessrigidly profitsto theowners rules. and Thisprovides is about quality giving people the to value for breathing space they needfrom to concentrate money caretaking services a caretaker on putting lives back together.” that is fully their accountable to the committee.” The Chairman went on to say that “these Under legislation introduced onin1the December requirements are not reflected current 2010, all dwellings nonowners sharedcontinue pool agreements. This iswith whyaour must have a valid pool certificate beto reject a request for ansafety extension of these fore a rental agreement canwithout be entered into. agreements.” An extension, a tender It has also been confirmed Safety process, has been the normby in Pool the building management industry for many Queensland that the delay also years. appliesThis to will not be the case in the future many Shared Pools provided there areatunits. strata title buildings as owners become more aware of their right to say “no” to an extension. The Carmel Secretary said our Unit Buying a Unit owners have voted ‘No’ to extending the
Premier announces common sense measures in aftermath of natural disasters
management rights for ‘Carmel by the Sea’ “Themost Stateother has been a terrible time (like stratathrough title building on the and now is not the time to stick rigidly to Coast) were sold by the developer of the the rules.” These “Management Rights” (MR) building. contracts commit the Lot owners to use the “Thiscontractor is about giving people the breathing one (the contractor that paid the space they need to concentrate oncaretaker putting developer for the “rights”) for both their“in lives backletting together.” and house” agent services with built in cost escalation clauses. The owners Under introduced 1 December had no legislation say as to the terms ofon these long 2010, all dwellings with a non shared pool term agreements, yet they are committed must havethem a valid safety to honour forpool many yearscertificate (up to 25 before a in rental can be entered into. years someagreement cases). Owner groups have It has by PoolState Safety for tooalso longbeen beenconfirmed lobbying various Queensland that the delay also applies to governments for legislation to better control Shared Pools provided there are units the building management industry with within little or success. Many and(whether we at the thenocomplex that are owners rented out UOAQ believe that these contracts permanent or holiday let).“rights” There are fears should be for no more than three years, should have the right to be simply terminated forBuying poor performance, should more effectivelya a Unit Buying limit the ability of the contractor to sell the
See tips inside See Inside the Page 3Edition April
Death See by tips insideClass 2 See tipsDemocracy inside A Thousand Cuts Building Misuse or Oligarchy?
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APRIL 2011 MARCH 2011
Premier announces common sense measures in aftermath of natural disasters Written by UOAQ 2010 main account The enforcement of new pool safety laws will be delayed for six months and Queensland’s statutory land valuations will be postponed for three months in the aftermath of the floods and Cyclone Yasi. “The State has been through a terrible
time and now not the time to stick rigCarmel byisthe Sea idly to the rules.”
Management Rights to allow them to expire: “This is about giving people the breathing they need on options, putting • space For future choicetoofconcentrate management their lives back together.” • For future owner control of our building,
• For future ability to say who manages and legislation introduced on 1 Decem Under how our complex is managed, ber 2010, all dwellings with a non shared • For future ability to reduce costs through must have market a valid pool safety cer pool a competitive tender process, before a rental agreement can beand • tificate For future value (savings) for owners into. It has also been entered manager (no purchase priceconfirmed for MR), by Queensland that an theunsuitable, delay also • Pool For Safety future ease to dismiss to Shared Manager, Pools provided there are applies non-performing the complex that are out • units For within a performance warranty – rented if we know permanent or holiday let).to (whether we cannot be terminated we tend under-perform, • For future ability to stop Caretakers selling their MR for the highest price offered to whoever and whenever they like (Owners should choose who is the most suitable Manager based on their management skills, knowledge, integrity, commitment, etc). Once a better and more appropriate set of agreements is adopted at ‘Carmel by the Sea’, it will provide a benchmark for the path forward in an industry that is in urgent need of reform. In this new era the problems experienced by many other owners in strata title buildings hopefully will be limited or Brisbane Skyline eliminated.
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Welcome to a New Look Unit News Online Paul Cassels - Editor
UOAQ volunteer office workers with Vice president Paul Cassels.
Some New Faces around the Office We moved into a large unit complex at Grange in April 2009, looking forward to a peaceful, hassle free life. Unfortunately, there have been a few pitfalls! An enlightened friend told us about UOAQ and now we find ourselves not only members of UOAQ, but also volunteering at the office on a regular basis on Thursdays. We help with enquiries and
are on a huge learning curve about owners’ rights and the importance of having a sound base of knowledge of the rights and responsibilities of both owners and management. Thanks Paul for your patience and enthusiasm to improve our computer skills!. It’s great being among people so passionate about the protection of our rights and assets.
