Monthly Archives: October 2015

Strata tenants need a place where they can come home to be happy and content.

If you are the owner of a strata scheme in Sydney or in other Australian cities, or are managing this type of property, it means keeping the premises liveable is part of your many responsibilities. Aside from ensuring your tenants are satisfied with their living conditions, you also need to attract new ones to come and live in your building.

Upkeep of the property is a major task and you can’t get by without hiring strata cleaning services to give your space a good scrub. Not only should you be concerned about its physical appearance, it’s also important that you keep it hygienic to ward off disease-causing germs that can affect you and the people in the complex.
What are the advantages of hiring a professional maintenance team?

Cleaning of Internal and External Common Areas

We all know how dirty common areas can get—from dreaded carpet stains to grimy lifts. Without dedicated cleaners, your in-house staff will have their hands full. You’ll need a team who specialises in keeping high-traffic areas immaculate.

Cleaning of these areas usually include, but are not limited to:
1. Ensuring stairways and lifts are kept immaculate
2. Maintaining footpaths, walkways, driveways, and car parks
3. Removal of graffiti
4. Disinfecting and sanitising of railings, skirting boards, and exteriors (like patios)

General Trash Management and Removal

Can you imagine your house with pizza boxes littered everywhere? How about an overflowing trash can adorning your front lawn? Just like you can’t imagine living in such surroundings, your tenants can’t as well. The amount of rubbish in a strata set-up can be overwhelming. As such, there should be a schedule for the removal or collection of garbage, at times that are convenient for everyone.

Window Cleaning

Grimy windows are a major turn-off. But you also need professionals who are skilled and have the proper equipment to clean them. Why can’t your in-house staff do it themselves? First, it’s common for mould and mildew to grow and thrive on window sills, glass and frames. If they are not properly handled, they can pose as a health risk to tenants. Second, improper cleaning can mean dirty streaks on your glass! It’s tiresome to keep cleaning until those streaks disappear. Third, windows are dust magnets that require regular maintenance. With the number of windows in your complex, you’ll need cleaners who can do the job quick and easy.

A Variety of Mundane Tasks are Taken Care of

Not only will you need professionals to clean and disinfect the premises, you’ll also need a team who can expertly take care of your gardens, trees, and lawn. See that light that’s constantly flickering in the hallway? Commercial cleaners can handle these items as well!

With so many cleaning and general maintenance tasks a highly trained cleaning staff needs to take care of, you can have peace of mind and leave the cleaning, sanitising and disinfecting to the experts.

Strata and Community Living often brings people of diverse interests and backgrounds close together. Disagreements and disputes can sometimes arise.

Mediation seeks to assist people in strata and community schemes to resolve their disputes on terms that work for them. It is a structured negotiation process in which a neutral and independent mediator assists parties in disputes, to help reach their own resolution without further legal action.

Mediation is a quick, inexpensive and an informal way of resolving disputes. The only charge for mediation is a fee which must by paid by the applicant for mediation, otherwise there are no other charges. Mediation gives all parties equal opportunity to explain their situation in a controlled environment. The whole process is quite flexible as arrangements can be made to suit each case.

Mediation can also include support people who can help clarify issues in disputes. For instance, you may want to bring a builder or other person with specialist knowledge to further explain your concerns.

In most dispute cases, a mediation session is compulsory. You cannot take any further steps under the Act to resolve your dispute unless an attempt at mediation has been made. Your application will usually be completed within four weeks.

At the mediation session everybody sits around a table and talks through the issues with the help of a mediator. A mediator can be provided by companies like NSW Fair Trading, who have qualified mediators and staff with knowledge of strata and community laws. Alternatively if you prefer, you can find and pay for a mediator of your own choice.

The mediator’s role is to:
• Assist the parties to raise and consider options and strategies by which the issues may be addressed
• Assist the parties to discuss the issues with a view of negotiating a settlement they can all live with

The mediator does not determine who is right or make decisions for the parties with all parties being encouraged to actively participate in mediation.
Mediators from NSW Fair Trading may be able to help by providing information to both sides on their rights and responsibilities under the strata and community law.

Any agreement reached through the mediation process may be put in writing and signed by all parties. These agreements can be ratified by an Adjudicator or the Consumer, Trader & Tenancy Tribunal.

Security is vital for any property, but especially rental properties.

