John Mann providing Q & A on the 2GB Chris Smith Afternoon Show – discussing Property Law with Warren Moore– 29 November 2016
Tuesday, 29 November 2016
WM – Warren Moore /JM – John Mann /C1,2,3, etc – Callers
WM Well major and controversial changes to the Strata Laws in New South Wales come into effect tomorrow.
We are going to hear about what this means legally to those currently living in strata, townhouses or apartments and thanks to Turner Freeman Lawyers, we have a $100 Westfield voucher to give away to the caller who asks the most relevant question. 131 873 is that number; and
Turner Freeman Lawyers provide a range of specialised legal services including compensation and negligence law, asbestos litigation, superannuation and disability claims, family and employment law Wills and estate and property law. You’ve got offices in New South Wales in Sydney, Parramatta, Campbelltown, Penrith, Newcastle and Wollongong and offices in Queensland, South Australia and Western Australia. So, if you’ve got a question, particularly about property law, now is the time to get on the phone; 131 873. John Mann is an accredited specialist in Wills and Estate law and property law. It’s good to see you again John.
JM G’day. Glad to be back.
WM Well, we’ve got plenty to talk about. We’ve always got plenty to talk about but today is particularly important because tomorrow is a whole new chapter isn’t it?
JM Exactly, this is one of the biggest reforms in strata law for many years. The original 70s concept of strata titles been developed has come a long way. These reforms I think, some have been very necessary, others are going to be a bit controversial, but we will just have to wait and see as we go along as these things go into effect.
WM Well I think one of the big ones that are going to be controversial is selling a building if 75% of the owner’s agree and you are going go and clarify that in a moment or two. I mean the property council love this because they reckon you get some old rundown buildings that would be easier to get them developed, but do you think that will actually happen, the people will be forced to move out of their home because they are in the minority?
JM I suspect that if the developers waive enough dollars, most people are going to be convinced. The procedure to have a strata scheme terminated or redeveloped is very very complicated and is going to be very long drawn out process and expensive. But I suspect that in the end there would probably be some decisions of the Tribunal or the Court sorry, the Land and Environment Court that will mean some of these schemes will be wound up. Probably because some of the buildings are in a very parlous state.
WM Yeah, yeah.
JM Particularly some of the old flats that were build in the 20s and 30s that were converted to strata title and bits and pieces are now falling off and the owners just don’t have the resources to pay for the repairs.
WM Does this – these changes also put more responsibility on strata managers to do the right thing?
JM It’s really outside the province of a strata manager. This is the decision by the unit owners and it’s their show. Anybody who wants to put a proposal to wind up a scheme or redevelop it can put it. There’s no restriction on that or whether that comes from a strata manager or developer or the unit owner. It really doesn’t matter – the legislation doesn’t say who it has to be, but then the ……I’m sorry, I’ve just lost the expression – they’ve changed a lot of the definitions and the Strata Committee then has to consider the proposal. It has to call a meeting within 30 days they’ve received the proposal and think about it and decide whether they are going to take it further. Having made that decision, they then have to call another meeting within 30 days for unit owners. Then that meeting has to decide whether they are going to proceed further and if they do then they have to appoint a Strata Renewal Committee. That Strata Renewal Committee is charged with the task of producing a strata renewal plan. The general idea is that they have 12 months to do it. The meeting that appointed them gives them a budget and they have got to go off and get some sort of a plant to prepare to bring back at a later date. Now they’ve got 12 months to do that or if the unit owners agree it can be extended. Having got to that point, then they call another meeting – that plan is presented and that is the meeting at which the unit owners then decide whether they will proceed further with the plans.
JM That’s where the 75% majority comes in. At that stage everybody – if they decide to proceed – everyone is presented with a notice and the unit owners have to within a certain timeframe provide consent.
JM That they agree to the proposal or that they don’t. If they do and if they want they can still withdraw it at a later date.
WM Well there you go.
