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A Strata Title UpdateROCKEND STRATA USERS SEMINAR7 June 2011Melbourne, Australia

+Today’s Agenda

A selection of strata issues

2 Stage Victorian strata law changes

Compliance issues

Existing & emerging trends in strata

50 years of Australian strata title

Questions

+2 Stage VictorianStrata Law Reforms

Some more Victorian strata law changes

Consumer Affairs Legislation Amendment Act 2010 [CALAA]

Consumer Affairs Legislation Amendment (Reform) Act 2010 [CALARA]

Stage 1 started on 1 January 2011 for everything except delegation to committees and proxies for committee meetings

Stage 2 starts on 1 September 2011

+2 Stage VictorianStrata Law Reforms

Registered managers and chairpersons can witness use of the seal for owners corporation certificates

Delegations to committees can be made by instrument or by resolution

Delegations (by instrument or resolution) must be by general meeting

Delegations to committees end at next AGM

Non valid delegations can be ratified

+2 Stage VictorianStrata Law Reforms

VCAT can award costs in fee & charge recover actions

VCAT costs can include professional & volunteer manager charges directly or indirectly relating to recovery

Only lot owners can appoint proxies to committees

Empowers police officers, CAV inspectors or other CAV authorised people to serve infringement notices under Consumer Acts

+Compliance Issues

There’s a lot of laws, regulations, rules or contracts in strata

They apply to everyone in strata

So, everyone in strata needs to comply with them

But, there’s a lot of non compliance everywhere in strata

Why does it happen?

Why does it matter?

+Compliance Issues

Ignorance: People just don’t know what to comply with.

Lethargy: People can’t be bothered to do what’s required

Busyness: People are too busy in their other lives

Miserliness: People won’t spend the money

Arrogance: People simply don’t want to

Corruption: What’s required is against their interests

Civil Unrest: The rule or provision is actually inappropriate and should be ignored

+Compliance Issues

It may be okay for owners not to comply (for whatever reason) since the consequences mostly affect them

But, one strata stakeholder can’t get away with non-compliance - the strata manager

Strata manager contracts require the strata manager to operate the scheme according to all applicable controls other laws (negligence, trades practices and registration

controls) require performance to strict competence standards

There’s exposure to contract breach issues & damages claims

Plus strata corporation & owner relationships will suffer

+Trends

The future of strata title will include more of the same But a few other trends will also influence strata over the

next 10-20 years as follows Decentralised control away from committees Increasing owner empowerment on decisions &

governance Hyper-regulation of strata scheme operations Degeneration of management into over-formality &

processes - rather than outcomes Large scale owner apathy and ignorance  Increasing operational complexity of buildings &

systems

+Trends

Haphazard application of other laws to strata corporations leaving them out of sync with other property

Effective strata scheme support services become more crucial to good management & operation but increasingly hard to find

Rapidly rising operating costs to owners causing stress & conflict

Debates over appropriate owner engagement to determine how much is not enough & how much is too much

Debates over tenant status, their rights & responsibilities.

+50 Years of AustralianStrata Title

A sparsely populated country with 7.6 million square kilometres, 22.5 million people & 8 major cities

A strong culture of property ownership

Stable banking & long term low interest mortgage sector

Taxation incentives for residential rental investment property

Enthusiastic property developers operating in boom-bust cycles

Multi unit housing represents 25% of total Australian housing

51% of new housing in NSW in 2010 was multi unit housing

+The Beginnings

Apartments appear in the early 20th century

The post war period see many more low rise apartments: mostly rented to younger couples saving for a home

1950s income & wealth levels of baby boomers lead to pressure to own apartments so a few innovators looked at apartment titling options

Lend Lease (via Dick Dusseldorp) lobbies for & initiates law reform for strata title and a joint working committee of private & government lawyers develop new NSW laws

The Conveyancing (Strata Titles) Act 1961 starts on 1 July 1961

+The 1960’s & 1970’s

First NSW strata laws have 29 sections & 2 schedules

The first Australian strata building still exists in Ashfield

NSW Laws copied all around Australia and Australian laws copied in Canada, New Zealand, Singapore, South Africa, Indonesia, Malaysia, Fiji, Philippines, Cayman Islands, India & Hong Kong

Major NSW law reform of in 1974 with 200 sections, 4 schedules & separate regulations

Pioneering times for everyone

Negative gearing promotes strata rental investment

A specialised strata management industry emerges

+The 1980’s & 1990’s

Major NSW law reforms: community title laws allowing estate subdivisions & 2 part laws (splitting development & management)

Major QLD law reforms: creating core Act & Regulation Modules for different building types

Steady growth in strata popularity, acceptability & values plus the 1990s property boom adds massive growth in strata numbers

Large scale foreign investment in strata property ownership

Professional strata associations/groups emerge & strata managers regulated in 2 states

Holiday apartment syndrome starts in QLD & long term (25 year) onsite management contract emerge

+The Naughties

Australian laws copied in United Kingdom & United Arab Emirates

Proliferation of law reforms in every Australian state

Over 33 separate strata Acts, with over 1600 sections, over 3000 regulations & more than 70 schedules

Proliferation of legal decisions in Courts around Australia

GFC puts pressure on property values & strata cash-flows

Larger & more complex strata developments emerge

Smaller sized housing units become standard in strata

Strata manager business polarise with large oligopoly style operators & micro businesses

+Conclusions & Questions

What have we learnt?

Where do we go from here?

What are the next questions?

Where do I find answers?

+Contacting Me

Contact me anytime about strata matters at …

francesco@strataexperts.com.au

And, follow my blog on worldwide strata matters at …

www.francescoandreone.blogspot.com

Find information about strata at my websites at …

www.francescoandreone.com & www.strataexperts.com.au