There is always the security key or swipe card access option, but these can be cost prohibitive for most property owners. However, a secure rental often leads to secure tenants.
The following is a safety checklist to ensure your rental property is secure.

Lock in the basics

Although many aspects of security are common sense, some landlords often overlook the basics such as the need to quickly fix broken window latches and door locks, especially in older houses. This is one of the biggest frustrations for tenants, who will even leave if the property does not meet basic safety requirements. It’s also important to:
• Ensure all windows and door locks are checked regularly
• Make sure bathroom and laundry windows can be left opened safely for ventilation
• Ensure any external high windows are maintained
• Consider changing locks at the start of new tenancies

Do your groundwork

Colour schemes and large bedrooms may be at the top of most renters’ lists, but the surrounding areas and shared facilities provide peace of mind when it comes to safety. Tenants will always consider the following before signing a lease agreement:
• Is the street well lit? This is particularly important to tenants who park on the street
• Is there CCTV security cameras around the premises?
• Is the buildings’ common property kept in good order?
• Does the building have a caretaker to help and assist?

Switch on safety

Most electrical switches in a rental will be used every day. Faulty electrical switches are a common cause of fires and broken sockets should be fixed immediately. Before a new tenant moves in make sure:
• The switches are checked for cracks or loose fittings
• The appliances are working and can be operated safely
• There are enough sockets throughout the property to avoid overloading the existing outlets

Landlords should also produce a comprehensive entry condition report that details any safety concerns, and be as involved as you can with the Owners Corporation to ensure the property’s security is maintained to the right level.

Work Health Safety & Strata

In January 2012 the Work, Health & Safety (WHS) Legislation was introduced, which among other goals set out to create ‘harmonisation’ across Australia in relation to WHS matters.

What it also did was create a great deal of confusion in the strata management community about whether or not residential strata schemes were considered to be a ‘person conducting a business or undertaking’ (PCBU), if yes to what extent, or, if not were there any circumstances whereby an exemption ceased to be in play. Questions were raised and debated in relation to mixed-use schemes, (buildings with a commercial or retail element) and over-arching all these questions was how the WHS legislation interacted with the obligations placed on Owners Corporations by the Strata Schemes Management Act 1996 (the Act) to repair and maintain the common property.

The last few years has seen conflicting advice with no definitive answer provided – and more importantly –advice on meeting obligations was neither practical nor helpful.

Work Cover NSW released a “Fact Sheet for Strata Schemes” in relation to the WHS legislation. It addresses a number of issues and answers clearly that a fully residential strata scheme that does not have direct employees is in fact exempt from the WHS legislation.

However, once a person is onsite undertaking works, let’s say an electrician, then the residents are considered to be ‘others’ at the work place, basically providing an obligation on anyone to take reasonable care in relation to their safety and the safety of others and to ensure that directions from the worker are carried out. This obligation exists in any situation where work is being carried out. Even in a private dwelling.

So what now…?

The most important thing for any residential strata scheme to be aware of, is that regardless of any obligations (or lack thereof) under WHS legislation, Section 62 of the Strata Schemes Management Act 1996 (NSW), places a strict obligation on the Owners Corporation to repair and maintain the common property. This is an obligation that has been upheld as absolute by the Courts and many examples of precedent exist.

In practical terms, what this means is that an Owners Corporation should routinely have a suitably qualified expert conduct inspections and provide reports in relation to the common property – identifying any risks and highlighting any item in disrepair. This report should be acted upon and updated to maintain accurate records on actions taken.
[Interestingly enough, the WorkCover NSW fact sheet offers commentary that any Strata Scheme meeting its obligations under section 62 should also, by default, be meeting its obligations under section 20 of the WHS Act.]

What about Commercial & Mixed Use Schemes…?

A building that is entirely commercial or retail is a PCBU for the purposes of the WHS Legislation. As well as needing to ensure strict compliance with Sec 62 of the Act, commercial buildings need to comply with WHS legislation.

