spring 1999 Smoke Alarms State legislation in South Australia now requires all unit owners to install smoke alarms in their units before January 1st 2000. There are three main types of smoke alarms on the market: Battery powered with a removable battery that needs checking and replacing every six to twelve months. Lithium battery powered. This type has a non removable battery and lasts around ten years. Mains powered with a back up battery that needs periodic checking and replacing. If you bought your unit after February 1st 1998 then you must install either a type 2 or 3 alarm. If you rent your unit and bought your unit before February 1998 then we strongly recommend you install a type 2 or 3. This will reduce your risk of being held liable for loss of life or goods for failure to maintain your alarm(s).   Maintenance programme: test your alarm at least once a month by pressing the test button. test mains operated alarms by turning the mains power off and pressing the test button. if the alarm is a battery operated Type 1, change the battery at least once a year and when the 'battery low' warning beep sounds. every six months clean the alarm gently with a vacuum cleaner brush. This helps remove particles that may trigger false alarms. Check the alarm immediately after cleaning to ensure it is working correctly. Do NOT paint over the alarm   Location: As a minimum alarms should be installed between the living areas and the bedrooms. Do locate the alarms: entirely in the room or passageway if ceiling slopes, 500 mm - 1500 mm from the apex on the ceiling at the head of the stairway to the top storey at least 300 mm from a wall 500 mm from the apex of a sloping ceiling 1000 mm from fluorescent light fittings 300 mm from any other light fittings     Do NOT locate the alarms: in a draft stream from air conditioning ducts, ceiling fans or near windows or fresh air vents in a dusty location near a bathroom or laundry (near a source of steam) in a kitchen (Sources include Planning SA publication and REISA SA legislation updates) top of page   GST & Strata Insurance Policies Insurance policy renewals for strata corporations now have a GST cost attached. You may wonder why this is so given the GST does not apply until next July. The reason is the insurance policies extend in most cases for 12 months. Renewals since July this year are affected. The good news is that the Fire Service Levy has now come off. In some cases the cost has dropped even with the GST. This of course will not be the case in a full year of GST. Strata Corporations need to be planning for the impact of the GST now. As we hold annual meetings with our owners we are estimating the cost of the GST and how it will effect fees, contractor charges, utilities etc. This estimate is being added the the annual costs for the period after July 1st 2000. The GST on the insurance premium is calculated from renewal. Give us a call if you need some help with the annual budget.  top of page winter '99 Goods & Services Tax - Options for Unit Owners Parliament has passed the GST legislation. Australia's 1.1 million unit owners will be strongly affected by the introduction of this new tax on July 1st 2000. The reason is that their Corporations are predominately consumers of services (plumbers, electricians, managers, lawn contractors etc.) which are currently untaxed. There are choices in how unit owners through their Corporation deal with this new tax. The Corporation can either raise additional levies to cover the increased fees on insurance premiums, plumbers bills, manager fees and other suppliers or they can register as a GST center and claim the GST input costs against a GST of 10% on their levies. The latter option involves a quarterly return to the tax department. Records of all transactions and their respective GST components must be recorded. All unit owners need to be aware that some costs and changes will occur before July 2000. Contracts signed now that run through July 1st 2000 will be subject to the GST for that period after July 1st. This will especially apply to Corporation insurance policies and management agreements as these usually are in effect for at least a year. Unit owners, their officers and managers, where they have one, need to be considering the implications on annual budgets now. For our clients we are looking to see if the cost of quarterly returns is worth any potential savings. It may be best to keep it simple and raise the additional levies needed to cover the GST on services and goods bought after June 30 2000.  top of page   Random Audits of Builders Light is appearing at the end of the tunnel for improved unit developments Building faults have become the bane of unit owners and their managers over the last 10 years or so. A proposed scheme of random audits may herald a long needed turnaround. The reason has been that many Councils have pulled out of inspecting new homes for fear of being sued if buildings were later found to be unsafe. The problems coming to light have varied from missing fire walls at Gulf Point Marina to missing flashings in bathrooms leading to extensive water damage. The speculative unit development market has been particularly vulnerable as the developer and builder are often under the same parent company or hand in glove. With the Council largely out of the picture short cuts have been taken. Many of the faults have been hidden beneath the building skin and have taken years to come