for everything you need to know about strata...

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"Your strata home or investment property is probably one of your greatest assets so you need to make sure you protect that asset by ensuring all maintenance and repairs are carried out when needed and that they have been correctly done. When the time comes to sell, a property that looks rundown and is in a state of disrepair never commands as good a price as a well-looked-after property. Also, this whole maintenance area can be a real trap for young players and, while most 'think' they are doing the right thing, they can be walking into a minefield......read on to understand why."

ONGOING STRATA MAINTENANCE and REPAIRS

Who Pays for What?
Alternative ways to pay
Real Quotes
Major Works
Improving your Strata Scheme
The Benefit of Maintaining & Improving?
Minor Works
Just imagine this scenario for a moment....

Who Pays for What?

This is something that MUST be determined from the outset. I remember reading the following description in an excellent NSW Fair Trading webpage about repairs & maintenance on their OLD site and I feel it put it in quite simple yet straight-forward terms. Sadly the new Repairs and maintenance in a Strata Scheme fact sheet does NOT have this in there but it's still very informative.

"The owners corporation must repair common property, and owners must repair anything within their lot. However, it is not always clear what is common property and what is the individual lot. Generally, everything inside the airspace of the unit, including all internal walls, fixtures, carpet and paint on the walls is usually the lot and therefore the responsibility of the lot owner. Everything outside that airspace including boundary walls, windows, front and rear doors, and tiles fixed to the floor is usually common property and therefore the responsibility of the owners corporation."

This fact sheet goes into quite good detail regarding what constitutes common property and what doesn't. If still in doubt, make sure you refer to the actual strata plan (as it will hopefully be able to make the situation a "lot" clearer - excuse the pun) and don't forget to check your by-laws just in case there are some 'special conditions or exclusive use' items hidden from view. These are now known as Common Property Rights. At any rate, determining if the item to be repaired or replaced is common property or not is critically important as it will dictate who pays the bill.

NSW Fair Trading also provides a "Common Property Memorandum" (in PDF format) which is a list that Owners Corporations can use to help them work out who pays for what. One example sited is that "all internal lights are the responsibility of the lot owner".

The memorandum is just a tool (albeit a good one) for the OC which can decide to adopt it OR alternatively put in specific by-laws to handle the different situations that come up. Every little bit helps with this tricky area so make sure you have a look at the Memorandum AND the fact sheet which BOTH go into more detail than I can here.

Ultimately, it's the responsibility of the Owners Corporation to look after all aspects of the Common Property of the Strata Scheme but if you're STILL having trouble then make sure you have a look at the fantastic document from the SCA (Strata Community Australia) called: Who's Responsible - A Guide to Common Property. It's a little old now but it'll give you a great idea as to what's what.

Ultimately, it's the responsibility of the Owners Corporation to look after all aspects of the Common Property of the Strata Scheme. And don't forget NSW Fair Trading's comprehensive fact sheet on Common Property and the Lot either. I'm sure that, after going through all of this, you'll be an expert in determining whether or not the problem involves Common Property.

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Alternative ways to pay....

Many Strata Schemes, for a variety of reasons, may find themselves in the position where money is desperately needed to pay for essential repairs or renovations but the bank account is 'bare'.
Now, when this situation occurs there are a couple of options open to the Owners Corporation including:

Don't do anything and wait till enough funds have been raised from future levies(not recommended)
Raise a Special Levy so the works can be completed (not very popular)
Raise the funds via a Strata Finance loan

While the idea of taking out a loan may seem abhorrent to many, it might just be the best (and sometimes ONLY) solution to ensure the work actually gets done before the problem gets any worse and more than likely resulting in a 'cost blowout'. If left unchecked, and the problem involves WHS safety concerns, it could develop into something even worse - like litigation due to negligence - and no one wants that. Yes, interest on the loan must be paid but at least the necessary works are done, the dreaded Special levy is avoided and everyone is safe from harm.

To get the full rundown on this 'ever increasingly popular' option, read my information page on Strata Finance Loans.

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Real Quotes

As we all know, defects can develop at any time and, as a building ages, repairs WILL be needed. These repairs usually involve the obtaining of a number of quotes for the work to be done. But again, as we all know, not all quotations are the same and can vary greatly. From experience it would appear that the old saying "You get what you pay for" still rings very true. So, be wary of the obviously cheap quote! It'll usually end up being a case of false economy in the long run - with perhaps a dose of frustration and dis-satisfaction thrown in for good measure.

