NSW Home Owners Warranties Virtually Ruled Out

If you've been concerned about the reducing rights of NSW home buyers for building defects, things just got a whole lot worse.


By a combination of changes to the Home Building Act 1989 and two NSW Court of Appeal decisions, there's going to be some strata corporations that never get to use their rights to sue for statutory warranty breaches.


It's crazy.  But, how did it happen?


First, Section 18E of the Home Building Act 1989 changed in October 2011 so that the warranty period for non-structural defects was reduced to 2 years from completion of work and proceedings for breaches have to be started by then.


Second, the NSW Supreme Court decided in Owners Corporation Strata Plan 64757 v MJA Group Pty Limited and Vero Insurance Ltd v Kassem that completion of work under the Home Building Act means the defective work itself and not all the construction work for the building; so that it could be a date before the end of the building work.  In other words, it's possible that each defective part of the building will have different completion dates.


So, if a strata building has drainage defects (like in the Kassem Case) which are caused by work done early in the construction cycle, then the 2 year warranty period started long before the building was finished.  And, since building construction, approval and strata registration can easily take close to or more than 2 years, that means that new strata corporations may find time limits have run out before they come into existence or very shortly afterwards (and often during the initial period).


It's just unbelievable that this situation has been created to further deny NSW strata owners fair rights to get defective buildings fixed.  Judge Campbell's comment in the Kassem Case that this situation 'has the potential to create a difficulty for a purchaser of residential real estate' is an understatement.  


I'd say this situation effectively prevents most new owners in strata buildings from suing over non-structural defects in NSW.


So, when will NSW strata owners get a fair go on building defects?


Francesco ...

Future Proofing NSW Strata Laws

NSW is reviewing its strata laws (again) and has invited everyone to make comments in an Open Online Forum until the end of February (see NSW Strata Law Reforms are On Again)


And, now they've asked me to write a blog for the Forum which I've done about looking to the future to make real improvements to NSW strata laws.  It's called Turn your Strata Thinking Forwards Before Making Changes and in it I make 10 key suggestions for change as follows.

1. All current bugs in strataneed to be identified and fixed.  They’re easily discerned from court decisions; owner, resident and manager experience; complaints to government; previous discussion papers; and simple analyses of the current laws by experts.  This is a big job, but it’s just the beginning.
2. The different property title regimes for medium and high-density real estate need to be merged so that they operate consistently. There’s no good reason why owners’ experiences in strata buildings should differ to community title or part strata.
3. Governance models and hierarchy need to be re-thought and re-structured based on clear policy positions about whether (or not) owners should always overrule elected committees.  After all, if everything always needs to be decided by owners then why give committees and managers any decision making powers and responsibilities?
4. Strata scheme information collection and sharing needs to be upscaled so that more information is more easily available to owners (and others) about what has, is and will happen in strata buildings.
5. More flexible options for discussions, debate and decision making by strata owners needs to be permitted so that engagement levels increase from the current minimums and decisions better reflect owner views.
6. Long term (non-owner) residents’ interests in strata buildings need to be recognised.  They form almost half the strata constituents in New South Wales and are critical to the future.
7. The construction quality of the strata buildings needs to be improved and guaranteed (at construction, for the first owners and in the medium and long term) by improved approval, checking and re-checking systems.
8. Differences between the experience (and cost) of property ownership between free standing and medium-high density real estate needs to be reduced or eliminated, so that strata property is not second rate property.
9. A register of strata buildings and key information should be created, with regular updates so that everyone can know more about what is (and is not) happening in those buildings.
10. The position of non-owners who assist strata corporations needs to be better defined as traditional roles and business models change to meet owner, committee and building needs.

So have a look at the Forum and make your own views heard.

Francesco ...

Google Maps Inside Strata Buildings?

Google Maps has become the ubiquitous way to find things anywhere on earth from your computer, laptop, iPad, tablet, iPhone or Android device.  But, up until now Google Maps was limited to streets, buildings and other major landmarks (from the outside).


