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Combustible Cladding Laws in Queensland Announced

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If you don’t know whether the cladding on your building is combustible (or to use the less scary word – non-conforming), you are soon going to be forced to find out.

The issue over what cladding has been used on buildings crystallised after the Grenfell Tower fire in the UK in 2017.  Australia’s equivalent (without the horrific loss of life in Grenfell) was the Lacrosse Tower fire in Melbourne in 2014. The ABC’s Four Corners covered the issue in this excellent episode.

Since then the wheels of respective state governments have turned very slowly.  Victoria has their cladding task force and has now come up with a rectification solution that will allow lot owners in bodies corporate to pay back the cost of addressing the defective cladding through their rates.

Other states have equivalent bodies but no solutions yet.

The Queensland approach has been to create the Non-Conforming Building Products audit taskforce which led to the government addressing concerns with all of their own buildings.

Now it is the turn of the public at large.

It’s a seemingly innocuous title, but it has some real kick.  The new regulation is:

Building and Other Legislation (Cladding) Amendment Regulation 2018

And what it means for bodies corporate when it commences on 1 October 2018 is this:

The compliance zone

If your building:

  • is any of classes 2 to 9 (which covers basically everything residential and commercial other than houses); and
  • had a building development approval issued after 1 January 1994 but before 1 October 2018 to build the building or alter the cladding; and
  • is of Type A or Type B construction (essentially buildings of three storeys or higher)

then the building is caught by the new regulation.

Stage 1 – registration

If your building is one of those in the compliance zone you need to register and complete an online checklist via the QBCC that will run you through whether the building is likely to be one of those with non-conforming cladding.  Every building will have until 29 March 2019 to complete this.

If you don’t complete it, there is a maximum fine of 20 penalty units ($2,611).

If there is no issue, then all is well and you just need to keep that certification. If not, you are onto stage two.

And no – we don’t know what the checklist will include yet or even a link to where you will be able to find it, but when we do we will let you know.

Stage 2 – building industry professional

If your building is one that may have non-conforming cladding you have until 29 May 2019 to go back to the QBCC with a statement from a building industry professional about whether the cladding on your building is non-conforming.

If you know the cladding on your building is non-conforming you can skip the completion of the report, notify the QBCC you have non-conforming cladding and go to straight to stage three.

There is only two months between the last date to register and the date on which this first assessment is required.  We suspect it will not pay to be tardy in getting started, as there are fines for missing the deadlines.

There maximum fine for missing this date is the same as that for missing stage one.

Stage three – fire risk assessment

If you have non-conforming cladding then you must have a qualified fire engineer complete a fire risk assessment about the safety of the building. That assessment will determine whether the scheme as it is will essentially remain safe or whether rectification works are necessary.

Every building must give the name of their fire engineer to the QBCC by 27 August 2019 and have the final report to the QBCC by 3 May 2021.  That is less than three years away.

If you have not nominated your fire engineer or completed the risk assessment by the required dates the fines gear up to a maximum of 50 and 165 penalty units respectively ($6,527.50 and $21,540.75).

After assessment

If the building has non-conforming cladding then:

  • a notice to that effect must be displayed in a conspicuous part of the building for so long as the cladding remains in place; and
  • every lot owner and tenant must be given a copy of the notice – including new tenants and new owners.

The crystal ball

This is where the fun begins.  Not.

We see the following compliance headaches with all of this, but these are just the immediate issues.

Ignorance of the need to comply

Everyone will be out there trying to make bodies corporate aware of their obligations.  But some will simply ignore them.  Some strata managers may also simply ignore them.  It is ultimately the role of the committee to get this done, but no doubt fingers will be pointed at strata managers if it isn’t.

Strata managers need to be vigilant to make sure they have covered their backsides by addressing this with every body corporate they manage.  It may not be pretty when the government starts rounding up those buildings that have not participated in stage one by the required date.

