Strata Apartments as Investments

You might think that strata apartments are real estate.  And, mostly you'd be right.  But you're not Donald Trump.

Sometimes strata apartments are so embedded into complex building operation and management structures that they no longer have typical real estate characteristics.  You can't live in them or use them yourself, someone else decides when they're rented and at what rate, they get renovated at your cost without you input, you can only sell on conditions and you have to share (or pool) the returns with other owners/investors.

In such cases the apartment has (effectively) become the underlying asset in an investment product and is no longer real estate in the traditional sense.  

This doesn't matter much if the investment is providing fair returns.  But, when it's not things start to get messy and loss making owners look to their lawyers.

That's exactly what's happening right now in Toronto at the Trump International Hotel & Tower Toronto where a group of investor owners are suing everyone (including Donald Trump himself) over the representations, delays and returns from their strata apartment investments in that development.  They are arguing, amongst other things, that the development and investment was governed by securities laws (as well as real estate and other laws).

It's an interesting story and case which you can read about at the legal action website of the plaintiff's lawyers, Heydary Hamilton.

It's also novel and unusual that the primary documents in the case are being published in this way by (at least) one of the parties in the litigation.

I guess this is one situation where some strata owners would like to tell Donald Trump - 'You're Fired!'


Francesco ... 

Is Changing Strata Managers Getting Easier?

They say that change is good.  

But, sometimes strata buildings wanting to change managers find it harder than they'd like.  That can be because they don't know how to change or what to do, they don't have the time to organise it themselves or the existing manager makes things harder than they should be.  So, they often need some help.

Strata Match is in the business of helping Australian strata buildings change managers.  So, it's causing some interest and controversy.  But, regardless of your views, it's very likely that strata owners and strata corporations are and will continue to become more empowered over all kinds of decisions (including changing strata manager).

Now, Strata Match is running free seminars in Sydney about how to change strata managers and what they do to help.  You can find out more and register here - http://stratamatch.com.au/

So, if you want to change strata managers and need help why not attend?


Francesco ...  

Green Strata Research from WA

There's a lot of interest in greening strata buildings (along with almost everything else) and lots of people advocating changes.

But, you might not realise that many of the physical changes required to reduce energy and water consumption or to reduce carbon emissions are not automatically permitted in strata corporations.  For a range of reasons, such upgrades need three quarter or unanimous owner decisions, which restricts the ability of strata corporations and member owners to 'green' their building.

During 2011 Chiara Pacifici of Curtin University undertook research on this issue and published a paper called Greening Strata Title in WA: Turning barriers into opportunities for individual owners to  
implement environmentally sustainable provisions in existing residential strata dwellings.

In the paper, Chiara Pacifici identifies the problems facing West Australian strata corporations implementing green initiatives and makes some innovative suggestions which I think we will see adopted in future strata law reforms.


Francesco ...

Are Electric Cars a Strata Building Friends or Enemies?

Even though you might not buy one, very few people are opposed to electric cars.  After all, if they're going to reduce fossil fuel consumption and carbon emissions, it's gotta be a good thing ... right?

Well, in a bizarre twist of corporate (ir)responsibility  Colorado strata corporations might be opposing pro electric car legislation proposed for that US state.

Senate Bill 13-126 is designed to facilitate drivers and users ability to charge electric cars in apartments, condominiums and common interest communities by restricting strata corporations' ability to prevent owners from installing a level 1 or level 2 electric vehicle charging system in their property or in common areas,  It also requires strata associations to consent to such installations except in very limited circumstances.   

That means that the usual control that strata corporations exercise over common property alterations is reversed - and owners can expect consent in most cases.  So, despite any objections to the works, decision making powers of committees and managers are fettered.  It also means that, over time, multiple owner changes and car charging installations can leave the common property a mess and create potential problems over consequential damage and ongoing repair and maintenance.

It's another great example of how things that are good for the general property owning and living public might not work so well for strata corporations because of their peculiar co-ownership structures, shared space environments, stricter regulatory controls, day-to-day operational limitations and the longer term cumulative impacts of changes.  

You can read more about this dilemma in this article by strata lawyers Wizenburg, Leff, Purvis & Payne.

It's a real shame since I believe that electric cars and strata buildings go really well together.  After all the buildings are good parking locations, have ready sources of electricity at bulk buying rates and contain many potential users who could share the vehicles.  

Let's hope a sensible compromise can be found so that strata building owners and managers can keep supporting electric cars and contributing to saving our planet.


Francesco ...