In the latest release of Google Maps for Android enables you to figure out where you are and see where you might want to go when you’re indoors.  Google Maps 6.0 for Android includes directions inside buildings like airports, shopping malls or retail stores helping you determine where you are, what floor you're on, and where to go indoors. 

It's pretty cool and you can watch a short video about it below.

But, why not extend it to apartment complexes so you can see where apartments are located (by building, floor, street entrances, etc) and where shared facilities are within strata buildings?  It wouldn't be any harder than doing it for public spaces and would improve amenity in strata buildings for owners, residents, visitors, delivery people, managers, real estate agents, etc.

Maybe we'll see Google Maps in your strata building soon.

Francesco ...

IKEA Style Strata Apartments

Sometimes we're just so conventional and don't realise it until someone suggests something that's obvious and sensible (but revolutionary).


And, that's what I thought when I read Stephen Cassady's blog on CondoFeed called I Want To Build an IKEA Small Space Condo Complex | CondoFeed 

Stephen was inspired by the Small Spaces demo rooms at Ikea to think that you could simply re-assemble them into a strata building (rather than a department store) and instantly give people great living spaces at reasonable cost.  It's a good idea that turns traditional thinking about building apartments on its head; moving apartment objectives from the developer/builder's perspective to the resident's perspective.


You see, apartment developers and builders focus on footings, walls, floor slabs, windows, doors, mechanical services, plumbing and electrics and roofs (which are of course important) and then simply dress up the interiors to make sure they look fashionable enough for sales and marketing.

So, why not start with an objective of creating Ikea style rooms and then work out how to build them so that they stand up without cracks, integrate with each other, have light, air, power, water and other services and last at least 10-20 years.  In that way, we'll get better outcomes for everyone at at the same (or lower) cost.


I think that the idea can apply to all kinds of high density real estate (and not just low cost housing) and challenge everyone to think about it as an option.


Well done Stephen and see you at the Ikea apartments soon.


Francesco ...

Strata Apartments for Vampires

There's stereotypes about strata apartments like everything else.  


You know the one - light, bright, airy apartments, with sleek surfaces, light coloured designer furniture, no clutter and immaculate potted gardens. The apartment you want to live in and the developer wants to sell you.


But even if you can find one (and keep it that way) with all that junk you really need to live with, that ideal is not for everyone.  Some people want a dark, quiet apartment without views. 


Don't believe me?  Then read this fascinating article by Constance Rosenblum in the New York Times about the vampire apartment dwellers of New York.  The people who want to live in the dark and 'light challenged' apartments because of thier work, lifestyles and budgets.

I'd never considered this alternate view and was surprised.  But, I see the appeal now too.


So, see you at your back alley window sometime soon.


Francesco ...

NSW Strata Law Reforms Are On Again

Even though they've changed NSW strata laws more than 30 times in the last 50 years I keep hearing how they don't work properly, there are inconsistencies in the current laws, unfair outcomes often occur and changes in society, technology and housing needs don't fit properly.


So, I'm guessing that there's a lot of people wanting to say a lot about NSW strata laws.  And, here's their chance. 

The NSW government has launched public consultation about strata law reforms wanting to know what people think about the current strata laws and what you think should happen in the future.  There are 4 key questions but there's no reason comments are limited.


You can find out more about the consultation programme here and join in the forums here too.


So, since there's more than 100,000 people owning, living and working and there's (apparently so much to complain about) it would be great to see a few thousand comments.  


I'll be making a few comments and suggestions myself.




Francesco ...

Members may make views known on the above link. The attached press release was launched last night by the Minister at the SCA Christmas Function whcih OCN office bearers were invited.

http://www.propertyobserver.com.au/residential/nsw-begins-consultation-on-overhauling-complex-strata-rules/2011121452845?utm_source=Property+Observer+List&utm_campaign=1339ee1e3d-December_15_20117_4_2011&utm_medium=email

Overseas Ownership as a Strata Feature

There's suddenly a lot of interest in the future of strata title in New South Wales as the government starts consultation about making major reforms to the laws affecting high density real estate ... which is great.  But, it's likely that the comments they'll receive will be too narrowly focused on individual problems that stakeholders have experienced in the past.