It would also seem that there will need to be some form of evidence (termed ‘a proof of agency’) produced to the QBCC about the ability of anyone to complete the document on behalf of the body corporate.  What that looks like is also yet to be determined.

Stage two timing

There are only two months from the last date for registration to the time to return the building industry professional report.

If bodies corporate leave it to the last minute we suspect there won’t be enough experts to go around.  Get started and get started early, because when you allow for the Australian holiday season (Melbourne Cup Day through to Australia Day) there is also another three months that disappears very quickly during that registration period.

Fire risk assessment notifications

If a building has non-conforming cladding, notifying new owners is easy.  They appear on the roll, and (hopefully) the strata manager’s software programs then deal with the notification.

Tenants will be a lot harder.  For those with onsite management or professional property managers, it may be okay as they should have systems that will deal with it. Communicating what needs to be done with property managers will be important.

For people who self-manage or use a property manager who does not know what they are doing, the reality is tenants may not be told.  Our immediate interpretation is that holiday / corporate tenants probably do not need to be told (as they might not be ‘leasehold interest holders’), but time will tell.

The bigger issues

The uncertainty.

These are all guesses, but try these as flow on effects:

  • the fact that non-conforming cladding may be present is going to be a potential disincentive to prospective property buyers while it is not known, and a probable genuine turn off to them once it is certain.
  • what will banks do with their lending policies for potentially affected, or known to be affected, buildings?
  • strata insurers will now have to price the (soon to be) known risks for building insurance.

It wouldn’t surprise us if there was some change to the disclosure regime to specifically address this issue.  After all, the statutory disclosure at the moment includes who the body corporate secretary is. Whether the building has non-conforming cladding is probably a tad more important.

Rectification costs

The Lacrosse Tower owners are still fighting about who wears what cost five years after their fire.  The statutory position is that if rectification is required, then the body corporate must do it.  It may well have a right to recover those costs from parties involved in the construction process, but that right is independent of the immediate obligation to sort the issue out.  We will leave limitation periods aside for the moment too.

This means owners are going to have to pay special levies, or bodies corporate borrow money, to bring their building back to having conforming cladding.  Bodies corporate will not be allowed to delay that while they try to recover the costs from a third party.

The statutory obligation to disclose defects

And for you faithful readers who have come this far, this is the biggest issue we see for property sellers.

Just because cladding is non-conforming might not mean it needs to be removed.  The other fire safety mechanisms may cover any risk appropriately.  Having said that, the non-conforming cladding could still very well be considered a defect in common property (although we are still debating that internally).  There are arguments for and against this, but if it is not a defect, why is there the need for the conspicuous sign in the building about it?

Section 223 of the Body Corporate and Community Management Act 1997 imposes an obligation on sellers to disclose to buyers latent or patent defects in common property that the seller is aware of or ‘ought’ to be aware of.

Sellers ‘ought’ to be aware of issues identified in the body corporate minutes.  Committee members who are actively involved in the decision-making process around this have nowhere to hide under any definition.

If buildings have non-conforming cladding, which is not disclosed in the sale contract by a seller, and there are subsequent rectification works required along with the special levies or borrowings, we can see a raft of litigation about the lack of that disclosure against sellers, sales agents and those who prepared contracts for sale (such as lawyers).
We like providing solutions, but with this one there is a long way to go before the air clears. We will keep you updated as this one evolves.

Article provided by Hynes Legal 

Body Corporate Debt Recovery Clarified

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The confusion over the time limit a Body Corporate has to commence recovery of outstanding Body Corporate debts has now been clarified by the Court of Appeal.

 

The Body Corporate and Community Management (Standard Module) Regulation 2008 says the following;

If the amount of a contribution or contribution instalment has been outstanding for 2 years, the Body Corporate must, within 2 months from the end of the 2 year period, start proceedings to recover the amount.

