A Quick Tram Ride through Victorian Strata

In Melbourne trams are a easy way to get where you want to go.

And now there's also an easy way to find out more about Victorian strata corporations called the OC Guide.  The website explains that the guide - 

"has been developed so that individual apartment owners and owners corporation committees of management  in an OC within the State of Victoria, Australia, may have an online reference for information to assist them in both understanding their Owners Corporation and hopefully resolving some of the many Owners Corporation challenges. Owners Corporations were formerly known as Body Corporates in Victoria and are often referred to as Strata as in Strata Title." 

I don't know who's behind the OC Guide but it hardly matters.  After all, more information about strata is a good thing for everybody.

So, check out the OC Guide if you're on a Victorian strata journey.


Francesco ...

Are Wooden Strata Apartments in Danger from the Big Bad Wolf?

Should strata owner be worried about timber apartment blocks?

Not necessarily because of the big bad wolf.  But, rather because of the heightened maintenance requirements and potentially shorter life span.

It hasn't been an issue in Australia since most apartments have been built with masonry and/or concrete construction (even if there are timber components).  But, it's quite common to see timber framed and clad apartment buildings in other parts of the world.

However, environmental fashions and initiatives have led to the first mainstream timber apartment building in Melbourne. 

It's called Forte and its developed by Lend Lease.

The 6 storey apartment building is built from cross laminated timber and has only 23 apartments.  Lend Lease says it's the world's tallest timber apartment building, has a remarkably low carbon footprint and will revolutionise apartment construction.

Although there's nothing different about running and maintaining a timber strata building from any other, I suspect that it will be more susceptible to incorrect, inadequate or delayed maintenance and repair.  So, more attention (and money) will be required to preserve it.

And, I wonder about the effective life of the building and what that means.  Since it's likely to be less than concrete or masonry construction should this kind of strata building have planned redundancy from the beginning.  Otherwise, what will owners do when it needs replacing (or when it nears the time for replacement)?

You can find out more about this innovative building here.

Maybe, routine ongoing maintenance and repair (and paying for it) will be the big bad wolf of wooden strata apartments.


Francesco ...

The Yin-Yang of Overseas Strata Owners

I recently read a few interesting articles that illustrated the yin-yang of overseas strata owners in Australian strata.

The Chinese concept of yin-yang, literally meaning "shadow and light", describes how polar opposites or seemingly contrary forces are interconnected and interdependent in the natural world, and how they give rise to each other in turn in relation to each other.

So, why are overseas strata owners a yin-yang strata issue?   

On the one hand it appears that an increasing number of strata owners live overseas.  They're attracted to Australian real estate investment by its stability and foreign investment laws make it relatively easy to buy and won in Australia.  And that's a good thing for Australian strata as this article Foreign Investment in Australia's Property Market by Strata Community Australia explains.

On the other hand overseas strata owners can cause serious strata grief when they don't pay their levies.  That's because strata laws are state based and legal action against people who are not Australian residents and/or not present in the state are more complicated.  Usually they need to be taken in superior courts (so are more costly) and things like service and enforcement action are more difficult without Australian addresses.

This was recently highlighted in a Victorian VCAT case about strata levies called the Sivanesan Case.  You can read more about the problems over strata levy recovery in these articles (The Challenge of Foreign Investors by SCA) and (page 6 article Recovering Fees from Overseas Owners by SCA VIC) and look at the Sivanesan Case judgement here.

So, as much as Australian strata wants and needs overseas strata owners to maintain growth and investment in the sector, they can pose a serious legal and cash-flow impact on strata corporations when they don't pay their strata levies.

It's a yin-yang strata thing.  Or, to put it another way "the sweet is never as sweet without the sour". 


Francesco ...

Artistic Elevators

I hate elevators!  They are just so annoying and boring.

You have to wait for them longer than you usually want.  When they arrive they are either empty so there's no company or so full they're overcrowded.  Inside they look so drab and boring and you're stuck there doing nothing (or worse listening to Muzak).

So, how about using that wasted space and time for art that challenges and stimulates?

Here's a dramatic approach that's been taken in Poland by Studio Pixers. 

Francesco ...

Victorian Strata Bedtime Reading

Can't sleep because you're thinking about the next strata corporation meeting in Melbourne?

Then you need this book.

Called Owners Corporations in Victoria, it's written by Rebecca Leshinsky and Simon Libbis who have many years experience and it provide answers to most of your questions about Victorian strata corporation operations.

You can find out more and buy it here.


So, there's now no excuse for restless Victorian strata nights.


Francesco ... 

More Law Changes for Strata Managers

It's just turned spring in NSW and the legislators are getting frisky with more and more law reform proposals every month.