That's fine (and necessary since those problems can and should be fixed) and I'll leave everyone with complaints about the way strata laws and operations work to make those submissions.  But, just fixing up problems experienced by minorities is not making significant change or re-engineering things in strata for the future.


I'd like to focus on fundamental issues that are often ignored but have a huge impact.


One of those is overseas ownership in Australian strata buildings.


It's often forgotten (or not known) that until foreign investment in Australian real estate was opened up in 1975, the growth in Australian strata title ownership was steady but not exceptional.  However, after 1975 we saw huge growth in strata title building and apartment numbers; caused as much by foreign investment as it was by domestic demand.  The late 1970s, 1980s and 1990s experienced growth in strata numbers exceeding 25% per year.


The influence of overseas ownership in strata continues today with many developers and developers relying on offshore sales for the economic viability of projects. In a recent article in Property Observer called Asian buyers vital to Australian property market Morry Schwartz makes the point that Asian buyer are looking to invest in stable economies outside Asia (like Australia) so they need accommodating.  He focuses on developers and sales agents and highlight the Asian real estate listing site juawi.com.


He's right about that and his point equally applies to the operation and management of Australia strata corporations.  Since they need to have mechanisms to better provide for and deal with foreign ownership so that Australian strata property is more attractive for investment and Australian strata corporation operate better with overseas owners.


So, what kind of changes are necessary for foreign owners of Australian strata apartments?

• More information that is globally relevant and understandable needs to be provided:  from simplified ownership and title details to reporting on decisions, issues and finances
• The overseas domicile of strata owners needs to be facilitated by allowing international notification mechanisms, foreign levy recovery process, international payment mechanisms, and timing adjustments for notices and events to cope with different time zones
• Multi-lingual communication facilities should be provided (both ways) so that strata owners, committees and managers can liaise better
• More flexible and innovative meeting and interaction mechanisms need to be developed (using new and emerging technologies) to allow easier owner participation regardless of where they're located
• Better mechanisms are needed to deal with the increased likelihood of tenants occupying overseas owned strata apartments (and therefore reduced levels of owner occupiers in strata buildings)
• Matching the various taxation status(es) of overseas owners to the taxation status of strata corporations

  There's a whole lot more that could be done by strata committees, strata managers, property managers and other strata service providers to suit the special needs of overseas owners.  But that doesn't need strata law changes ... just good business sense and awareness.


So, the future of Australian strata will involve more overseas owners (and increasingly from Asia) so if we're serious about changing things to accommodate the future of strata let's make it more overseas owner friendly.




Francesco ...

A Bicycle's Year in the City

Living in a big city can be tough.  But what if you're a bicycle on the street in NYC?

Here's a great time lapse video of exactly that - a year as.  And it gets tough for the bike towards the end.



Enjoy!

Francesco ...

Checked Your Strata Neighbours Recently?

You'd think that with all that close living in strata buildings, owners and residents would know who they're neighbours and co-owners are. After all, it could make a difference?


The recent uproar about one Toronto strata owner highlights why you might want to check the list of owners in your strata corporation.


It seems that no-one noticed that the owner of a Toronto condo penthouse at 10 Navy Wharf was Muammar Gaddafi, and the son of the former Libyan leader. It was a big surprise to the strata corporation, its manager and other owners.  As well as the Libyan government who is claiming the apartment as a state asset too.


You can read a bit more about this interesting turn of events in stories by the National Post (Saadi Gaddafi owns a $1.6M penthouse in Toronto, Ottawa asks RCMP to investigate Gaddafi son's Toronto condo, Libya lays claim to Gaddafi condo), and by Chris Jaglowitz.