to light. The affected unit owner and strata corporation has been faced with expensive litigation with vague laws or wear the cost and fix it themselves. In releasing a discussion paper on the issue the Minister for Urban Planning, Ms. Laidlaw said some builders were taking advantage of the situation, which was "potentially destroying the lives of individual investors". Under the Development Act, councils have the power to inspect construction sites to check compliance with standards, but some have received legal advice that they could be liable if the building was later found to be unsafe. Planning S.A. carried out a number of audit inspections of residential building work in progress in the metropolitan area and reports: "These inspections have confirmed that there is a significant problem with noncompliance of building work with the Act." The Minister's discussion paper proposes the Development Act be amended to oblige councils to conduct audit inspections of at least some construction sites. Light at the end of the tunnel soon we hope. Hint: Thinking of buying a unit? We suggest you arrange for a prepurchase inspection. top of page     Voting rights & committees When a unit is owned by two or more people and two or more of them are voted onto the committee that unit has more than 1 vote. This would be the case if both a husband and wife were elected to the committee. How can this be. We all thought that the Strata Titles Act only allowed for 1 vote per unit for residential group. The following is an extract of the legal opinion we received recently on this matter. The Strata Titles Act 1988 (as amended) ("Act") defines a "unit holder" as a person registered as proprietor of an estate in fee simple in the unit. Section 35(1) of the Act entitles the Corporation by resolution to appoint a Management Committee of unit holders. Thus all registered proprietors are unit holders and all of such registered proprietors are entitled to be appointed to the Management Committee irrespective of the fact that such registered proprietors may be multiple owners of one unit. As duly appointed members of the Management Committee, such members all have equal voting rights irrespective of the fact that such registered proprietors may be multiple owners of one unit. We would liken the situation to joint shareholders who could both be directors. The one vote per unit requirement in Section 34(1) is in our opinion a different and separate issue and does not affect the above and opposite position with the Management Committee. If there is concern that the 2 registered proprietors of the one unit are exercising too much influence or control on the Management Committee, then the solution is for the unit holders to exercise their voting rights to ensure only one of the registered proprietors of the unit is appointed to the Management Committee. A simple resolution removing the Management Committee under Section 35(5) and then appointing a new Management Committee should suffice Good advice if you want to avoid future problems.  top of page   Viewpoint - Fair Deal Needed for Unit Owners on Taxes The last year has been dominated by taxes and talk of taxes. Much has been made of the need for reform and that may well be needed, however many proposed and existing taxes discriminate against unit owners. Take water use charges. The base rate (up to 125,000 litres) charges have risen 75% in the last 3 years. Unit owners on the whole consume less water than average households and the cranking up of the base charge effects them disproportionately as they cannot take advantage of the corresponding drop in the excess rate. Minimum Council rates often disadvantage unit owners. Many units are valued below the minimum rate and so owners pay the same rates as larger home owners. The state government water and sewer taxes reap some $7 million per year from unit developments over the quarter acre blocks they replaced. Our experience over the GST has been that governments forget about unit owners when it comes to legislation and taxes. If you are concerned to see unit owners get a fair deal on taxes let your local politicians and councillors know.  top of page   autumn 1999 Unit sales at risk The sale of some units in Adelaide have met with problems recently. Some land brokers / conveyancers are failing to complete the settlement of units and putting at risk the sale and the money of all parties. The sale of a unit involves a number of steps. Some of the most important involve the conveyancer: - Ordering search documents for the Strata Corporation (Section 41) Making the necessary adjustments for Strata Corporation fees Paying any outstanding monies to the Strata Corporation Informing all relevant authorities of the change of ownership - including the Strata. Recently we have noted the following: Conveyancers have owners do their work by having them undertake the strata search No notification of change of ownership to the strata corporation or other authorities Leaving it to the new owners to settle the outstanding accounts Two recent examples are: Conveyancer in Tea Tree Gully - they failed to obtain a search document, failed to notify us of the change of owner, supplied the wrong details to the local Council who thought the new owner lived at the units when in fact it was tenanted. Outstanding monies were not paid. Conveyancer in Flagstaff Hill - they failed to obtain a search document but asked owner to do so, they