Strata Titles Act Reforms
15 Jul 2018
The Strata Titles Amendment Bill 2018 and Community Titles Bill 2018 have been introduced into the WA Parliament prior to the Parliamentary winter recess. We are hopeful that the bills will be passed this year paving the way for some much needed reforms in the industry.
Strata Titles Act Reforms
31 May 2018
The Strata Titles Amendment Bill 2018 and Community Titles Bill 2018 look set to be ready to be introduced into the WA Parliament as early as June. Both Bills are eagerly anticipated and mark a significant step forward in not just addressing some of the short-comings of the existing Strata Titles Act but also introduce new forms of land titles that will open up development opportunities on land that is currently unavailable for strata titles. Community Titles will allow for strata style coordinated development and coherent management of multi-story buildings as well as large scale multi-stage developments.
Landgate, and particularly the reform team, deserve to be recognised for the massive effort required to produce such substantial reforms but also for their high level of industry engagement at every step of the way. I am certain that this has produced much higher quality, more balanced and robust results.
Strata Titles Act Reforms
20 October 2017
Latest news from Landgate is that they are aiming to have reforms before parliament Mid 2018. Of course this date is subject to change but these long awaited reforms are looking much more likely to becoming a reality.
15 October 2017
The senate enquiry has delivered it's report and government agencies responsible for construction around Australia have been working feverishly to identify residential buildings that are potentially clad in PLE panels. There are still many questions to be answered around who will pay for the testing panels to determine their contents, what is an appropriate solution to mitigate the risks posed by PLE products and who will ultimately pay for implementation of mitigation measures.
Terrorism Insurance Scheme amendments approved
6 June 2017
It appears terrorism is having a wide range of impacts across the globe. Acts of terrorism are truly abhorrent crimes inflicted mostly on innocent, unarmed and unprepared civilians. Apart from the obvious anguish that is caused to those that are directly and indirectly impacted by these acts there has also been some thought given to the economic consequences of a major terrorism event. To provide some cover for large buildings the Australian Government established a re-insurance pool that covered commercial buildings and charged a levy imposed by Australian insurers with fees based on zones surrounding major cities. The scheme has recently been changed and will now include mixed use and residential buildings with sums insured in excess of $50 million. Please read the public statement below.
"Changes to Australia’s Terrorism Insurance Scheme, as recommended by the 2015 Triennial Review by Treasury, have now been approved and are effective as at 1 July 2017. The changes extend the Scheme’s coverage and will ensure it remains fit for purpose.
The changes will:
broaden the definition of eligible property to include buildings with a floor space of at least 20% used for commercial purposes or which have a building sum insured of at least $50 million, whether used for commercial or other purposes (effective on contracts of insurance issued or renewed from July 1); and
amend the Terrorism Insurance Act 2003 to extend the definition of a terrorism exclusion or exception in an eligible insurance contract to include acts described as “chemical”, “biological”, “polluting”, “contaminating”, “pathogenic”, “poisoning”, or words of similar effect.
ARPC Chief Underwriting Officer, Michael Pennell PSM, said the clarifications will benefit insurers and policyholders by filling the mixed use/high value building gap and removing uncertainty in the event of a Declared Terrorist Incident involving biological or chemical material.
“ARPC would like to thank insurers that attended our 2016 market consultation events and provided valuable feedback with regard to the recommendations,” said Mr Pennell.
“These changes will modernise Scheme coverage, underpin its financial strength, and ensure ARPC is better equipped to protect Australia from the economic losses caused by terrorism catastrophe.”
Posted on 4 April 2017"
Strata Complex Makes News
28 March 2017
The West Australian Newspaper today featured a news article on page 5 describing the "nightmare" faced by the current owners of Queens Riverside which include 1) the builder going broke 2) significant building defects being identified 3) massive increases in strata levies 4) strata company cash flow problems 5) conflict between the developer and buyers over voting rights and defects responsibilities 6) owners feeling locked out by the strata council. Unfortunately these types of problems are not uncommon in strata developments and leave the buyers disgruntled at having difficulty selling their apartments and having to foot the bill for a defective product.
The article indicates that the newly elected WA Government see a need for reform of the Strata Titles Act (STA) to further protect consumers. Fortunately Strata Community Australia WA and many other segments of the property industry have been intensively working with relevant government agencies on amendments to the STA for the last few years to provide more robust consumer protection but also many other amendments. So there is hope that the situation may improve in the future. Unfortunately the current development environment has problems that stretch far wider than the amendments to the STA can fix.
Building defects in the strata industry have become a significant problem right across Australia. Some may argue that there has been a widespread decline in the quality of skill and materials but a study into the problem did not find a corresponding problem presenting itself in the commercial building environment. The reason for the difference appears to be a difference in the process of selecting the builder and the much higher level of construction oversight that occurs on a commercial building site.
Once a building is completed and defects are identified it is generally much more difficult for strata owners to organise themselves to mount an action against the builder and they generally lack the knowledge and experience of managing a major building dispute to obtain a successful outcome. Strata owners are therefore starting from a position of disadvantage in a building dispute, which is quite often exacerbated by an unwillingness amongst the owner group to raise money to spend, which can be significant, on obtaining the quality advice, reports etc. that are required by the legal system.
There is no way of knowing whether a builder will remain in business during the entire construction and defects period and there still seems to be a lack of complete protection from building companies disappearing with liabilities and re-emerge under a different guise to start again. Under a normal house construction contract there is protection for owners through mandatory home indemnity insurance but this does not apply to buildings over a certain value leaving apartment buyers without any form of similar protection.
The developer of the project aims to make a profit, as you would expect, but is often under enormous pressure to buy land and a building contract at a price point that buyers will find attractive as well as produce a strata budget and levies which acceptable to buyers. It appears that these two price factors are given the most weight in a buying decision without due consideration being given to value for money. These factors can push the developer to select the cheapest building price, which does not usually produce the best quality building, and set a strata budget and levies that only provide for minimum costs.
An abuse of the democratic process of decision making processes allowed for under the STA is not uncommon, NSW have now limited the number of proxies that can be held by one person to try and combat this, but where a majority power block is used to the disadvantage of others there may be some protection through common law. Legal advice should be sought by aggrieved owners to see if the principle of 'Fraud on the Minority" can provide some relief.
It is always disappointing for us to hear of a significant failing in the strata industry but in the case reported today in the West Australian is indicative of much problems that will require much wider, multi jurisdictional solutions.
Strata Titles Act Review
22 March 2017
The drafting of the amendments to the Strata Titles Act 1985 are well under way. Industry stakeholders have been given the privilege by Landgate of receiving drafts of the amendments for comment with the second response being due late March. For more details on what is being considered for inclusion in the reforms go to the Landgate STAR web page.
Short Stay Accommodation
17 March 2017
With the wide spread adoption of online booking services such as AirBnB there has been an explosion of units being used for short stay with little regard for the impact the short stay use has on the strata and residents.
Why is this a problem? Unless the building has been purpose designed for short stay accommodation there is a high risk of conflict arising from adjoining units being used for different purposes i.e. residents are looking for quiet enjoyment as opposed to occupants looking to enjoy themselves and let their hair down. There are also issues with maintaining security, increased malicious damage and an accelerated deterioration of common property (estimated to be four times residential use).
Recent SAT and court decisions have determined that strata properties with by-laws that restrict the use of lots to "residential" use excludes the use of lots from short stay accommodation. This matter is not fully decided yet as it is going through an appeals process and may even end up in the High Court. Watch this space.