So, next time you're getting in the lift, parking your car or waiting for the strata meeting to start, check out your strata neighbours.


Francesco ....

More Strata Smoke & Mirrors

I just blogged about the increasing interest and pressure on strata smokers in Australia and Canada last week (see Aussie Strata Smokers are Huffing & Puffing).


And, now I've seen this new website in British Columbia, that lists smoke-free strata buildings for owners, residents and managers.

Called Smoke Free Housing BC, the site says  you'll 'find a list of buildings with smoke-free policies' and that you can 'explore the 'View Details' link for a description of each building's smoke-free policy'.  There's also a search facility for listings where residents can search the directory to locate smoke-free rental buildings and condominiums all across British Columbia and a register where landlords and strata corporations can list and promote their smoke-free buildings.  And, it's all free.


It's a great idea for strata owners and residents who want to live smoke free (and for those who want to still be able to smoke without persecution).  And, I expect we'll see similar sites develop elsewhere.


And, why not extend the directory to list strata buildings according other amenity and lifestyle issues like parking, children's facilities, noise, security, etc? 


Anyone want to create the strata building version of Trip Advisor? 



Francesco ...

Is High Rise Harassment Increasing?

There's increasing reports of strata corporations acting unreasonably and perversely against the interests of one or a few owners and/or residents these days.  Like this Today Tonight news report about a few more disturbing strata incidents in Australia. 


Whilst it's true that there's two sides to every story and it's hard to say who's right and wrong in all situations, I'm sure none of us want to be involved in situations like this ourselves.  And, we certainly don't want to be harassed and forced out of our apartments by dominating committee members and managers.  But, equally we wouldn't want to be called 'strata nazis', strata police' or 'strata dictators or despots' when we're volunteering to help run the strata corporation and only doing our job.


Whatever the problem is in each strata corporation, the solution usually involves compromises that may not make anyone happy.  That's because strata corporation actions and decisions get imposed on owners and residents who may not (and often do not) share the same values, objectives, motivations, morals and views.  So, it's no surprise there's disagreement about decisions and whether they are fair or not.


Perhaps that's an inevitable consequence of strata title ownership and living.  Or, maybe it occurs because strata committees and managers are enforcing rules more strictly these days.  And, it's also possible that dis-affected strata owners and residents are also more aware of their rights to complain about things they don't like.  


But whatever the reasons, it's important that there's simple, quick and effective ways to resolve these differences fairly so that unnecessary animosity can be avoided (or at least minimised).  Otherwise, public perceptions that living in strata means being exposed to more prevalent neighbour issues that are hard to resolve, means being subject of majority oppression on decisions and means the risk of despotic behaviour by the strata leaders.  And that means that strata property is seen as a 'second rate' real estate; which is neither right or desirable since we'll all be living in higher density in the future.


So, let's use our heads (and hearts) to make living in strata a better experience that's free of high rise harassment.  After all, we're not in the school yard anymore.


Francesco ...


   

Who Can Sue in Strata Corporations?

In Victoria there's an interesting debate emerging about who can sue in a strata building to enforce the strata corporation's rights.


You see since an old Court decision in 1843 called Foss v Harbottle the common law position for companies and other member based organisations is that only the collective body can take legal action to enforce its rights and not its members.  That's even so if the collective body refuses to take action. So, in a company that means shareholders cannot sue on the company's behalf to protect their interests.  And, in a strata corporation owners cannot enforce the strata corporation's rights.


But it's not that simple anymore (if it ever was).


In Victoria the Owners Corporations Act 2006 gives owners (and other people) the right to bring actions in the Victorian Civil & Administrative Tribunal about strata issues and seek a wide range of orders.  So, if a strata corporation won't enforce a rule or by-law, or won't dispute a manager's actions or doesn't seek compensation for damage to common property an owner might be able to do so.


Recent VCAT decisions have highlighted the issue and included varying comments including the statement that "The fact that such a statutory response similar to that in the Corporations Law was not included in the OC Act leads me to the conclusion that this was no mere oversight and that the rule does apply to owners corporations".  But the Victorian government says that it always intended owners to have that standing and may clarify that in future law changes.