JM Having got to all of this, if any of the unit owners are still anti it – then the matter has to be referred to the Land and Environment Court and they have to make a decision based on the material that is in the report and a primary part of that is the compensable value that the units are more ….. once being objecting to the proposal.
WM Lets put it this way. This comes into effect tomorrow and no-one’s going to have to move out by Christmas?
WM Probably not Christmas next year.
JM Not without procedure. It certainly going to be…….. to see how it goes.
WM Yeah. Now that’s only one part of these changes that we’ve mentioned. 131 873 is the number. Let’s throw it over to you – your calls. John Mann is our property law expert and Dennis is on the line. G’day Dennis.
Caller 1 – Dennis
Dennis Hello mate. How’re you going?
Dennis I’ve lived in this block of units which belonged to my wife for 20 years. Anybody and everybody that wants help or ………………… I’d help, help, help. Any advice on what they do as far as refurb…… I do, do, do. Now the committee’s all changed and whatever and I’ve been parking in – because I’ve got two cars – I had it parking in the units – the other units have been sold – I was parking in the visitor’s parking of a night when it is virtually empty. Now they are saying I’m not allowed to park in visitor’s parking.
JM Well the visitor’s parking I’m assuming is part of the common property isn’t it?
Dennis Yes it is.
JM Yes well the Council have the control of the common property and….
Dennis No they don’t
JM Why do you say that?
Dennis I rang the Council the other day and they said it was out of their jurisdiction.
JM Oh but sorry – I didn’t mean the Local Council – I meant the Council – the Owners Corporation. Sorry – the Owners Corporation have the control of the common property and to grant somebody the exclusive use of that under the present legislation requires exclusive use by the law and if you don’t have that then the Owners Corporation are entitled to say, well this is common property. You can’t use it as a permanent right for you.
WM Dennis – they have the right to do it but I understand you’ve obviously got a history that that makes a bit sensitive.
Dennis It really does mate. Let me tell you.
WM Okay Dennis – thanks for your call. 131 873. Hello Jill.
Caller 2 – Jill
Jill Oh hi. How are you today?
WM .We’re well. What’s your question?
Jill Good. I live in a block of three townhouses and I don’t think any two could come to 75% – so does that mean that can never happen here?
JM That’s a good question. …….. do the mathematical ………but the voting is not necessarily just to show of hands, it is based on unit entitlement.
JM So the exact percentage that is determined of the 75%, not the number of hands.
WM So do you have all have the same points or entitlements>
Jill Well no – one and two have the same and number three has more, slightly more because it’s bigger – but number one is small – number two is about twice as big and number three is about another quarter of a size – it’s big – it’s like the three bears. But the entitlement is one – is one and two of the same and number three is a slightly bigger entitlement.
WM Well I don’t want to answer the question on behalf of John but it would depend on the math wouldn’t it?
JM That’s right. It’s a mathematical question.
WM So it’s just a matter of working out the points and whether – yeah – two of them could get to the 75% based on the points, not on the actual number of units.
Jill So even a small block like ours, they could push you out after you’ve been there for 30 years if they decided they wanted to?
JM Well this is what’s caused the controversy because previously it had to be 100%.
JM And now it’s been reduced because I think they recognise that there’s going to be a great deal of more applications of this sort and Sydney’s running out of space. A lot of sites are occupied by relatively small blocks that were built many years ago where now multi-storey blocks might take precedence. A lot of this is going to be governed by market forces and whatever the developers might be prepared to offer – to purchase the scheme – to wind up the scheme.
WM Okay good on you Jill. Thank you for your call. 131 873. Hello Mary.
Caller 3 – Mary
Mary Hi. How are you?
WM We’re well. What’s your question?
Mary What was the average cost of installing or changing a bi-law be?
JM Look. That’s very very difficult to give you any estimation of because it depends on the complexity of the bi-law. The general rule is that there will be a registration fee of course, I think its $136 – don’t hold me to that – that’s the current charge I think. The actual preparation of the document – it depends on how much legal drafting goes into it – some are very simple – some of them run into quite some pages. So unfortunately I really couldn’t give you a ball-park figure of that over at least on the air without knowing the nature of the bi-law is.