In addition to having an expert routinely inspect and report on the common property for the purposes of identifying risks (and acting on any such report) there are additional steps a PCBU Strata Scheme can undertake to ensure compliance, and as much as possible, discharge liability. Such steps may include, but are not limited to:
• Development of a Work, Health and Safety policy relevant to the particular building
• Develop a system to ensure that all contractors hold correct licenses, qualifications and insurances
• Have regular risk assessment carried out on high risk plant equipment – such as lifts or cooling towers
• Develop an emergency evacuation plan
• Develop an incident reporting procedure
• Ensure a consultation process in place for discussion with tenants/operators and workers

Mixed-Use Schemes are slightly different again, as the Owners Corporation is considered to be a PCBU only in relation to the common property that is accessed and used by the commercial lots. As a matter of best practice consideration should be given to undertaking the steps above.

Disputes in a Strata Scheme can take on many forms. Sometimes they can arise between owners because they live in such close proximity to one another. At other times disputes can start because some owners default on their responsibility to pay the levies. There can also be disagreements between owners and the Executive Committee over the way some aspects of the scheme are being handled.

Whatever the reason may be, the harmony of the Strata Scheme is negatively impacted and a resolution needs to be found before the problem escalates into something it shouldn’t. From experience, it would seem that most disputes have to do with the breaking of a scheme’s by-laws but, obviously, this is not always the case.

A by-law issue….
If the dispute involves a breach of a by-law, the best (and sometimes quickest) way to resolve most differences is for the warring parties to talk through the problem with each other ‘face-to-face’. If this isn’t possible then the sending of a polite letter from the Executive Committee or the Strata Manager (if you have one) to the offender might be enough to make some of them realise they’ve actually done the wrong thing.

The letter should outline the breach & seek compliance with the relevant by-law by describing, in detail, what needs to be done to rectify the situation and what will happen if the expected conditions are not met. In this way, there is no doubt in anybody’s mind as to what the next step will be. In many cases, the offender wouldn’t have been aware the by-law even existed let alone that they were in breach of it.

Other types of disputes
Disputes arising from situations other than by-laws can tend to be a little more complex and while the ‘face-to-face’ approach should always be tried in the first instance, be quite prepared for it not to be either practical or successful. For the more stubborn cases, you may find the only way to solve the impasse is via some sort of 3rd-party intervention as discussed below.

Somewhat stronger actions
Only after the ‘friendly’ avenues have been tried, and the parties still cannot come to an amicable solution or they simply refuse to comply or agree, should the ‘more serious and less friendly’ alternatives be looked at. However, it’s amazing what can be achieved if the warring parties can actually get together and talk out the issues. Don’t underestimate the power of this and every attempt should be made to arrange a meeting before taking the next step. Even so, if a dispute cannot be resolved between the owners by the simpler methods, mediation via a 3rd-party may be the answer

What types of disputes can arise?
As varied as the world of Strata is, so are the types of disputes. So, here are just a few of the more common ones:
• Parking on common property without approval
• Damage to common property
• Keeping pets
• Excessive Noise
• Enforcement of by-laws
• Exclusive use by-laws
• Issues about meetings and resolutions
• Storage and collection of garbage issues
• Alterations or repairs to common property
• Damage to ceilings or walls due to water penetration
• Internal fencing & boundary issues
• Validity of meetings or procedures
• Variation of Insurance and Unit Entitlement allocations
• Contribution and Levy issues
• Enforcing restrictions on use of common property
• Appointment/Dismissal of a Strata Managing Agent
• Appointment/Dismissal of an Executive Committee member

In general terms, an Owners Corporation is responsible for the following main insurances:
• The main building and any outbuildings
• Public liability
• Workers Compensation
• Voluntary workers cover

Building Cover
The Owners Corporation has a duty to cover all buildings in the Strata Scheme under a Damage policy with an approved insurer. The ‘building cover’ includes not only the structure but also the common property fixtures and fittings such as carpets in common areas, hot water systems, light fittings, doors, common air conditioning systems and intercom systems, etc.
Special conditions for 2-lot schemes

This building cover requirement doesn’t apply to 2-lot schemes (referred to as small schemes) where the buildings are detached and no building or part of the building in the Strata Scheme is situated outside those lots. However the 2 owners must decide, by unanimous resolution that the Owners Corporation will not be taking out building insurance.

Insured amount
In the NSW Strata Schemes Management Act 1996: Section 82-Damage Policy there’s a prescribed method detailing what’s to be included when calculating the sum insured for the Damage policy. In simple terms the amount is calculated by using the estimated cost of:
• Replacement of the building
• Removal of all debris
• Professional fees for architects, engineers and other persons whose services are necessary

IMPORTANT – A valuation of the building must be carried out at least once every 5 years and the building insured for the new valuation amount. This valuation must be carried out by a qualified valuer or quantity surveyor.