Strata Community Australia (Vic) disagrees and has issued a position paper on the issue (amongst other law changes) that you can read here.

And it raises interesting questions that are difficult to resolve like.

• Are strata owners really like company shareholders or do their interests and rights go further?
• Should a strata corporation's decision to take legal action (or not take it) bind all the owners regardless of their views and interests?
• Why shouldn't strata owners who want to take legal action to enforce strata corporation rights be allowed to do so at thier own risk?
• Does it matter if the legal action is internal (for matters between owners or between owners and the strata corporation) or external (between the strata corporation and external parties)?
• Is a universal rule about this (either way) appropriate or should the decision depend on the circumstances in each case (and so be discretionary)?

I'm interested in other views about such restrictions as the issue applies to strata corporations everywhere.  So, let me know what you think.


Francesco ...

High Density Ascendency

I was very interested to read this article by Robin Murphy in WRI Insights where he writes about The Atlantic's 4th annual Green Intelligence Forum on sustainable cities last year and what's happening with housing in US cities.


Apart from the other things he says Robin explains how suburban housing is being submerged by higher density (and why).  Here's what he says (which explains it better than I can paraphrase) - 


Another fact: of 102 U.S. cities pursuing new long-term development plans, 99 moved to create more densely populated city areas. The age of non-dense suburbia may be passing, with demand for more efficient mobility as the main driver for people opting out of a life of lawns and leaf-blowers. The housing market implosion was not an accident but rather one waiting to happen. One speaker referred to it as the “collapse of the fringe” – simply stated, that the suburban model does not work anymore. People are tired of being isolated, far from work and services, sitting in traffic while burning ever-more expensive fuel. Richard Florida does not believe that a housing “recovery” is underway, but instead a complete “re-set” that will include an evaporation of suburbs and an increasing emphasis on what people prefer – walkable urban places with amenities and services.


It makes sense to me and reflects what I have been seeing for the last 10 years.  


So, whilst suburbia gets submerged ... high density ascends.


Francesco ...

Winning (and Losing) Strata Proxy Wars

We've heard this strata gripe before.

It's not fair (substitute your preferred word) that I was outvoted at the meeting by (insert name) because they had so many proxies.  It shouldn't be allowed!

And a recent article in the SMH by Keith Jackson repeats it with stories of unhappy outcomes from the writer's experience of proxy use and suggesting the simplistic solution of limiting proxies.

But, what's the reality of voting and proxies in strata corporations?  Here's what I think -

• Provided owners pay what's due they are entitled to vote on decisions and can vote any way they want to.  In other words, owners are allowed to be self-interested, unreasonable and inconsistent.  Which means that you can always expect perverse decisions.
• Most owners are not that interested in strata matters, meetings and voting at meetings. As a result, most places allow meetings to occur with as few as 25% of the owners and in many places even less using an 'interim decision' mechanism.  So, even small voting blocks (as small as 10%) can often influence strata decisions.
• Strata owners are adults (by definition) and as such can make decisions about giving (or not giving) a proxy.  So it's fair to assume they realise what they have and are doing by giving a proxy to someone (or can be persuaded to make a better decision).
• It's easy to cancel a proxy.  So, if a proxy holder's action become a real a problem for strata owners they can fix it.
• Abuses of the proxy, meeting and voting systems can always be remedied by challenges to decisions in courts and tribunals that have always recognised and addressed unreasonable decisions, bias, misleading conduct and oppression of minorities.
• There's usually only one strata owners' meeting per year.  So, there's plenty of time to get prepared, change things or do something about problems.
• Limiting proxy numbers doesn't prevent block voting by owners and groups of owners. 
• And, just because you're outvoted at a strata meeting doesn't mean you're right (and the others are wrong).