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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
Welcome to April 2011 edition of UOAQ The Unit News Online: An Australian and International Online Unit Owner Magazine and our brand new look! This issue offers a variety of articles that are both researchbased and practical, as well as articles of value from owners. I am very grateful to our fine Editorial Staff and would especially like to thank all the authors who contributed to this issue. Readers will note that most articles are in a new layout and format. I sincerely hope that readers will find this compilation of articles to be of interest and relevance to the issues you all face in Unit Complexes large and small. I hope that you will continue supporting the Unit Owners Association of Queensland by sending us articles and items of interest. As always, I welcome your comments and suggestions sent to Attention Editor UOAQ Unit News Online at firstname.lastname@example.org
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Unit Owners Association QLD
Death By A Thousand Cuts This is the fate of the holiday unit industry on the Gold Coast if the current rate of assault on owner’s funds is maintained. The takeover of buildings by public companies with massive increases in costs to owners by way of letting commissions and Caretakers wages is just the start. The Gold Coast City Council saw the money pit and placed totally unjustified surcharges on rates for all units above the third floor. The developers are allowed to continue selling 25 year building caretaking contracts for millions of dollars that the owners have to pay via their body corporate levies. Corruption in the industry is reported in the news almost every week – but the Queensland Government continues to sit on its hands and do nothing to protect the unit owners. The recent settlement by Department of Fair Trading in the Phoenician fraud case against the management company did nothing to recoup the owners funds and left the management company in place. The average investment unit owner is lucky to get one to two percent return on capital after all the leaches have taken more than their share of the income from rentals. The permanent residents have no protection under Queensland law that their building will not be turned into short-term rental for schoolies, football clubs and their fans, bucks parties and wedding receptions. The sea change for permanent residents is a nightmare of short term rentals that belong in motels and hotels, and the investor owners are getting less and less return on investment as the building caretakers, the body corporate managers and the public company letting agents take more and more of the income. The unit industry is in real danger of owner resistance through no investment in new units and sales of existing units because owners are being thrown into an unregulated snake pit. The units will turn into slums as the money for maintenance and refurbishment dries up and the Government will have no one to blame but their own ineptitude.
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The Odyssey Of Seven Houses Once upon a time a developer built seven identical houses in a street that went up a hill. It was a beautiful street. Every house had a lawn, a swimming pool, a tennis court and a barbecue. When the developer sold the houses, the house at the bottom of the hill was the least expensive and the house at the top of the hill was the most expensive. Because the houses were all built at the same time and all the new owners moved in about the same time, the owners decided to get one contractor to mow all their lawns, service their swimming pools and sweep their tennis courts. The lawns, the swimming pools and the tennis courts were all identical therefore the contractor charged each owner the same amount. All the owners were happy because they saw that this arrangement was fair and equitable. The owners lived in harmony and were friends, and they asked the developer to call their street the Australian Way. Then the house at the bottom of the hill sold to a new owner who negotiated with the contractor to charge him less for all the services. But the contractor wanted to maintain his income, so he increased his charges to the other six owners in the street. He did this based on a percentage of what each owner had paid the developer for their house. But the six owners were unhappy because they could not understand why one owner should pay less and all other owners pay more for the same services, just to maintain the contractor’s income. And so six of the owners were unhappy because they did not agree with subsidising the owner at the bottom of the hill – and the street was unhappy and they asked the local council to change the street’s name to Communist Court, because it was no longer the Australian Way.
BCATS Australia Pty Ltd is an Accounting Practice specializing solely in all Body Corporate financial issues.
BCATS’ Managing Director, Carol Wright, is highly driven and respected in the high profile Body Corporate Industry and possesses qualifications including: a Bachelor of BusinessAccounting, Professional National Accountant, Graduate Certificate of Professional Accounting, Member of the National Institute of Accountants and Certificate IV in Assessment and Workplace Training. For 5 years, Carol lectured and delivered Body Corporate Financial Training for the Gold Coast Institute of TAFE, throughout
Director B.Bus(Acc), PNA, MNIA, GCPA, TAA, C(Dec)
PO Box 403, Ashmore City. Qld 4214 Mobile: 0419 559 733 Phone/Fax: 07 5597 4791 Email: firstname.lastname@example.org
Queensland, targeting key areas of Body Corporate Bulk Electricity, Financial Management, Body Corporate Accounting, Budgeting and Reporting. Carol’s background includes the writing of numerous publications and presentations for the CITQ and UOAQ while authoring an industry specific book called, “The Body Corporate Committee Member and the Body Corporate Manager – WHAT YOU NEED TO KNOW!” – A comprehensive look at Body Corporate Legislation. As Managing Director, Carol prides herself on her comprehensive and unparalleled knowledge in Body Corporate areas of: • • • • • • •
FINANCIAL AUDITS; BULK ELECTRICITY and all its relevant and current legislation (Electricity Act, BCCM Act, Tax Act, GST Act, Community Ambulance Cover Act, etc); BULK ELECTRICITY BILLING AGENT: Carol is highly sought after by Body Corporates to on-charge bulk electricity to each lot in complexes currently in a bulk electricity on-supply arrangement; BULK ENERGY COST SAVINGS ANALYSES; CONVERSION OF ELIGIBLE COMPLEXES to a bulk supply situation; RENEGOTIATE BULK ELECTRICITY CONTRACTS with the National Electricity Market; and BULK ELECTRICITY FINANCIAL AUDITS: analysing on-charging methodology to ensure 100% compliance and recovery to protect Committee Members.