Public Liability
The Owners Corporation is required to insure against death or injury to a person or damage to property for which the Owners Corporation could be held responsible. The minimum cover is currently (in 2008) $10,000,000.

TIP – Public Liability insurance should also be considered by individual lot owners for any special circumstances involving their lot and not covered by the insurance taken out by the Owners Corporation. There are many war stories of owners being ‘caught out’ when the unusual or unexpected happens. So make sure you find out what is and isn’t covered under the insurance put in place by the OC and take any appropriate action.

Workers Compensation
Workers compensation insurance protects employers and injured workers from financial costs when a worker sustains a work-related injury or disease. So, where Workers Compensation Law and Policy requires the Owners Corporation to take out workers compensation insurance, it must be effected.

Voluntary Workers insurance
The Owners Corporation must insure, with an approved insurer, against any damages that it may become liable for when a person does voluntary work for the Owners Corporation in the building or on the common property. A voluntary worker is any person who does work without receiving or expecting to receive any fee or reward.

Other Insurances to consider
Contractors insurance
While it’s not mandatory for any contractors doing work at a Strata Scheme to have the proper insurances, allowing uninsured contractors onto your scheme to do work is simply asking for trouble. Now, there’ll be no problem if nothing goes wrong, but if something unfortunate DOES happen and the correct insurances are NOT in place then the Owners Corporation will be held liable. So, if you want to be totally safe, please:
• Do NOT use uninsured contractors no matter what the situation
• Do NOT use ‘friends-of-friends’ or ‘handy’ owners to work for the scheme unless they are insured
• Check and make sure the contractor’s insurance is valid AND that the cover is sufficient

Office Bearers insurance
The NSW Strata Schemes Management Act 1996 allows an Owners Corporation to obtain insurance to provide financial protection in the event the Executive Committee members become legally liable to pay compensation for actual or alleged wrongful acts. In insurance circles, this type of insurance is known as Office Bearer’s liability insurance.

While this insurance is not compulsory, a motion to consider obtaining such cover must be included in the agenda of each Annual General Meeting if such insurance has not been obtained.

Misappropriation
The Owners Corporation also has an option to take out insurance against the fraudulent embezzlement or fraudulent misappropriation of Owners Corporation’s money (i.e. funds set aside for management of the scheme) and/or property. This type of insurance is usually referred to as Fidelity Insurance and is quite different to Office Bearers liability insurance so, again, make sure you get complete details on this type of insurance from your broker or insurer.

Contents insurance
This type of insurance is probably the one most people are familiar with and lot owners should carefully consider taking out contents insurance to ensure their property (i.e. their lot) is protected from damage, fire, theft or loss.

Everything within the lot, which doesn’t form part of the building, should be insured under a contents policy. Items such as furniture and furnishings, floorcoverings and wallcoverings, light fittings, clothes, appliances and equipment, paintings, personal items and so on should all be covered under a contents policy.

Often there’s much confusion as to whether items are covered under the Owners Corporation’s insurance or whether they’re covered under the owner’s contents policy. Therefore owners need to discuss these issues with both the insurer (or broker) AND the Executive Committee PRIOR to taking out a policy so that it’s very clear, right from the outset, what’s covered by what insurance.

Fire Safety is an extremely important part in the maintaining of a Strata or Community scheme but sadly is, in many instances, one of those matters that’s put into the too hard and too expensive basket thereby possibly putting the lives of the scheme’s residents at risk.

The NSW Environmental Planning & Assessment Regulation 2000 requires that “the owner of a building, to which an essential fire safety measure is applicable, is required to maintain each essential fire safety measure in the building”. Failure to comply with this legislation can lead to significant fines and possibly serious legal ramifications for those responsible.

Fire Safety measures include (but are not limited to):
• Fire mains and water supply services
• Fire hydrants
• Fire shutters & windows
• Fire doors
• Fire dampers
• Fire hose reels
• Fire extinguishers
• Smoke detectors and alarms
• Automatic sprinkler systems
• Emergency lighting
• Stand-by power systems
• Exit lighting & signs

Annual Fire Safety Statement
An appropriately qualified person, such as a Fire Engineer or Building Surveyor, must inspect the fire safety measures and provide an Annual Fire Safety Statement to the owners. This statement must then be provided to the local council and Fire Brigade each year and a copy displayed in a prominent location within the strata building.