WM Okay Mary – thank you for your call – 131 873- email by 2GB.com or 4BC.com.au. Are there any other parts of the legislation that you think it ……………………………… apart from the ability to wind up at 75%?
JM Well that’s the one that has caused the most controversy but more importantly in recent years in building residential strata’s, the government in its wisdom has decided that if the building is more than three storeys, it doesn’t have to be covered by the Home Building Insurance Warranties.
WM Tell me about this – I have personal experience…. sadly with this.
JM Now. According to the program commencing on the 1st of July next year will be where a developer builds a residential block of units, and it’s something to which the Home Warranty Insurance Act doesn’t apply. The developer will be required to lodge a 2% building bond with the secretary of the Department of …… just have to look them up and see if they’ve changed their name….. every second day… ..but there is…….. anyway….. I’ll come back to that…….
WM With the relevant government.
JM The relevant government department. And is obliged to provide a building report from an independent builder who can be rejected by the Strata Owners Corporation. If they fail to appoint one, the secretary can appoint one on their behalf with the approval of the Body and that then reports on building and building defects. That’s got to be carried out within 12 months of the completion of the building work, assuming what’s called the initial period is expired in that time. With the intention that any building defects are then obvious or apparent can then be dealt with over the next 12 months.
WM Well as I said I had personal experience of that of a building that was too small to have the mandatory insurances and the developer went bust and of course the builder wasn’t paid and so they’re off – obviously the owners end up with the problem. So this is obviously designed to address that sort of issue.
JM Exactly. I think that is a very important reform. Another important reform is where a developer calls an initial meeting after when a building’s finished and they’ve sold a certain number, they then have to call a meeting to set up the Owners Corporation. Now as part of that agenda, they now have to present a maintenance schedule.
WM Oh okay.
JM Which will set out what items of the building will need attention in due course. If there are any warranties and guarantees, they have to be handed over to the meeting. That’s going to be something for the regulations. There are some there now… but I think that would be significantly expanded. In my view it should include things like lifts, because lifts are notorious offenders in multi storey buildings and costs and repair. It’s no good having a 13 storey unit if the lift doesn’t work.
WM No, no. Well that’s an important reform too because we hear all the time the developers putting artificially low strata fees initially to entice buyers but they are just that – artificially low.
JM That is now addressed so that if it can be later determined if they have deliberately done that, the developer can be sued for the difference between what they said it was and what the actual shortfall really is.
WM Okay. 131 873 – let’s go to Murray on line 8.
Caller 4 – Murray
Murray Thanks for taking the call.
WM Pleasure. What’s your question?
Murray I’m assuming these new strata rules apply to commercial and industrial properties as well as residential?
JM Primarily these are residential.
Murray Oh okay – so there’s no initial change to ……..
JM Not necessarily. But one of the things that will change is that strata’s that are set up for retirement villages, industrial and so-forth, there will no longer be a prescribed set of bi-laws. They’ll basically engineer their own. With the new residential ones, whoever comes into effect after this date will get the new bi-laws. Anybody who’s in existence, but was incorporated after July 1997, can keep their own, anything before that have to adopt the new ones. The legislation will say that the Owners Corporation will have to call a meeting in 12 months – within that 12 months to decide on the bi-laws.
WM Okay. Thank you for your call Murray and we have John Mann in the studios as legal talk – John an accredited specialist in Will and Estate law and property law with Turner Freeman Lawyers. 131 873 is our number and we’ve got a few minutes left so we will take some more calls with John Mann – our property law expert for Turner Freeman Lawyers. G’day [Jude]. What’s your question for John?
Caller 5 – [Jude]
Jude Yes just wondering like – they offer you a good price for your unit and then it would have to be a very good price because if you move out, you would have to actually buy a house because if you go into a unit again, it could happen again couldn’t it?
JM Well of course it could. Unfortunately it’s just a commercial decision that you might have to make.
Jude Yes – it’s a big gamble because if your unit’s worth $650,000, they would offer you at least $850,000 for you to get out – wouldn’t they?
