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Litigation by Australian strata corporations for building defects is still in its infancy compared to the USA. So, there's some very useful lessons to learn from US strata experiences with making, settling and funding building defects litigation.
In this useful article by Berding Weil Attorneys from California they cover the issues facing strata corporations when deciding how to pay the legal costs of building defect litigation.
It's an interesting exposition in the 2 main options: Pay for Service or Contingency Fees - and I recommend it to anyone running a strata building defect claim.
Leaving aside any legal restrictions on contingency fees in Australia, it's important to understand that many US strata corporations agree to contingency arrangements because they simply can't afford to fund the defect case themselves. So, unless they are prepared to abandon the building defect claim or accept whatever settlement is offered, they have to agree to give away part of their recovered damages to successfully run serious defect claims.
In my view, that's a situation many Australian strata corporations are now finding themselves in for the following 4 reasons.
1. Since builders, developers and insurers are fighting claims harder, it's getting more difficult (and therefore more costly) to successfully run those claims.
2. Strata corporations don't have the funds to run these harder claims (without owners paying special levies) and so don't do so, or run them poorly (and cheaply) and lose.
3. That also leads to strata corporations settling building defect claims early and more cheaply than they could or should.
4. And, because commercial viable contingency arrangements are not permitted in Australia (contingency arrangements being mostly limited to a 10% surcharge on normal fees and not related to outcomes) there's no low cost option for running those cases.
It's a difficult cycle for strata corporation with building defects and we need some innovative solutions. Any ideas ???
Francesco ...
There's street art everywhere. And, here's some from Croatia.
Enjoy, and thanks to my daughter, Peta Andreone, for some of the images.
Francesco ...
I've haven't thought much about the poetry or prose of the written strata word, since my focus has been on technical accuracy and legal compliance. But, nowadays I believe that we can do all that and still make it a more enjoyable read.
After all, even if we just focus on strata meeting minutes, you'd have to admit that there's been a lot of words and pages written by a lot of people that no-one would choose to read unless they absolutely had to (and even then probably not read all of it).
So, why not make them easier to read, more informative and enjoyable (even just a bit)?
This recent post on HOA Brief by Robert M. DeNichilo called What Makes For a Good Set of Meeting Minutes is a good start. Whilst it's US focused, the general guidelines about what should go and what should stay out are of universal value.
Next comes the formal requirements that apply to in your part of Strataland since you need to make sure the box tickers and strata auditors can't fault the records. I'm assuming that you're already doing that by using templates and checklists.
And, finally how about a bit of wordsmanship? Partly that's good grammar, modern expressions, first person voice and the present tense. And, partly that's imaginative expression, story telling and creating a mood. If you paid attention during all those creative writing classes you'd know what I mean.
I like to imagine Shakespeare writing the minutes of his strata meeting and the other owners eagerly waiting to read them. Perhaps they'd read something like this -
A quorum once achieved, shortly after the half hour, the meeting thus began
No proxy was valid, but all men and women were appropriately financial for the day
The last minutes, after debate, were agreed by all present
And insurances were approved, but with two objectors
Yet considerable consternation ensued with the expenditures
Leading two objectors to propose amendments reducing the numbers
The amendments defeated, but there ensued a vote by poll demanded by the pair
Resulting, after time spent in scrupulously counting, in approval of new expenditures
2 score in favour and, but 3 opposed
So, fellow owners will pay, four times in the year
On each eve of January, April, July and October
$100 dollars for each entitlement they hold
No more to discuss, the meeting then ended on the next hour
And all thee present returned to the bosom of those they love
My apologies to the old bard for this.
But seriously, I'm sure with just a bit of effort we could make our strata writing a lot better for everyone.
Francesco ...
Some Victorians might not be amused by strata people getting together and having some fun.
But on 21 September 2012 SCAVIC is holding its 2012 Symposium at the Peninsula, in Docklands called Exploring the Boundaries. They say that the Symposium will focus on knowing the limits that apply to strata corporations and stakeholders so they don't go too far - which is a good thing (I think).
You can find out more and register here, but you need to do so before 14 September (presumably for security checks).
See you in Docklands doing the Victorian strata things.
Francesco ...
Most people in strata have (or should have) a love-hate relationship with developers.
You gotta love them because they take on the commercial risks to develop and build strata buildings and if they do it right we get great high density living for many people. They make the (strata) magic happen.
But, there's many reasons to hate them too because of complaints that strata buildings are not built properly, they don't provide the new strata owners with the documents and information they need, strata levies are set too low, unreasonable and unfair long term contract get imposed and they sometimes try to interfere with strata corporation decisions.
So, many people like Michael Teys in his recent blog, think that the developers hang around too long and should be sent packing firmly and quickly. He's not the only one - with people telling me over many years that the sooner the developer is out of the picture the better.
But I have a different view. I think that developers should be forced to stay involved in the strata buildings they develop for longer and have responsibilities during that time.
It's precisely because developers take a short term interest in the buildings they develop and leave almost as soon they're finished that strata owners get poor outcomes. All of the developer's knowledge and understanding of the building structure and construction, operational plans and issues, their supplier arrangements and connections and their resources are lost. Plus, they more easily avoid the consequences of inadequate budgeting, compliance or planning and have no responsibility for bad decisions that might be made by the new owners which they could have helped avoid.
I'd rather see developers being forced to have one (and only one) position on the committee, a requirement to provide a 'free' person to assist the committee, positive obligations to provide relevant information on financial, compliance, construction and certification matters for committee decisions and liabilities for the consequences of not doing so - for a few years after the strata corporation begins. That would change things dramatically for everyone and help ensure better handover of new strata buildings.
Sometimes the counter-intuitive ideas are the best.
Francesco ...
London may have just hosted an impressive Olympics, but they also have some great street art as these images demonstrate.
Enjoy! And, thanks Scott Beale.
Francesco ...
Why does everyone want to pretend that renters in strata apartments have nothing to do with strata corporation issues and operations? Are they the silent and unseen strata majority that should be seen but not heard?
In a recent column at Flat Chat called You're not the boss of me! questions were asked about the strata manager communicating with renters which has prompted me to make the following important points.
Recent NSW data suggests that about half the strata apartments are tenanted, so 50% of strata residents are renters. That means that their rent payments are funding half of the strata corporation budgets as well as providing their strata owner landlords with profits.
As strata residents, renters must comply with strata laws about damage to common property and behavioural matters as well as other laws governing neighbour behaviour. Renters also have rights to get damaged common property repaired, make application for strata orders and participate in strata disputes affecting them. They can even be elected to strata committees if an owner nominates them.
The only things they can't really do is attend and vote at strata meetings, and they don't have to pay strata levies.
Interestingly, in British Columbia, Canada long term renters (over 2 years) become de-facto strata owners and can vote and participate in strata meetings instead of the owners.
Maybe it's about time we recognised the significance of renters in Strataland?
Francesco ...
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