Smoke Alarms
In NSW, smoke alarms are already mandatory for all new buildings and for some renovated buildings. However, since May 2006, owners of older home units have been required to install smoke alarms (in the ‘correct’ locations) and keep them in good working order.

The official ‘correct’ locations for smoke alarms in a unit are:
• one alarm on each level of the unit
• one at the part of the unit containing the bedroom and the rest of the unit

Any smoke alarm that complies with the Australian Standards AS 3786-1993 Smoke Alarms (which should be stamped on the product packaging) will meet the new requirements.

Repair & Maintenance
Repair and maintenance of smoke alarms is an individual owner’s (or landlord’s) responsibility with the only exception to this requirement being if the smoke alarms were installed at the time the building was constructed. Then the Owners Corporation repairs and maintains the systems, however the resident remains responsible for regular replacement of the batteries for all battery-powered alarms.

Buying a property that’s strata titled is very different to purchasing one that isn’t, especially for those intending to live in it. In many cases, those with no previous experience in the ‘Strata Lifestyle’ are not fully aware of the differences between strata living and residing in a normal house. There’s special rules to obey (by-laws), there’s money you have to pay every quarter (levies) to maintain your portion of the parts of the complex that you own jointly with all the other owners (common property). There’s also an Owners Corporation and an Executive Committee that regularly hold meetings to discuss important issues. Yes, in many ways it can be quite foreign to the uninitiated.

As the NSW Office of Fair Trading’s publication ‘Buying into a Strata Scheme?’ states:
“Strata schemes are in effect small communities where the activities and attitudes of residents can have a significant impact on the satisfaction and enjoyment of others. It’s important for people to be aware of their responsibilities and obligations when owning a strata unit.”

The Strata Search
Before purchasing a strata title property, it’s wise to arrange an inspection of the records and accounts of the Owners Corporation by a suitably qualified strata searcher. This is called a Strata Search and is covered under Section 108 of the NSW Strata Schemes Management Act 1996.

There are many things that aren’t apparent from a visible inspection of the building and a Strata Search can uncover any issues prior to the purchase. There are also a number of factors which can impact on you once you become the owner and it’s better to be informed about these before purchasing so you can make an informed decision.

The Strata Search report will include:
• The financial status of the scheme
• Pending building works
• Special levies
• Past works history
• All expenses for the past two years
• 10-year budget analysis
• General information on:
o Insurances
o By-laws
o Any disputes
o Any other areas under investigation

Other important questions….
• Is the building adequately insured?
• Is there a recent building valuation to support amount of insurance?
• Does the Strata Scheme have an adequate sinking fund, taking into account the age of the building, the current state of repair and the type of construction?
• Can I afford the quarterly levies?
• Are there any special levies planned?
• Are there any outstanding building works, unpaid invoices, etc that could result in a special levy?
• Is the annual sinking fund allocation adequate?
• What are the current balances in the Administrative and Sinking Fund account?
• Are there any current or proposed litigation matters involving the Owners Corporation?
• Are there any limitations or restrictions on the use of common property which may affect me?
• Are there any outstanding public liability claims involving the Owners Corporation?
• Are animals permitted? and if so, are there any restrictions or conditions?
• Have any alterations to the unit been approved by the Owners Corporation?
for example: the installation of an air conditioning unit

The NSW Government has launched a survey to identify and address potential issues regarding the buying of property off the plan. Buying an apartment off the plan means signing a contract to purchase an apartment that is yet to be built. You can view the design and building plans but there is no physical property to see or inspect.

The main focus of the survey is to find out emerging issues for buyers such as concerns over sunset clauses. This relates to some vendors reportedly delaying a project’s completion in order to rescind the contract with the current buyer, this allows the vendor to then on-sell the property to another buyer for a higher sale price. This is creating uncertainty for buyers who have been waiting some time for their purchase to settle.

In response to these concerns, NSW Fair Trading and NSW Land and Property Information (LPI) are consulting on the extent of the problem and looking at potential measures in response.

To participate in the survey please click here