failed to notify us or the local Council of change of owner. Outstanding monies were not paid. Old owner being pursued by the Council for outstanding rates. Conveyancers have been so diligent in ensuring that due process is observed and any slip ups by agents etc., are tidied up. It is disturbing to see this new trend and it does their profession no good at all. We have passed our concerns onto the Institute of Conveyancers. If you are selling or buying a unit we strongly recommend that you check that your conveyancer does the right thing by you.  top of page Common Sense Prevails The owners of a group of 6 units now all have a space to park their cars. This was not the case for one owner until recently. The group was built with 5 garages and 6 units. This situation has been tolerated since it was built in the 1970s. The owner of the carport-less unit did not have a car and so there was no problem... until she decided to sell her unit and move on. She found that it was difficult and near to impossible to sell the unit without its own parking space. She approached us as the manager and suggested using some common space beside the driveway as a permanent space for her unit. We explained that for her unit to have exclusive use the Corporation would need to agree 'unanimously' (at least 2/3rds agree with no dissent). An agreement was struck between the Corporation, the current and prospective owners. The prospective owners were given permission to erect a carport on common property under a lease and they agreed to undertake some much needed repair work and landscaping about the proposed carport. A fair deal was struck, the current owner can sell her unit and the Corporation saves some money on repair works. We received a note from the owner the next day - in part it reads "... and I think you missed your calling as a diplomat. If it hadn't been for your persistence and flexibility the whole thing would have fallen through" We believe that strata management is about outcomes that work for people. In this case all the people won and fairness was served.  top of page Paint supervisor ensures a good job Many of our groups have been repainted this year. On average a group of units needs painting about every seven years. It is a large investment for many owners - somewhere between $500 and $1000. The investment can be more substantial and more often if the work is poorly done. We are now recommending to our clients that a Painting Supervisor be appointed to ensure the painters stick to the specification and provide a first class job that will last. This has proved successful at a group where we were recently appointed. The buildings had been unpainted from over a decade. The gutters were not working and it was generally in a poor state. The Supervisor has made regular visits and is very pleased with the job. It appears that just knowing the work is going to be checked by a qualified person keeps the painters on their toes. For under $300 on most jobs we believe it is money well spent. top of page summer 1998/99 Court Cases Who Benefits? Section 27(6) Strata Act In the Court case Hughes vs Strata Corporation 1899 the Judge had to rule on Section 27(6) of the Strata Titles Act. This section allows the Corporation to recover costs for work on common property where it benefits an owner or group of owners. The case revolved around repairs to cracked walls caused by heaving soils. The Corporation argued that the owner 'benefited" from the works and therefore should pay. The Judge ruled 'The repair will not benefit the applicants ... not putting them in some more advantageous position vis-à-vis any other unit holder' ' This is a welcome ruling as Section 27(6) has led to many arguments between owners. The ruling is clear, reinstatement is not a benefit. top of page Pay for equipment not used In this Court case Rois Investments vs Strata Corporation 7176 the Judge had to rule on whether an owner had to pay to maintain a common air-conditioning system they did not use. The Judge ruled that under Section 10 of the Act the common property (air-conditioning system) is held by the Strata Corporation in trust for the unit holders and that each unit has an equitable share in the common property which cannot be alienated or dealt with separately. Many groups do not have common air-conditioning. However many owners question why they should pay for the swimming pool, lift or grounds they do not use.  top of page Awful Tenants - Getting rid of them Tenant Problems Nuisance tenants can ruin the life of fellow residents at any group of units. Strata Corporations and their owners can now take action to evict tenants. 