Get the Right Person for the Job

Another thing to be very aware of is to use only qualified trades people. Just TWO of the 'must haves' are that they are licensed AND insured. Fair Trading (as always) has a great information sheet on Selecting a Tradesperson or Builder so be sure to take a peek and take note of what they say. There's even a link where you can do a free license check OR you could go to their Home Building Licence check page if you want a bit more information.

It goes without saying that all job specifications should be prepared by appropriately licensed and qualified professionals to ensure the problems are correctly diagnosed so the correct and the most economical method of repair will be used for each job. The so-called "handyman" down the street or the retired gent in Unit 33 may not be the best idea even though I'm sure he thinks he's up to the task.

Be Careful of this...

A "scope of Works" is very important to ensure that the quotes you're getting are for the same work. You may not be 'comparing apples with apples' unless you have details of EXACTLY what is going to be done. One contractor might offer a quick fix 'band-aid' approach whilst the other might have a 'top of the range' approach. Whatever trade you DO use, make sure they have the appropriate license (and insurance) for the work they're going to do.

Quick Tip: It's a good idea to use a trade who understands strata, otherwise they might include something that's payable by the lot owner and not the Owners Corporation (and vice-versa).

If you happen to use a Strata Managing Agent to look after your scheme then, usually, most of the hard work has already been done for you. A good Strata Manager has a list of pre-approved tradespeople that have been thoroughly checked for quality of workmanship, qualifications, licenses and insurances. This preferred list usually consists of those firms that have shown reliability, efficiency and professionalism in the work they do. Yes, sometimes they may be a bit more expensive than the small, local tradesguy just down the road but at least you know the work will be done, on time, properly and safely - and there's also some recourse if you're not satisfied with the completed work.

If you are responsible for getting or need to get quotes from tradespeople then go to my Strata Trades Guide information sheet.
There you'll find a number of trade selecting services to help save you time and effort - and hopefully money.

Now, in direct contrast, if your scheme is self-managed you'll need to take a lot more care when selecting and using contractors to do work at your complex. Why? - please read on...

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Major Works

The only way any major works can be done on the building is if there's enough money available to carry out those works and the Capital Works Fund's purpose is to provide sufficient money to enable major works, both anticipated and unexpected, to be completed. However, if there aren't sufficient funds, the project will have to be either delayed (which is NOT a very good idea at all) or funded through the Owners Corporation obtaining a loan that's repayable over a number of year and the cost added to the quarterly levies. Refer to my section (just above) on "Alternative Ways to Pay" for some more details.

When something requires attention, job specifications (along with a detailed 'scope of works') should first be prepared by the appropriate licensed professionals to ensure the problem is correctly diagnosed. This way, the correct and the most economical method of repair can then be done.
Careful planning is necessary before commencing any project and expert advice is especially needed for major works, such as (but not limited to):

roof replacement
concrete spalling
guttering replacement
fire safety compliance & upgrades
lift upgrades
balcony repairs
building facade repairs
window replacement
archbar replacement
cracking to walls and subsidence
uplifting of driveways and concrete areas
waterproofing and rising damp problems
termite (and other pest) eradication
pool resurfacing
carpet replacement in the stairwells
common property painting and maintenance
installation of window safety devices

Improving your Strata Scheme

For older buildings, consideration should also be given to updating your scheme to improve its appearance and value by:

rendering the building's façade
renovating the foyer area
upgrading the landscaping
replacing the balcony and stairwell railings with a safer, more modern design

Lannock Finance have produced a quick reference guide on the do's and don'ts regarding capital works called "Doing the right Capital Works" and is definitely worth having a look at.

Interestingly, Lannock decided to take this PDF off their site and replace it. Luckily I managed to salvage it (before it disappeared into 'internet oblivion') and load it to our server. The info is still very relevant so it was a little disappointing they got rid of it. They do have a new site with lots of good stuff but I couldn't find these datasheet-style PDFs anywhere.

The Benefit of Maintaining & Improving?

With some advance planning, the right advice and correct budgeting considerable value can be added to a Strata Scheme by keeping it in pristine condition thereby being of direct benefit to each of the owners. Not only will they have a more stylish building to live in but the value of all properties in the scheme will have kept pace with market values.

To get the full rundown on the importance of having a Preventative Maintenance Program for your scheme (which covers mainly Major Works, read my information page on Preventative Maintenance Program.