BCATS Australia is offering a FREE “BULK ELECTRICITY FINANCIAL AUDIT” for non-clients (conditions apply). This OFFER is open until JUNE 2011, and when completed, provides committees comfort or concerns regarding their current billing agent’s services.
Class 2 Building Misuse The cause of the sixty (60) plus deaths in a 2010 Bangkok nightclub fire has been attributed to patrons not being familiar with the fire exits of the building and not being able to find their way out of the building (escape) when the electricity failed and they were left in darkness surrounded by smoke and fire. This is the identical scenario that will exist if a class 2 long term residential unit building being misused for short term transient accommodation (class 3) here in Queensland were to experience a similar fire, because the fire standards in the misused class 2 building have not been upgraded to the required Australian Standard 1670. The failure of the Queensland Government to proceed with the Department of Infrastructure and Planning recommendations to enforce the correct use of class 2 buildings as residential units has placed hundreds of lives at risk in sub-standard tourist accommodation on the Gold Coast, in Brisbane, on the Sunshine Coast and in far North Queensland. Every elected representative of the people has a responsibility to insist that the Minister for Planning and Infrastructure, as a matter of priority, acts on the advice of his Department to safe-guard lives of tourists and residents in Queensland units
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Democracy Or Oligarchy? Wikipedia defines democracy as: Democracy is a political form of government carried out either directly by the people (direct democracy) or by means of elected representatives of the people, as if the people and the elected person were one, linear line of decisions. (representative democracy). The term comes from the Greek: δημοκρατία (dēmokratía) “rule of the people”, which was coined from (dêmos) “people” and κράτος (krátos) “power”, in the middle of the fifthfourth century BC to denote the political systems then existing in some Greek city-states, notably Athens following a popular uprising in 508 BC. Even though there is no specific, universally accepted definition of ‘democracy’ equality and freedom are two principles that are always included within the definition the word democracy. [dubious – discuss] These principles are reflected in all citizens being equal before the law and having equal access to power, and the freedom of its citizens is secured by legitimized (sic) rights and liberties which are generally protected by a constitution.
Body Corporate passed a by-law contrary to BCCM Act Section 180 (3), but because without passing a by-law the vote of the majority was, in the opinion of the Adjudicator, unenforceable. These decisions by the Adjudicator ignore the fact that a number of buildings in Queensland are operated as residential only. Therefore the majority of the owners of this building are being discriminated against by the Office of the Commissioner for BCCM. There is no justification for BCCM Act Section 180 (3) other than to impose the will of the few on the majority of owners, contrary to the most basic democratic principles. The section serves no purpose unless it is intended to protect the commercial business interests of the singular residential letting agent over the interests of the many building owners. In this building, there is no residential letting agent; therefore, Section 180 (3) only serves to impose the will of the minority over the will of the majority. The Government should therefore repeal BCCM Act Section 180 (3) as it is contrary to the democratic principles of the Australian system of Government and is being administered in a discriminatory manner by the Commissioner for BCCM.
Australian democracy is enacted via a system of majority rule that selects one of two alternatives, based on which has more than half of the votes. This is the system under which the Australian Constitution Section 23 for the Senate and Section 40 for the House of Representatives operates, also Queensland Legislature, Local Government and even election of body corporate committees. However, when it comes to the Body Corporate and Community Management Act 1997, (BCCM) the legislation given force under the majority rule democratic system is not extended to, or embodied in the legislation. The Body Corporate and Community Management Act 1997 raises the question: “Is Queensland a democracy ruled by the will of the people or an oligarchy ruled by the interests of the few?” The BCCM Act Section 180 (3) states: “If a lot may lawfully be used for residential purposes, the by-laws can not restrict the type of residential use.” The impact of this legislation is that a body corporate (the unit/ building owners) can not by democratic vote control the use of their own building, or their own living standards. We can name a building where the majority of the Body Corporate twice voted to restrict to use a residential building to long term occupancy . An Adjudicator of the BCCM Commissioner twice overturned this democratic vote of the majority of the owners.
The building owners wanted their building managed and operated by the Body Corporate as a class 2 building in accordance with the building Certificate of Classification to provide permanent long term accommodation that facilitates the amenity, level of health and safety commensurate with the community expectations for places of permanent residence and owner occupation subject to the Residential Tenancies Act 1994. That is a minimum period of 42 days.” An Adjudicator of the BCCM Commissioner overturned this democratic vote of the majority of the owners. Not because the
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