Crowd Sourcing + Strata = Owner Engagement

Strata owner engagement is a serious problem for most strata corporations and I've blogged about the challenge before (see No Fault Strata Owner Apathy).


I feel that one of the causes is the lack of options for strata owners to express their views on issues and feel like it makes a difference.  After all, usually that only occurs at a formal strata meeting where the stakes are high, every vote counts and people become polarised around outcomes -rather than the issues.


So, giving owners other forums to explore issues and information and where they can express opinions can only improve things.  


Crowd Sourcing is (according to Wikipedia) a process that involves outsourcing tasks to a distributed group of people. This process can occur both online and offline, and the difference between crowdsourcing and ordinary outsourcing is that a task or problem is outsourced to an undefined public rather than a specific body, such as paid employees. WIth a few bass modifications I think it might be an option for strata corporations to get more and better strata owner engagement.


Some explanations and examples to get you thinking about how Crowd Sourcing could work include this article from This Big City that explores the pros and cons of Crowd Sourcing for urban planning feedback and this report on a real example of using Crowd Sourcing in a development context from Washington where a developer asked the community what kind of tenants they'd like in a vacant shop.


Imagine if your strata corporation used Crowd Sourcing to canvass important issues, plans and challenges with owners (asking for them to collaborate to find the better or the best outcome) before holding formal meetings to decide things?  It's not that hard to do, couldn't do any harm and would improve outcomes by engaging more opinions.


Francesco ... 

A Defect Claim Knockout for Large Strata Buildings

You probably know that throughout most of Australia strata buildings over 3 storeys have not had Home Warranty Insurance covering defective original construction since 2003.


That means that they can only sue the builder (and maybe the developer) for defects under the applicable home building laws (and maybe in negligence).  Which is fine if the builder is still around and solvent.


But as this article by Adele Ferguson in SMH Domain reveals the solvency of many Australian builders is doubt.


She reports that since January more than 363 companies in the building industry have become insolvent (with more than 200 of them from New South Wales and 95 from Victoria).  And, she says 'the trend seems to be getting worse, with 30 building companies failing in March, 33 in April, 51 in May, 63 in June and a whopping 40 collapsing in the first 10 days of July'.


Whilst that's bad news for the building industry, it's even worse news for strata owners, executives and managers of buildings they built that are over 3 storeys - since their primary targets for compensation for building defects (the builders) are disappearing fast.


So, apart from the all the adverse decisions being handed down by Courts in strata defect claim cases now there's going to be even less possibilities to sue builders due to economic factors.


It makes the decision taken about 10 years ago to exclude taller strata buildings (over 3 storeys) from home warranty insurance 'last resort' protections appear to have been overly optimistic about the  financial strength and longevity of builders.  And, it leaves strata owners without fair and reasonable protections over the quality of the their buildings (again).


Maybe the NSW Office of Fair Trading will take this into account in its current review of Home Building Laws (see Repairing NSW Building Laws).  Or, am I just being hopelessly optimistic?


Francesco ...  

Winning the Strata Olympics?

Imagine if there was a Strata Olympics.  Where every 4 years the best strata people from around the world competed in contests of skill, strength, speed and stamina to test their strata ability and see who was the best in the world.


It's worth thinking about what the strata sports might be, what it would take to win and which countries would be strongest.  I imagine events like these -

• Speed vote tallying where the fastest at counting votes on a multi-candidate election with a poll wins
• A long distance sinking or reserve fund race where strata executives tried to see how long they could make their funds last before the money runs out
• Meeting notice weight lifting where competitors tried to lift increasing large (and heavy) AGM meeting notices with multiple attachments
• Strata compliance gymnastics where owners, executives and strata managers contort themselves to fit through increasing small and complex gaps and channels without falling, touching the sides or hurting themselves
• Water penetration polo where a slippery ball has to be kicked or passed between team members to score goals in water trodden apartments situated below leaking balconies, planter boxes and flat roofs
• A 400 meter hurdle where strata managers had to run a lap of the oval and jump over or otherwise avoid strata owners trying to stop them to ask questions or get information
• And, for the final event there would be a marathon strata meeting lasting 26 hours where the person most active (or awake) at the end wins

It would be a fantastic strata spectacle.  And, just imagine the pageantry of the opening ceremony!


Francesco ...

Pet Friendly Strata Information

A friend of mine has a few incompatible passions - strata and pets - and is doing something about it.  She's started a website called Stratapets with lots of useful information.