A recent decision by the District Court had interpreted that the above  section from the Body Corporate and Community Management Standard Module meant that if a Body Corporate did not commence recovery proceedings within that time frame that it was barred entirely from doing so.

The Court of Appeal has now restored the previous industry wide interpretation that whilst a Body Corporate is obliged to commence recovery proceedings within 2 years and 2 months of the original debt being due, it does not lose the right to do so if the proceedings are not commenced in that time.

 

*Information from Hynes Legal 

 

Quorum

What is a Quorum?

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In the world of Strata, a quorum is the minimum number of voters who must be present at a General Meeting in order to have a valid meeting.

In this article written by Frank Higginson of Hynes Legal, Frank explains what a Quorum is and the outcome if you do not get a Quorum at a General Meeting.

Frank also goes on to describe who a voter at a General Meeting is and the requirement of that voter to ensure their vote can be counted.

Click on this link to read more!

 

 

 

 

 

 

 

 

Using Direct Debit to pay your Body Corporate Levies

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Did you know that you can pay your Body Corporate levies via Direct Debit?

This can be a very viable option for those lot owners whom travel and are away from home, or are just sometimes forgetful.

The  Direct Debit is set up through ‘Stratapay’.

There are two options for lot owners to select when setting up a Direct Debit through Stratapay;

  1. Autopay – The payment for your levies is taken from your bank account approximately 5 business days from the due date of the levy.  The amount taken is the exact amount of the levy that is due.
  2. A reoccurring payment amount of your choice, reoccurring on a date and interval you choose.

Option 1 is often utilized by lot owners as it is ‘Set and Forget’ .

As long as the funds are available to debit from your nominated bank account or credit card, your levies will always be paid by the due date.  This ensures you will always meet discount dates (if applicable to your Body Corporate), avoid penalty interest (if applicable to your Body Corporate) and avoid overdue fees which are processed on overdue notices and final notices.

If Direct Debit is something you would like to establish for payment of your Body Corporate levies then please follow the steps set out hereunder;

  1. Click on this link to obtain the Stratapay Direct Debit form for completion.
  2. Phone our office on 07 5450 5300 or email [email protected]  and request your ‘Stratapay reference number’.
  3. Complete the Stratapay form and then post the form to the address at the bottom of the first page.

Once your direct debit is set up with Stratapay, your future levy notices will have Direct Debit notated on them.

 

 

 

Balustrades and Railings

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In Queensland there are strict requirements when it comes to balustrades

Where a deck or balcony is one meter or higher above the ground then balustrades are required to be at least one meter high.

The openings in balustrades cannot be greater than 125mm.

If a deck is more than four meters above the ground, balustrades cannot have elements located between 150mm and 76omm from the floor.

Balustrades must be constructed so they can resist forces that can reasonably expected to be placed upon them, including people leaning against them and strong winds.

Retaining walls do not require a balustrade unless they are associated with a path of travel to and from or between buildings, however it is still a good idea to provide a balustrade or barrier where there is a risk of people falling.

Balustrades are required on stairs and are just as important as they are used as support for people ascending and descending the stairs.  For stairs, a barrier of at least 865mm high above the nosing of the stair treads is required.  For stairs more than 4m in height, a railing must also not have any climbable elements such as horizontal rails located between 150mm and 760mm from the floor.

Repair or Replacement of a Balustrade

You are only required to comply with the standard that the dwelling/building was constructed to, in relation to repair or replacement of the balustrade; however if the replacement is part of a substantial renovation exceeding 20% of the system then the certifier may request a replacement construction to current standard.

The above information does not relate to pool fencing requirements.

*Information taken from Queensland Building and Construction Commission

items covered by residential strata building insurance

Items Covered by Residential Strata Building Insurance

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Residential strata building insurance provides general insurance cover for the building, shared or ‘common’ areas, common property and common area contents. There are several items covered by residential strata building insurance. We’ve listed these below.