1995 saw the Residential Tenancies Act include a new provision - Section 90. This new section gives any interested party the right to seek eviction of a tenant if the Residential Tenancies Tribunal (RTT) is satisfied the tenant used the premises illegally, caused or permitted a nuisance, an interference with the reasonable peace, comfort or privacy of another person who resides in the vicinity of the premises.. If you are suffering from noise and nuisance produced by a tenant at your group here are some hints on how to solve the problem: Keep a diary of the noisy/nuisance behaviour over a week or so. Have other affected residents sign the diary. Ask your Strata Corporation to approach the owner or agent, if there is one. Submit the diary and a request to have the nuisance behaviour cease - include provision for action under section 90. Give them say 7 days to comply. If at end of this period the behaviour is continuing apply for a hearing under Section 90. Contact the Residential Tenancies Tribunal on 8226 8612 for the application form. If the Corporation is applying, the form can be filled in by the Corporation Secretary or Manager, however at least one owner must be joined in the action (a natural person). The Tribunal will advise the applicant of a preliminary hearing date to establish if there is a case to answer, if so, the Tribunal will move to a full hearing. Other options You can take action in the Magistrates Court for a breach of the Articles. An owner or the Corporation can apply for a hearing under Section 41a of the Strata Titles Act. This action may be against the owner not the tenant - for their failure to enforce the Articles with their tenant. Hint: Check when the lease expires - it may be soon, if so seek non renewal. Before proceeding to Court it may be useful to seek legal advice. Section 90 is a welcome change. For too long many residents have had to put up with antisocial behaviour from tenants. If you have a manager check on additional management fees for processing and tribunal appearances. PS: We have already used the threat of this Section to have some agents and owners lift their performance over tenant selection and monitoring.  top of page   spring 1997 Saving Your Shower Screen The cooler weather brings many cracked shower screens. Most of this damage can be avoided. The reason most screens crack is from hot water squirting on cold glass. The answer may be a change of shower head. The articulated shower head (see picture) not only directs the water to the drain, rather than the glass screen or bathroom floor, it also helps taller people to get a decent shower. The cost of replacing your existing shower head is around $50. Chris Ford or your favourite plumber can fit one. ps: Drop the rose down after use to drain the water. Insurance Claims: Cracked shower screens can be claimed on most Corporation insurance policies. However the insurers may only pay the value of the old screen and not for new laminated glass. The insurance company may also apply excesses if many claims are submitted. top of page   winter 1997   Power Surges - Who Pays ? The ETSA Corporation looks like being liable for any damages caused by surges in its electricity supply to its customers. 'The Australian Competition and Consumer Commission (ACCC) has a view that electricity companies are liable under the Trade Practices Act for damage caused by power surges', stated ACCC Chair, Professor Allan Eels. The ACCC move followed an announcement from a Victorian electricity supplier-United Energy that they would provide their customers with 'no cost' protection against power surges. Many of our unit owners have expressed concern over possible damage to their televisions, microwave ovens and other electronic equipment from power surges. ETSA has accepted a very limited liability in recent cases. This does not include some equipment failures or acts of god. The Trade Practices Act makes it clear that goods and services supplied should be fit for the purpose intended. The ACCC appears to believe that this includes electricity. This is good news for unit owners. With reports of the run down of ETSA's equipment and its possible privatisation there is justifiable concern in our community. Protection: Owners can get some protection for their homes by installing a surge protector. top of page   Surge Protection - What Owners Can Do We have organised a special offer on surge protection for our unit owners. Our electricians, Men at Workwill install aClipsal Surge Filter for $160. (see picture ) The Clipsal Filter will, when professionally installed, reduce voltages above 280V to a harmless level in most circumstances. The filter has a visual indicator to let you know if it is operating correctly or has failed due to a lightning strike or other major overload. The equipment in our homes (eg: televisions, videos, computers) are very susceptible to power surges - voltages over 280 volts. (see our article on page 1) The cost per unit is $160 for a standard installation which includes all parts and labour. This is cheap protection given the cost of replacing burnt out electronic equipment. You can call Men at Work on 0411 195 275 top of page   Contractors - What's the Deal A recent seminar held by the Body Corporate Managers Division of the REI of SA highlighted some very important issues and concerns for strata managers and their clients. Protection: A story was told of a plumber who excavated beside a unit looking for a leaking pipe only to undermine the foundations - the unit fell into the hole. The plumber was uninsured and unable to pay the $20,000 for repairs. The story highlights the need to ensure that ALL contractors visiting our clients have up-to-date insurance to cover against property and personal damages. We issue a written order for works on every occasion. Our work order specifies the need for the contractor to have insurance. We are going further however to ensure our clients are protected. All our contractors are being requested to supply their insurance details and, where necessary, building licence. These details are being stored on our Unitcare computer software. We will receive warnings if a contractor's insurance has expired. This will provide peace of mind for us and our clients. Quotes: Contractors are a vital part of our business and essential in getting the jobs done on our clients' properties. The seminar was told some contractors are spending $l000's a week quoting for jobs that never go ahead. In these cases the owners or managers thought it would be a good idea to see how much it might cost for works with no real intention of proceeding. The risk is that contractors will tire and refuse to carry out any quoting or work for the manager. To avoid this happening we are encouraging our unit owners to be sure they want to fund and undertake the work before seeking quotes.  