Like many people that love their pets and want to live in strata, my friend had to learn the hard way about the traditional incompatibility of the two and the apparent inflexible rules and policies that apply in many strata buildings.  But, that dis-appointment led her to find out more and share it on the web.


So, why not do the same and learn how to bridge the gap between strata living and pet ownership to make strata life with pets possible for you too?


Francesco ...

Is NSW Creating Strata No Go Zones?

The NSW government is proposing widespread changes to planning laws to improve urban outcomes.  The latest announcements suggest that areas will be defined as -

• 'enterprise zones' which are loosely regulated to encourage development,
• 'suburban character zones' which are heavily regulated to prohibit most forms of development
• 'future urban release area' which sets out areas where greenfield development is likely to occur in the future

The suburban character zones will allow council to excluding medium- or high-density development and is, apparently, in response to recent backlashes from communities, such as Ku-ring-gai, to past planning controls that allowed medium-rise and high-rise developments in established suburbs.

The idea strikes me as a trade-off: for allowing easier higher density development in some areas councils will be able to create areas where high density development is completely prohibited. A kind of strata no-go zone.

Whilst there's no doubt that the planning laws and processes need change, creating strata no-go zones is anti-strata and high density.  It adds another factor to the things that tend to make strata 'second rate' real estate that people buy if they can't afford to live in real homes in suburban zones - rather than the preferred living option for the future.

You can read more about the proposals in this SMH Domain article by Josephine Tovey and at the NSW Planning website.

Francesco ...

Is Your Home Happy

We spend so much time with our houses and apartments, we depend on them for shelter, security and refuge and we use them to make money ... but do we care about their feelings?


Have you ever wondered if our homes are happy?  What have you done to improve their lives?  Do you care?


Here's an amusing video from Nest about happy homes.  Enjoy!





Francesco ....

No Surprises about Strata Defect Laws

Why is everyone so surprised that one judge in the NSW Supreme Court decided that builders and developers don't owe strata corporations a duty of care in negligence for the quality of construction?


Since the decision in the Star of the Sea case last month (see A Strata Corporation Win on Building Defects and More Setbacks for Strata Building Defect Claims) there's been some frantic activity by strata corporations, managers, executives and lawyers over building defect claims.  For instance, Teys Lawyers issued a Bulletin telling everyone to quickly check the details, timing and status of their defect claims and others are doing the same.


But, there should be no surprises about this set back for strata defect claims.  After all, this is still new legal territory in this country, there's a lot at stake and the following things are not new.

• There has only ever been one Australian case (in the Northern Territory by a single judge) that decided  there were such duties.
• The High Court has changed the rules about negligence for this kind of damage a few times in the last 20 years and most lawyers will say that the law remains unsettled and confusing.
• Builders and developers have many good commercial reasons to defend these kinds of legal claims (and are well organised and equipped to do so).
• Conversely, most strata corporations are poorly organised and under resourced to run complex (and costly cases).

What's really surprising to me is that strata corporations leave their building defects unresolved to the point where they have to rely on such difficult legal principles to try to get redress.   Most buildings have rights to sue builders and developers for defects and have had up to 6 or 7 years to do so without ever having to worry about common law rights, yet they ignore problems, defer investigation and action, accept compromised fixes from builders and try to save money on experts and lawyers - all of which weaken their position when things don't turn out as they had hoped.


Plus, one unfavourable decision in the ongoing strata building defect battle is not the end of the legal debate in this area - it's just the beginning of the argument.




Francesco ...

Gimme all Your Strata Money

Perhaps the one thing that excites most people in Strataland is money.  How much the strata corporation has and needs? What owners should, want and can pay?  And, how well it's spent?


Invariably the 'right' answers to each of those questions are in direct conflict.  


Strata corporations could always do more than they are currently if they had more money.  Owners (of all kinds) would rather pay less and often have important competing needs for the money they have to pay strata corporations.  And, juggling strata cash flows from quarter to quarter, year to year and decade to decade is difficult to do.


But, the last 2 or 3 decades have seen strata corporation budgets and strata owner levy payments steadily increase.  And, that's a trend that will continue.


So, this article by Pamela Dittmer from the Chicago Tribune has some useful advice for committees to get better owner engagement and support for increases.  She suggests communicating better, transparency, following good advice, providing comparisons to similar properties and explaining committee reasoning for the increases.


