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Published by UnitCare Services. P.O. Box 4040, Norwood South 5067 52 Fullarton Road, Norwood.

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Gordon RussellManaging DirectorUnitCare Services

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spring 2012

Unitcarecare 1

I was shocked to find one of Adelaide's large body corporate managers defending why they had failed to pursue a unit owner for some $400,000 of outstanding levies.

We often have unit owners appoint us due in part to the manager failing to pursue outstanding monies. This case takes the cake. The debt was run up over the last four years.

The developer and his associates were caught in the global financial crisis and have found it difficult to sell their units for the price they needed to make the project work.

The manager even had difficulty producing an accurate balance sheet, or up to date information on arrears action taken, only weeks before the special September meeting of owners, held to grill the manager and get some progress on the debts.

By the time of the meeting the developer was with the liquidators.

We are concerned at the relationship many managers have with developers and how this might compromise their duty to unit owners, especially the unit owners who pay their levies on time.

The following is an extract from Sydney lawyer David Bannerman....

"In my experience as Chair of the Ethics Committee of the NSW Institute of Strata Manager (now Strata Community Australia) and as a legal practitioner in the strata industry the main ethical dilemmas faced are those of....

Managing agents where they were introduced to the site by the developer or they have an ongoing commercial relationship with the developer which places them in a position of conflict with their fiduciary duty to the scheme for certain dealings, such as, defects claims.

The following trends in ethics complaints are envisaged in the coming months and years....

With the increase in developments in New South Wales there may be an increase in ethical and conflict of interest challenges for managing agent dealing with developers

We believe that many managers are afraid to bite the hand that feeds them. Owners need to act in concert, get tough with their managers, grill them over their relationships and sack them if they fail to do their job.

Cheers

Gordon Russell

ps: Do you have any friends who need to read our newsletter? Ring and we will post one out or they can download it from our website o

MANAGER FAILS TO COLLECT $400,000A prestigious group of 70 units here in Adelaide has levy arrears of $400,000+. This debt has accumulated in just the last four years.

Michael Teys from Teys Lawyers stated that “this is one of the worst

cases of levy neglect I have ever seen”.

Mr. Teys joined Gordon Russell to help represent concerned owners at a general meeting of all owners. The meeting was called by our concerned clients.

The body corporate manager, his CEO and their lawyer attended the meeting.

In this case the manager had failed to vigorously pursue debts owed by the developers since the inaugural meeting. This is despite the manager being given the authority to pursue the debts with penalties.

The debt for this group equals all annual income for the body corporate. This is a delinquency rate of 100%.

The manager failed to provide owners with any detail on how the debt collection proceedings were proceeding.

The balance sheet supplied by the manager was in error. The arrears reported as if it was the end of the month. The meeting was on the 6th, 24 days before the end of month. The difference was $97,804! Surely a manager can produce a balance sheet that accurately reflects the corporation's position at the day it is printed?

Owners were finally sent to the debt collectors just weeks before the meeting of the 6th. We found that many were not the registered owners. A search of the Lands Titles Office showed many errors in the manager's owner list. With the wrong owners sent for debt collection

the process must commence all over again.

The result is a corporation that is financially stressed with discord between owner occupiers who have paid their levies,

and developers who have not.

The meeting generated greater support amongst non-investor lot holders, better governance by the manager and increased pressure on lot holders to pay their arrears.

Teys Lawyers and UnitCare will continue to provide the non-investors with all the assistance they need to ensure their Corporation is properly governed .

The adjacent table is from Teys Lawyers. Unit owners and

management committees can use this table to also assess the performance of their group and their body corporate manager.

THE IMPORTANCE OF TRAINING WITH EXCELLENT SOURCES CONTEMPT FOR CLIENTS &

THEIR MONEY

The meeting generated greater support amongst non-investor lot holders, better governance by the manager and increased pressure on lot holders to pay their arrears.

Teys Lawyers and UnitCare will continue to provide the non-investors with all the assistance they need to ensure their Corporation is properly governed .

cases of levy neglect I have ever seen”.

The adjacent table is from Teys Lawyers. Unit

In South Australia there is no requirement to be trained as a body corporate manager. There is no licensing or industry specific regulation.