NEVER FORGET THIS : Properties in buildings in tip-top condition with well maintained, well landscaped areas command a much higher price than units in bland, unattractive, poorly maintained buildings with little or no landscaping. They usually sell much faster too. WIN - WIN

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Minor Works

Most would think minor works should be a simple thing but it's an area that can get many into more trouble than they think, especially if care is not taken. It can be a real trap for the unwary. Let me explain.......

As we all know, the cost of everything is constantly rising including the rates charged by those who would be contracted to do the minor repairs that tend to crop up from time-to-time at all schemes. And so, as everyone is looking to save a dollar or two where possible, many Strata Committee members out there prefer to use the local handyman who advertises in the local paper promising 'cheap' rates or, worse still, use a 'friend-of-a-friend' who can drop by and fix the problem 'on the cheap' instead of the professional, fully qualified and insured tradesperson. And even worse than that, some decide to use an owner in the complex who is keen to do some work around the complex for a few extra dollars.

While all this sounds terrific on the surface, and while I commend those SC members for showing initiative, such a decision is fraught with danger. The problem stems from the fact that these sorts of non-professional tradespeople are usually either unlicensed or uninsured or BOTH....and this is the REAL danger. Not to mention that you generally have no 'official' recourse via warranties or guarantees of any sort with unlicensed, uninsured, non-professionals. And all this can lead to very serious consequences...

Just imagine this scenario for a moment....

While doing a minor (or major) repair at your building, the unlicensed, uninsured guy your Strata Committee chose has an accident and is severely injured. A sharp lawyer gets in his ear and says, "you can make a small fortune out of this if we handle it correctly", so this person decides to sue your Owners Corporation because 'insufficient care was taken to protect him from harm'.

If he was properly insured in the first place everything would have been so much easier and straight forward and more than likely taken care of without any further hassles or problems AND with no real damage done but, because he wasn't insured, your scheme, and maybe even the Strata Committee members too, will take the full brunt of any action. Of course, because there was an 'incident', Workcover will probably start sniffing around to make sure your scheme complied with all the Work Health & Safety laws. Let's hope you are 'squeaky clean' in this department as you don't need Workcover taking any action against the Strata Committee as well.

The fact he's also unlicensed (in this instance) may raise issues of 'illegal practices' on the part of the Owners Corporation depending on the nature of the repair. If the job in question required a licensed person 'by law' to do the work then the Owners Corporation may be liable for criminal prosecution. Once the authorities become involved all sorts of flow on problems can occur - and that's the last thing anyone would want - especially all the other "unaware" owners in the scheme.

And, now that your insurance company may have to pay out a hefty compensation claim to the injured person, your Owners Corporation could discover that the insurance company may very well prejudice your scheme in the form of increased premiums or even policy rejection when it comes time for renewal. All pretty serious stuff to save just a few dollars!

I'm sure you'll agree that, in this particular instance, the decision to use an unlicensed, uninsured person was not such a good idea......but this sort of thing happens ALL the time....and the RISKS are there and very, very real every time.

If all goes well, yes, you CAN save your scheme a few dollars but, if something DOES go wrong then it quickly becomes a case of very false economy. I personally do NOT like to gamble on such things.

A SERIOUS TIP: Whether it's carrying out minor repairs, major works or improving your scheme, get the right advice FIRST from a qualified professional in the particular field, making doubly sure those you select ARE properly insured and licensed.

Even though it may cost a bit more initially the rewards, in the long run, far outweigh the risks.
Bottom-line : Don't take the risk - it's simply not worth it!

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Strata Title Terms and Jargon

If you need to know the meaning of one or more of the common terms mentioned above then have a look at the Strata Terms and Jargon Information page.

DISCLAIMER: All information on this website is of a general nature and is intended as a guide only. Readers should check all information obtained from this website for accuracy from other sources and seek professional legal advice before taking any action based on any information obtained from this website. Information on this website should not be substituted for proper legal advice. The owners of this website will not be held responsible for any action taken as a consequence of same.

EXTERNAL SOURCES: The owners of this website do not make any warranty or representations regarding the information, products, services provided by or qualifications of any external sources listed on this website. Readers should make their own appropriate enquiries regarding accuracy, qualifications, licences, etc. The owners of this website will not be responsible or liable in any way for any representations made by any external sources listed on this website.

IMPORTANT NOTE: This website deals with strata matters in NSW, Australia only. Legislation varies in different states and territories and in other countries. For information pertaining to places outside of NSW, Australia please refer to the appropriate legislation for your region.

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