top of page winter 1996 A Strata Manager's First Responsibility I continue to be disturbed at unit owners tales of their managers failing to tackle even the basics. Here are some recent reports: Case l: Complaints to builder. The manager received new strata corporations direct from the builder. He discouraged owners from making complaints to the builder. The result is owners fight the battles. Case 2: The wrong insurance. A driver lost control of his car and damaged fences, yards and building fixtures. All covered by the insurance? Not in this case. The manager had arranged a policy not suited to strata corporations. The result is the owners are out of pocket. Case 3: A Corporation goes broke. The manager organised tree removal and prune with no authority or budget line. The cost came in at $900+. To make matters worse the budget was faulty and overlooked $1500 of regular costs. The result is the owners are out of pocket. Case 4: Over insurance. The manager recommended a level of insurance for a group of 16 units based on in-house calculations. An licensed valuer shows the group is half a million dollars over insured. The result is owners paid hundreds of dollars more than necessary for years. Case 5: Uncollected debts: The manager played the nice guy with an owner who owed the Corporation $l000's in levies. Debt collectors came and went and the offending owner called their bluff. The result is a lot of bad will and a big debt. The other owners are carrying the cost. My experience is that owners engage a manager for peace of mind, so that they can get on with their lives without the worry of day to day Corporation matters. My plea to those who put up the shingle as a strata manager is get some training and a Practising Certificate at the Real Estate Institute and don't forget who pays the bills - the unit owners. They are our first loyalty. top of page   autumn 1996   Owners Win - Neighbour's Trees Come Down A recent case atthe Magistrates Court has given hope to unit owners suffering damage from neighbour's trees. In the case Strata Corporation 5941 vs Mr. Miller, the Magistrate ruled that the offending poplars be removed. The ruling ended eleven years of frustration for the owners of units in the group. The trouble started with the blocking of the common sewer. At the time the group had no strata manager. The unit owners had an expert report on the situation. When it was evident that the large poplars on the boundary were doing the damage, owners approached the neighbour. He was unco-operative and until very recently refused to pay the cost of clearing the sewer when blocked by his tree roots. The unit owners appointed our firm to resolve the problem once and for all. We took the reasonable path through letters, lawyers and attempted mediation, all to no avail. Finally we took the matter to Court. We provided a summary of events to date along with photos and reports. Mr. Miller appeared with us before the Court. He wanted to negotiate a trench to sever and control the roots but the magistrate would have none of this. He told Mr. Millerthat the trees would have to go and that if he failed to remove them by the agreed date then we are talking incarceration'. This is good news for unit owners suffering difficult neighbours and destructive trees. We are now managing a group with large pines on the boundary. They are damaging the roof, gutters and drains. We will be seeing the difficult neighbour in Court soon.   HINTS: If you have a similar problem at your group get a good plumber. Have them provide a report on the cause of the blockage and photographs of any tree roots. Keep samples of roots and consult a tree expert. Once you have a conclusive report, approach your neighbour or use a local Mediation Service. If your neighbour is unco-operative go to Court - it costs less than $100 and may save you a lot of frustration and blocked toilets.  top of page   CAT'S DAY IN COURT We were recently appointed to a group of units where the owners had suffered an owner's cat. Over some three years the cat had torn up gardens, defecated in owners yards, made lots of noise in the small hours and generally been a nuisance. The owners had been served notice by the previous manager following much letter writing, all to no avail. Having had some recent successes at Court we advised that we refer the matter under Section 41 a of the Strata Act. The case was heard in early March this year. The magistrate ruled that the cat be removed from the property within 10 days or the Court would be reconvened. The magistrate suggested that the cat would be removed by Court Order at the owners cost. The owner would be in contempt of Court. It is pleasing to see the magistrates giving teeth to the Strata Act and providing owners with some peace of mind at the end of the day when all else has failed.   top of page