My suggestion to fix the 'strata proxy problem' is to increase owner involvement in decision so that individual votes and proxies are less influential and decision better represent strata owners' intentions.  That involves doing the following things.

1. Providing strata owners with better information about meetings, issues and decisions.
2. Offering strata owners other voting options (apart from attending meetings and proxies) like voting papers, electronic voting, etc.
3. Using technology to allow remote meeting participation via voice, video or avatar links.
4. Create new decision making processes that are not real time meeting based, like polls, forums, extended duration voting periods.
5. Reporting decisions and voting (especially by proxy) faster and more completely to strata owners.
6. Providing better information about the effects and results of decision options (before and after meetings).

I don't want to live in a nanny state where adults' rights to make decisions are limited.  But rather in a place where there's more information, transparency and reporting of issues, decisions and outcomes so we learn to make better decisions.

Francesco ...

Serviced Strata Apartment Dramas in Docklands

The conflict over serviced strata apartments (residential apartments used for short-term stays by tourists and business travellers) has recently been upscaled in Docklands, Victoria.


Wherever, serviced apartments operate there are potential problems arising from incompatible uses between tourists and residents, inadequate facilities in the buildings for operators, damage and disruption by some tourists, security breaches in buildings and 'sharp' business practices by over-zealous operators.  Owner residents are opposed to the short term use of apartment, but investors like the higher returns.  


So, the City of Melbourne has been taking action to try to limit serviced apartments in Docklands by issuing building orders against 26 owners in the Watergate tower requiring them not rent their apartments for less than 30 days at a time.  Now the owners have appealed the orders to the Building Appeal Board and a 'test case' is underway.

The council is relying building code as the basis of its actions.  And the owners and serviced apartment operators say they have beaten similar attempts to stop them under planning laws, but this is the first time they have been threatened by the building regulations.

And, the actions have prompted serviced apartment operators to form a new group called Victorian Holiday and Short Stay Industry Group (VicShortStay) who is now advocating self-regulation to ensure that serviced apartment operators conduct business in appropriate ways.  Which makes sense but is probably exactly what the serviced apartment opponents don't want to happen.

You can read more about Docklands test case in this article in Dockland News.  

And, it will be interesting to see how this develops and ends up as it affects many buildings, owners, strata committees, strata managers, building managers and serviced apartment operators all around Australia.

Francesco ....

Aussie Strata Smokers Huffing & Puffing

It looks like Australian smokers in strata buildings are huffing and puffing a bit more these days.  But, that's not because of the cigarettes.  Rather, because the strata anti-smoking lobby is increasing it's efforts.


In the last few weeks there's a few new developments.


First, a lawyer, international athlete, former strata resident and non-smoker, Peter Lavach, who contracted cancer after suffering from smoke drift in his building is taking legal action.  He plans to sue the strata corporation, the neighbour and the strata manager; which is a first in Australia.


You can read more about Peter Lavach in this Sydney Morning Herald article.

Second, there's now a new group called Action on Smoking & Health that's organised itself and gaining support.  And, they've published a detailed guide to controlling smoking in strata corporations called Smoke Free Multi-Unit Housing including information about the health effects of smoking in strata buildings, actions for owners, residents. landlords, committees and manager and case studies.

And, the trend seems to be repeating itself in Canada where an Ontario survey indicates that most Ontarians want smoking banned in apartments and condominiums (see article from the Barrie Examiner).  And, even strata insurers are interested in actions by condominiums to stop smoking in their buildings as this blog by Shaun Marker of the Merlin Law Group describes.


So, strata smokers better make the most of the puffing before it's all too late.

Francesco ...

Cardboard Cities, Towns & Buildings

Sometimes you might think your strata apartment might as well have been made of cardboard when building defects and water leaks start to appear.  But imagine if it really was.


Well in Ulyanovsk, Russia last year a Russian art project to create temporary cities and spaces built entirely out of cardboard. Participants create cardboard structures and art.  This one is the ninth created so far.


Enjoy the possibilities.

Francesco ...