JM Look. Well look that’s a question that I really can’t comment on because it’s a question of about two things. The question about valuation – it’s also a question about market forces… because a developer might say well all these units were $650,000 but to buy a block of 10, I might have to offer 8 million – who knows? let’s pick figures out of the air.
Jude Yeah it would have to be a very good price for people to vote on – you know what I’m saying?
JM Yes – see that’s the point of the report that the strata renewal committee have to put to the meeting and that’s when the meeting decides whether they adopt that or not. And that’s where the 75% majority is required.
Jude Okay – thank you.
WM Okay – good on you Jude.
Jude Thank you.
WM Thank you for your call. I mean I used to do a real estate show and people would love to know the value of their own place but the experts always say you’ve got to be careful because you might thank you are sitting on a lot of money but if you are in a hot market, you are going to have to spend a lot of money to buy your next place as well, so what goes around comes around I suppose.
JM Well exactly. Exactly. Yes.
WM 131 873, hello John.
Caller 6 – John
John Yes – g’day mate. I’m just wondering with these new strata laws. I mean our buildings are 15 years old, does this automatically change over for all pre-existing strata units or is it only new units strata schemes that are registered on or after the 1st of November?
JM Well it depends on the aspect of the legislation. The legislation we have been talking about in regard to the termination of schemes and the redevelopment of schemes will apply to all of them, as long as they are residential. Some of the other provisions will apply to existing or new schemes, some apply to existing – as I said about the bi-laws. It’s a bit of a dog’s breakfast. But this one that’s causing a lot of controversy will apply to all strata schemes.
WM Okay John.
John Okay. Thank you very much.
WM Thank you for your call. Hello Carroll.
Caller 7 – Carroll
Carroll Oh hi. How are you?
WM We’re well. What’s your question?
Carroll What I’m ringing for – the new laws that has been brought in for tenants being able to attend AGM meetings.
JM Yes. The tenants can either attend a meeting of the Committee.
JM But they cannot speak and they cannot vote. The tenants can also attend an Annual General Meeting and they can attend if they’ve got if more than ½ the building is let. They can attend through a representative, but again the representative can only address the meeting if asked and cannot vote.
Carroll So what’s the point of them being allowed to go?
JM Well at least I suppose they can be informed about some of the things that are going on, but certainly when issues of finance are being discussed, they can be excluded.
Carroll They can be excluded.
JM If matters of finance are being discussed yes.
Carroll Right. Yeah.
JM Otherwise they can be invited to attend or they might like to know that the back wall is going to fall off or something like that –
Carroll But I mean they are renters – they are not owners. They are renters – why are they given the right to be there?
JM Well you will have to ask our political ………. with that one because that’s what they’ve got in the legislation….
Carroll Yeah – what do you think of it?
JM I think that the tenants should have a voice. Now one of the things that will become compulsory is that each new tenant would have to be given a copy of the bi-laws.
Carroll Well I think that should be the law now.
WM So that they know what’s going on. Yeah.
JM Yes so that they know what is going on and I think that’s at least a step in the right direction. Look – I’m sorry it’s just very hard how you weight these matters up. The tenants live there – they have to put up with the building – but then they have their own rights against the landlord as far as the Tenancy Tribunal is concerned but in terms of management of the strata scheme, yes they can attend but they don’t have any power in terms of voting.
WM Yeah – good on you Carroll. Thank you for your call. Hang in there by the way because that was an interesting aspect you’ve raised, so we’ll give you the $100 Westfield voucher – thanks to Turner Freeman Lawyers. And sorry for all those calls we didn’t get to but I knew we were going to be busy today because you know its “D” Day really isn’t it for these new laws?
JM They are going to happen no matter what.
WM That’s true. Good on you John. Until next time.
JM Thanks for that.
WM John Mann – who’s our property law expert with Turner Freeman Lawyers and thanks so much for your calls. As we’ve gone through a very very busy legal segment this afternoon. We’ve got the news coming up next.