This time they're reviewing the laws governing real estate agents and strata managers with a range of proposed changes affecting -

• trust account audit requirements & auditor qualifications
• agency agreements & payment entitlements
• regulatory powers over agents

Because NSW is one of the few places in Australia that strata managers are licensed these changes will affect them and strata corporations, so you should check them out.  And you can make submissions up to 5 October 2012.

You can find out more about the changes at the Fair Trading website.

There's a summary of the proposed changes here and you can read the draft legislation here.

Francesco ...

Strata Defects Submissions by SCA & OCN

In July I blogged about the NSW Government revamping Home Building laws and the opportunity to make submissions about this important strata issue (see Repairing NSW Building Laws).

Strata Community Australia and the Owners Corporation Network have made a joint submission focusing on strata building defect issues.  You can read the whole submission here but some of the suggestions SCA and OCN make specifically about strata building defects include the following (my paraphrasing) -

• Introduce a meaningful tiered licensing system for developers
• Define completion dates as strata plan registration dates (made 3 times)
• Create a database of all HOW time limits dates for all (strata) owners
• Educate lot owners about defects, rectification works, fair wear and tear & their rights and responsibilities
• Require builders & developers to inspect lots & common property before handover
• Further definition of "structural defect" is required
• Restore HOW insurance to all strata buildings over 4 storeys (made 2 times)
• Restore the single 7 year time limit for claims (made 2 times)
• Abolish self-certification of building completion
• Variously to improve the CTTT mediation system, impose binding expert determinations on defect claims, shortening the CTTT processes, increase CTTT's money jurisdiction 
• Prevent the use of Phoenix companies to avoid defects rectification
• Imposing the same obligations on unlicensed builders
• Tightening up builders' opportunity to rectify defects so that it's for a limited time, once only, based on detailed work scopes, independently defined-supervised
• Create a national register of unfit persons with ASIC
• Personal liability for directors and shareholders  of non public companies for building defects
• Create a public register of HOW insurance policies

It's great that OCN and SCA are supporting strata stakeholder interests and you can't criticise the intentions motivating the suggestions, but I can't help feeling that this submission is a bit defective itself.  I say that for 3 main reasons.

1.  The submission fails to understand and deal with the shifts that have occurred in NSW over the last 10 years affecting the Home Building Laws, Court decisions that have re-interpreted strata building rights, the downturn in real estate development and the shift in insurance sector participation rates.  So, making submissions that things should go back to the way they were in 2003 is naive.  It would be better to suggest changes that fit into the likely future legal, political and economic environment.

2.  There is no analysis of the way these issues are dealt with (successfully or otherwise) in other jurisdictions (Australian or international) to illustrate why changes are necessary and which changes have already been tried.  For instance, Tasmanian strata laws include provisions assigning developer rights against builders to strata corporations and Victorian strata laws impose obligations on developers to resolve building defect issues in the first few years.

3.  Where's the invention and innovation?  Strata defects wont go away with more of the old solutions - they need innovative ideas to align the interests of all strata stakeholder (owners, developers, builders and regulators) so that  everyone benefits from properly built buildings.  These kind of submissions are where the big (and new) ideas should be formulated since they're unlikely to come from anyone else.

Given the likelihood that NSW developers and builders will continue to campaign that building defects are lawyers' and experts' beat ups, HOW insurance is unaffordable and that thier profitability is adversely affected by over regulation, the strata sector needs to make well reasoned, supported and sophisticated arguements to get improvements (or avoid further reductions in consumer protections).  After all the NSW Government Issues Paper is framed on the basis of reducing (not increasing) builder obligations.


Francesco ...

Help for the Environment in ACT Strata

It's good to see strata corporations doing what they can to save the environment (at least in the ACT).

You see in most Australian strata corporations the changes, upgrades and/or additional equipment needed to make 'green' improvements might not be within normal repair and maintenance and be classified as upgrades which require higher level approvals. In most states a a special resolution (three quarter majority) is required but in the ACT and for South Australian community schemes where the upgrades costs more than $5,000 an approval by unanimous resolution is necessary.

So, environmental upgrades are harder to approve and implement than ordinary repairs - reducing the likelihood of them happening.

But, one Australian exception exists in the ACT where the new (2011) legislation permits upgrades and additions for installation of sustainability or utility infrastructure on the common property with only an ordinary (simple majority) decision.  This facilitates these kinds of upgrades.  But the definition of “sustainability infrastructure” is limited covering only infrastructure and equipment that improves the environmental sustainability of the units or reduces the environmental impact of the owners corporation and the unit owners (including related utility service connections and equipment.).  The laws cite examples such as - solar panels, clotheslines, rainwater tanks.

But even these reduced approval thresholds may not apply to climate change adaptation work that is not also sustainability infrastructure.

You can read the relevant provision (section 23) here.

Well done ACT and thanks (from the environment) to ACT strata stakeholders!


Francesco ...