I know that doing these things won't guarantee owner support but it's still way better than simply calling a meeting with levy increases and hoping everyone will accept them.

Francesco ...

Who's Winning the Australian High Density Race?

In the race to higher density in Australia there's winners and losers amongst our suburbs.


This recent article in the Property Observer by Tim Lawless indicates that at the moment Sydney suburbs dominate the top 20 with Elizabeth Bay, Rushcutters Bay and Wentworth Point in the top 3 (in that order). 


So, well done Sydney high density contenders!  And, here's the top 20 table.

But winning the high density development race is a bit like leading the Tour de France. Winning a stage, a sprint or climb is great but not enough to win the race since it's a long way to the end and success comes from consistently staying at the front of the peleton.


Let's hope all the Australian competitors in the high density race keep pedalling hard and we achieve the targets needed to properly and affordably house our future population in a sustainable way.


Francesco ...

More Setbacks for Strata Building Defect Claims

Last week I blogged about one of my client's successes in their building defect claim (see A Strata Corporation Win on Building Defects) in the NSW Supreme Court.


But, its not all good news for strata corporations with building defects.


The flip side of winning the argument about the application of the protections under the Home Building Act is that the NSW Supreme Court also decided that common law duties of care about the quality of building construction did not exist in favour of strata corporations.


Although this is a very complex area of Australian law, in the simplest terms the decision is based on -

• Changes to the tests that apply for negligence claims for economic loss from proximity to vulnerability since the High Court decision in Woolcock's case 
• The reduced vulnerability of strata corporations that have the benefit of Home Building Act warranties
• Difficulties with imputing duties in negligence in favour of strata corporations as the ultimate owners of buildings when it's unlikely builders owe those duties to developers

So, things just got a bit harder for strata corporations that need to sue in negligence for building defects.  At the very least they need to get past the NSW Supreme Court to the NSW Court of Appeal to overturn this decision (and probably need to be prepared to take the issue to the High Court).  As Justice MacDougall said in his decision 'I think that the question of imposition of a duty of care is one for consideration either at the final appeal level or by the legislature'.


You can read the decision for yourself here.


And, if you want to read what the builder's lawyers say about the implication of the decision read their legal Alert here.


Given these developments, I'm very interested to see (and be part of) the next chapter in strata building defect legal claims.


Francesco ....

Repairing NSW Building Laws

2012 is a busy year for NSW strata stakeholders.  Apart from the major review of strata and community title laws the Office of Fair Trading is also undertaking a review of the Home Building Act.


That's the law that controls the construction of residential buildings (including strata buildings) and provides consumer protections for building quality.  So, it's pretty important to strata corporations who inherit what's developed and built and have complete responsibility for it.


The issues paper for the review identifies a  lot of issues, but of particular interest for strata stakeholders are the following areas.

In relation to the statutory warranties: Definition of “completion”; Subsequent purchasers; Sub-contractors responsibility for statutory warranties; Maintenance schedule for strata buildings; Refining existing statutory warranties to including requiring homeowners to mitigate losses; and Definition of “structural defects”


In relation to dispute resolution:  Compel homeowners to allow licensees back on site to rectify defects & Disputes over $500,000


In relation to home warranty insurance:  Exemptions from home warranty insurance (including high-rise exemption); Section 92B of the Act - where all work at an address is covered; and Providing optional “top-up” cover


As you can see these are very important issues which have peculiarly adverse impacts on strata buildings.  So, make sure you have your say and push for better (not less) protections.


You find out more about the review and download the issues paper here. 


Francesco ...

Telling Building Professionals about Strata Defects

During the first half of this year, the Owners Corporation Network has engaged with the NSW Building Professionals Board to explain the extent of strata building defect problems in NSW. 


That included a consultation session and follow up meetings where OCN outlined the frequency of strata building defects, the unwillingness of developers and builders to rectify them and the difficulties faced by strata owners and strata corporations when taking action to force repairs.  This was supported by the results of the  UNSW Governing the Compact City report that identified 85% of survey recipients reporting defects in their buildings.

As a result the BPB issued the following Bulletin to members acknowledging defects in residential strata as a major issue. 