Items covered by residential strata building insurance:

BUILDING i.e. Fixtures inside a lot that are covered under the Body Corporate Insurance

  • Baths, hand basins and toilets
  • Ducted air conditioners
  • Windows
  • Fixed tiling
  • Stoves
  • Doors
  • Paint
  • Wallpaper

COMMON AREA CONTENTS i.e. Contents items covered that are in common areas NOT in lot owner’s units

  • Carpets, floating floors, other temporary wall, floor and ceiling coverings within hallways and lobbies
  • Pot plants, mirrors and other decorations within common areas
  • Appliances such as washing machines and dryers owned by the Body Corporate and used by all unit owners and housed in common laundries
  • Any barbeque equipment, gardening equipment and garden.

Lot owners often misunderstand that their personal contents will be covered under the strata building insurance when in fact they are not.   Lot owners are strongly advised to have contents insurance and for those lots tenanted, landlords insurance, to ensure that in an event where an insurance claim is required to be placed their assets are correctly covered.

ITEMS COVERED BY CONTENTS AND LANDLORD POLICIES i.e. Items NOT covered by strata insurance

  • Carpets, floating floors, other temporary wall, floor and ceiling coverings
  • Light fittings
  • Curtains, blinds
  • Personal equipment and valuables such as jewellery and watches
  • Clothing
  • Furniture
  • Household appliances
  • Loss of rent

 

*information taken from CHU’s Residential Strata Insurance Plan

Levy Recovery Time

Levy Recovery Time Limitations

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Bodies Corporate are urged to commence levy recovery action against lot owners with outstanding levy payments within 2 years.

A recent ruling made by a Queensland District Court Judge ruled that Bodies Corporate must start legal proceedings to recover a lot owners debt within two years and two months of the debt becoming due; otherwise the Body Corporate will be unable to take recovery action.

What happened for this ruling to occur?

The Body Corporate for Mount Saint John Industrial Park CTS v Superior Stairs & Joinery Pty Ltd – This case involved a Body Corporate that raised a special levy to lot owners in 2009 to rectify works on a road that was on the common property.  A lot owner disputed the contribution and insisted that they would not pay the levy raised.    The Body Corporate then commenced recovery proceedings about 3 and a half years after the special levy first fell due.

The lot owner defended that part of the recovery claim was made out of the two year time limit established in the BCCM (Standard) Module Regulation 2008 (Qld).

In this regulation it states:  ‘If the amount of a contribution or contribution instalment has been outstanding for 2 years, the Body Corporate must, within 2 months from the end of the 2 year period, start proceedings to recover the amount.’

The way it has been done in the industry in the past is to treat the above provision as compelling the Body Corporate to take recovery action to ensure the continued financial viability of the Body Corporate, but not stopping recovery action being taken outside of that period.  This means that:

  • Lot owners could compel a committee to take recovery action as that two year period approached.
  • A Body Corporate Manager could refer to the two year period as justification to a committee why a tough decision has to be made against an owner that may be experiencing hardship.
  • A claim to recover outstanding contributions was not considered to be barred until six years has passed pursuant to the Limitations of Actions Act 1974 (Qld).

Instead a District Court Judge found:

  • The general time limit in the Limitations of Actions Act does not apply in the face of the two year two month period set out in the BCCM regulation module.
  • There would be no point to the two year two month period set out in the BCCM regulation module unless it was taken to be a time limit on when the action must be taken.

So what happens now?

If a debt to the Body Corporate is identified that is more than 18 months overdue, then urgent action is required to be taken.  A letter of demand or negotiating a payment plan is not sufficient.

The Body Corporate is now required to make a claim in a court or tribunal to recover the contribution before two years and two months pass otherwise the Body Corporate will have lost the right to recover the contribution.

To assist in managing the above it is suggested that;

  • Committees are regularly reminded of outstanding levy contributions
  • A resolution is passed to adopt a debt management policy to establish timeframes in which the Strata Manager may issue reminder notices, letters of demand and refer arrears to a lawyer for debt recovery
  • Carefully consider must be made for any payment plan that would draw out a contribution for more than 12 months.

 

Source: Jason Carlson – Grace Lawyers

 

 

 

 

Aluminium Composite Cladding

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Action has been taken by the Queensland State Government to tackle an issue that directly impacts the safety of strata property owners: flammable cladding.  This issue has dominated the media since the tragic fire at the Grenfell Tower in London and in the first week of July the State Government has appointed a special Audit Taskforce to investigate the use of substandard building supplies.

The Palaszczuk Government has established an Audit Taskforce to conduct a targeted audit with a primary focus on buildings constructed between 1994 to 2004 using aluminium composite cladding, after a potentially non-conforming cladding product was found on the Princess Alexandra Hospital at Buranda.

Mr de Brenni said that the Audit Taskforce would begin examining buildings built from 1994 – 2004, focussing firstly on hospitals and aged care facilities, accommodation buildings, high occupancy public and private buildings and high rise office buildings.

 “Queensland has a strong and robust system of fire safety and certification for our built environment, which has been successful in discovering and rectifying recent cases on non-conforming products.

 “The Audit Taskforce will begin by examining buildings constructed when use of these products was relatively new.

 “Fifteen officers from across QFES and QBCC will be assigned to the Taskforce, led by a senior officer from HPW.”

The full media release can be read here

The Strata Community Australia (Queensland) is very supportive in the action taken by the State Government to see testing measures introduced.

Body Corporate Insurance Premiums And Excesses

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A Body Corporate must take out body corporate insurance for its Community Title Scheme.  Each owner must pay part of the costs for that insurance.

The Body Corporate collects money for the insurance premiums as part of levy contributions.  Levy contributions are collected each year.

Body Corporate Insurance Premiums for Building Insurance

How much you pay as an owner toward the building insurance premium is determined by what type of survey plan your Body Corporate scheme is registered under.

If your scheme is registered under a Building Format Plan then your share of the insurance premium is based on the interest schedule lot entitlement.

If your scheme is registered under a Standard Format Plan the Body Corporate has to insure buildings with common walls.  Your share of the insurance premium relates to the cost of reinstating the building on your lot.

If your Body Corporate sets up a voluntary insurance scheme and you decide to take part, then you must pay and amount that relates to:

  • the value of your building as a part of the total replacement value of the buildings insured under the policy;
  • What you do on your lot and how that affects the total risk covered by the policy (e.g. if you store chemicals which could be a fire risk)

Adjusting Building Corporate Insurance Premiums

In some cases the Body Corporate can change the amount an owner pays towards to  insurance premium.

The Body Corporate can do this if…

  • The lot has better fittings and fixtures than other lots that affects the premium
  • Improvements have been made to the common property which benefit the lot and affects the premium
  • What is done on the lot increases the total risk covered by the insurance policy

Excesses

The Body Corporate can decide to take out an insurance policy where an excess has to be paid on an insurance claim.  An excess is an amount of money paid towards a claim you make on the insurance policy.  The excess may be the Body Corporates responsibility to pay or the lot owners responsibility to pay.

Who Pays The Excess?

This depends on a number of things.  For example, if the Body Corporate claims on its insurance because a lot has been damaged by water from a leak in that lot, the lot owner would normally pay the excess.  However, if the damage to the lot happened because the Body Corporate did not properly maintain the common property, it would be reasonable for the Body Corporate to pay the excess.

The general rule is if an event affects:

  • One lot – the owner should pay the excess unless the Body Corporate decides that it is unreasonable for them to do so.
  • Two or more lots – The Body Corporate should pay the excess unless the Body Corporate decides it is reasonable for the excess to be paid by one or more of the affected lots
  • One or more lots and the common property – The Body Corporate should pay the excess unless the Body Corporate decides it is reasonable for the excess to be paid by 1 or more of the affected lots.