Summary outcomes from consultation sessions
Our analysis of the raw data of feedback received during our consultation sessions earlier this year has identified the following key issues and suggested solutions.:
Consumer protection
Consumer protection issues related to building defects, the lack of qualified persons involved in the construction process and limited insurance protection.
Major building defects were identified as being structural, fire safety and wet areas/waterproofing problems, which require significant costs to rectify. These views are supported by recent University of NSW research.
The main causes of defects were identified as:
lack of on-site inspections
construction not being carried out to specifications lack of a coordinated approach to trades’ work pressures on fast tracking work and cost reduction.
Attendees called for a clear identification of who is responsible for defects and who is responsible for the certification of designs and work for fire safety systems, engineering plans, bushfire protection, energy efficiency and wet areas/waterproofing.
The inadequate coverage of home owners warranty insurance, the lack of a requirement for all building practitioners to hold professional indemnity insurance, and builders going into liquidation with relative ease were also identified as having an impact.
Attendees called for mandatory professional indemnity insurance for all buildings, or individual project insurance.
Certification of the design compliance of buildings

Certification of the design compliance of buildings, poor quality documentation and difficulties with the poor standard of development consent conditions were cited as key impacts on the reliability of the CC.

The lack of specified minimum detail that should be looked for, lack of clarity about who is responsible for providing this certification and overly broad statements of intent do not ensure proper certification of design.
Attendees called for plans to be prepared by accredited persons, improvements to the wording and clarity of conditions of consent, standardised certification, comprehensive documentation and certification by accredited persons.
Certification of the construction process
Attendees identified several issues around certification of the construction process:
section 96 modification process for development consents are not clear and can be approved after work has been undertaken
inspections are limited to what is visible at the time they are undertaken documentation is not always available during inspections
mandatory inspections have limited coverage
some missed mandatory inspections are not unavoidable supervision is not sufficient for the work being undertaken
the work occurring with the development consent is not consistent the PCA needs to meet unreasonable expectations
the roles of the PCA and the council are unclear.
Attendees called for additional mandatory inspections, guidelines and checklists for inspections, a standardised inspection process, greater supervision of on-site work, realistic expectations about the extent of the role of the PCA through better public education, and a clearer definition of the PCA’s role and responsibilities.
Lack of accountability
Attendees identified limited accountability for builders and contractors; limited qualifications, education and competency of persons issuing certificates; the lack of a requirement for a licensed builder in relation to all jobs; conflicts of interest where persons certify their own design; and the limited controls on, and education of, owner builders as issues impacting the responsibility for work done and decisions made.
Attendees called for more equitable and widespread accountability, minimum accreditation standards, independent third party certification, the licensing or accreditation of all builders and trades and mandated education and training for all practitioners. They also called for the accreditation of building designers, the overall principal contractor, engineers and service designers, installers, town planners and fire safety system installers. 


It's not the solution, but it's a great start in creating awareness where it matters.  Well done OCN!




Francesco ...

London Lessons for High Density Cities

London has been one of the world's leading cities for many centuries and has effectively handled the delicate balance between density, financial success, liveability and sustainability (as we've known it thus far).  So, if history teaches us anything, it's likely London will stay that way for some time to come and can teach us a few lessons.


So, when London starts making plans for the next 40 years involving higher densities, greener city centres, economic prosperity and employment vitality, I'm interested to see what is possible.  After all, London has been a pioneer of city innovations like urban transport, congestion zones, electric city cars and bicycle sharing.

That why the exhibition called The Developing City running at The Walbrook Building (a Foster + Partners’ designed building on Cannon Street) from 21 June to 9 September this year is a must see for all high density urbanophiles.   It displays top  architects’ visions of the City of London in 2050 by featuring 40 scale models of recent and proposed schemes in the City.  Plus 3 teams of architects (Gensler with Eric Parry Architects, Happold Consulting, Buro Happold, LSE, Royal College of Art, Siemens and RWDI; Woods Bagot with Brookfield and Hilson Moran; and John Robertson Architects with British Land, Land Securities and Arup) are displaying their ‘Visions for 2050’ in response to various drivers of change, including governance, climate change and banking regulation.


You can find out more about the exhibition here and here.


See you in the old (but soon to be renewed) dart sometime soon.


Francesco ...

A Strata Corporation Win on Building Defects

Despite recent trends, not every NSW strata corporation is losing their building defects case against developers and builders.


The Star of the Sea is a luxury residential strata complex at Terrigal on NSW's central coast which suffered from building defects.  After fixing some things the builder wouldn't deal with planter box leaks, balcony waterproofing and window and door leaks; so the strata corporation started legal action.


Unsurprisingly the builder and developer contested their claims.  Saying that because the strata owners rented out their apartments for holiday accommodation when they didn't use them, they had lost the legal benefit of the Home Building Act warranties protecting consumers.  It was a clever legal issue that had never been decided by the NSW Supreme Court.


So, before the case was finalised the strata corporation, builder and developer agreed to have that decided by the NSW Supreme Court.  The Court also dealt with the complementary issues about whether the builder and developer owed the strata corporation duties of care in negligence outside the Home Building Act.


And the NSW Supreme Court decided that the Home Building Act applied and the strata corporation had the benefit of the statutory warranties.  In deciding that it said that -

• the relevant time to determine the character of building work was at the time of contracting
• later actions and events would not change things unless it involved further residential building work
• the statutory warranties did not (and could not) come and go
• the residential character of building work and the statutory warranties applied to the whole of the building (not just parts of it)
• the decision about the character of building was based on objective assessments
• the owners were not involved an a collective enterprise such as to end the Home Building Act protections

The NSW Supreme Court also decided that the builder and developer did not owe duties of care in negligence - largely because the Home Building Act applied to provide adequate protections for the owners corporation - which will have wider implications for strata buildings that do not have Home Building Act protections or are out of time for claims.


You can read the judgment here - Owners Corporation Strata Plan 72535 v Brookfield [2012] NSWSC 712


Although this strata corporation still has to fight the case about the extent and cost of the defects and repairs (and it may need to resist appeals by the builder) at least it knows it has the protection of the Home Building Act and can recover damages for the defects against the builder and the developer.


It's a great result for one of my consulting clients and I thank them for agreeing to disclose the details.


Francesco ...

A Slow Count on Australian Strata Numbers

Every 5 years the Australian Beareau of Statistics releases numbers including the number of different dwelling types and the 2011 results are just out.  So, there's been a bit of hype about increases in strata dwellings (classified as flats, units or apartments) since 2006 and how it reflects a change in Australian housing. 


But the facts are not all that impressive as this extracted table reveals.

Dwelling structure	Australia	%	2006	%
Occupied private dwellings
Separate house	5,864,573	75.6	5,472,527	76.6
Semi-detached, row or terrace house, townhouse etc	765,978	9.9	658,858	9.2
Flat, unit or apartment	1,056,236	13.6	932,862	13.1
Other dwelling	66,666	0.9	76,080	1.1

When you look at it, there's been a less than earth shattering increase in the percentage of occupied flats, units or apartments of 0.5% (or 123,374 more of them).  That works out to a 0.1% shift or 24,674 more per year.  Even if you include some of the increase in semi-detached, terrace or town houses (totalling 0.7% or 107,120 more) it's still not that much.


So, unless there's a lot of empty strata apartments, it sounds like the much quoted transformation of Australian housing from detached housing to medium and high density might not really be happening (or happening as quickly as many people would like).  


The figures mean that the ambitious targets of government urban planning policies of the past have simply not been achieved and casts doubt about the ability to achieve future targets too.  Only a few more people are living in high density each year in Australia.
  
It also makes me think that the complaints of Chris Briem in his Urbanophile post called Misreferencing Misovestimated Population might apply in Australia too.

You can get the full details of the statistics and more Australian Census information here.


Francesco ...

Are New NSW Strata Owners Being Conned?

The latest changes to financial incentives to new home buyers in NSW promote buying and developing new high rise apartments as this summary on the NSW Office of State Revenue website explains.


Now you'd think that was a good thing for new buyers, developers and the strata title sector.  But not everyone thinks so.


Jimmy Thomson expresses a cynical opinion about the changes in his Flat Chat column saying that this change means that the least savvy and experienced home owners in the state are pushed into the most complicated kind of property ownership (strata title) in circumstances where most new buildings have defects.  And, he's probably right with the unhappy result that many of the new strata owners will have bad experiences and develop a 'second rate' view of strata title.


But, that doesn't mean new home buyers shouldn't be encouraged to buy strata apartments and that developers should not be developing them.  That's precisely the kind of real estate new owners should be buying and that government should be stimulating.  It also helps with housing affordability.


The problems of strata ownership (complex rules & processes, lack of understanding by owners, building defects, etc) just need to be fixed to benefit everyone involved and make strata ownership desirable for all the right reasons (not just financial).  After all it's the way we'll be living in the future.




Francesco ...