Unfortunately this has resulted in a lot of mistakes by managers, some of which have been costly for owners both in dollars and unnecessary disputes.

This September we had Michael Teys run a seminar for all of our staff.

The matters covered are featured in this newsletter. Michael bought his considerable expertise built over his decades as a lawyer specialising in body corporate law in the eastern states.

Michael Teys is the Founder and Principal Lawyer of TEYS Lawyers. He has a Bachelor of Laws and practices exclusively in the area of strata title law. He is a Fellow of the Australian College of Community Association Lawyers. He was formerly an Adjunct Lecturer with Charles Sturt University. He appears weekly on SKY News Business Channel’s Property Success with Margaret Lomas and is a regular panellist for the property edition of Your Money, You can read Michael’s blog at www.michaelteys.com and follow him on Twitter at @MichaelTeys.com

Teys Lawyers practice nationally in strata title law representing owners corporations, bodies corporate, management committees and apartment owners. The firm’s practice groups include building defects, strata community disputes, strata titles property law, by-laws and levy collection.

You can subscribe for their free e-newsletter StrataSpace and find out more about them at www.teyslawyers.com.au

Our next training session will be on conflict management. This will be run by Adelaide psychologist Ian Coats.

management committees can use this table to also assess

continued page 3

Michael Teys is the Founder and Principal Lawyer of TEYS Lawyers.

Unitcare 2 Unitcare 3

unit/update spring 2012www.unitcare.com.au

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HIGHRISE SMOKING BANS ON HORIZONWith over two million units across Australia, body corporates (strata and community titles) are becoming the fourth level of government.

Many have responsibility for rubbish collection, common services, by-laws or articles covering noise, nuisance, damage, behaviour, garbage and animals.

In order to address difficulties that arise from time to time groups often adopt 'policies' on pets, parking, use of common facilities, rubbish and behaviour problems.

A recent look at some group's by-laws and articles reveals many do not suit the group's needs and many 'policies' that need ...

1: to be incorporated into their by-laws/articles,

2: removed as breaching anti-discrimination laws, the strata or community titles acts.

Some pointers when reviewing by-laws, articles and 'policies'...

o Additional by-laws/articles should be kept to a minimum

o By-laws/articles should be kept short and simple so they are easy for owners to refer to without lawyers

o Avoid repeating things in the legislation. This is common in community corporations.

o Stop trying to save people from themselves

o Don’t interfere with life and liberty when it doesn’t matter

o Watch for inconsistencies with body corporate laws (e.g. by-laws prohibiting Ietting)

o House Rules have no legal standing

o If it’s not a registered by-law/article, it can’t be enforced no matter how sensible

o Absolute Prohibition of Pets is unreasonable

o Remember, by-laws are not about majority rule; prohibition is not in the interests of all owners in the scheme

o Pets make people nicer - half the worlds population own pets

o Sensible rules can be made about behaviour (of humans as well as their animals)

o Parking is always a problem

Additional by-laws can usefully add to a management committee's powers to:

4 Define what visitor parking means

4 Regulate oversized vehicles

4 Authorise removal and impounding of owners cars but not visitors

4 Owners with titled car spaces or exclusive use can remove cars for trespass

FOURTH LEVEL OF GOVERNMENT

Written Enforcement Policies Help

o Avoid by-law disputes arising from ignorance with a simple written policy

o What is our enforcement approach?

o What steps do we take to verify complaints?

o How do we try to settle disputes internally?

o When we will take external action?

A written enforcement policy will help maintain consistency from one committee to the next ...

o The right to legal remedies will be lost if enforcement is inconsistent

o Not treating owners differently from tenants

o Committee members can’t have special treatment

Mediation both informally (internal) and formally (through government offices) is always worthwhile

4 Be respectful of different opinions

4 State arguments with clarity and without emotion

4 Look for common ground

4 Narrow the issues

4 Document outcomes

The Art and Science of Writing Reasonable By-Laws

Is this by-law really necessary

o Does it conform to modern social and broader community standards?

o Does the proposal provide options and alternatives for individual behaviour?

o Is it practical and enforceable?

o Is it lawful?

By-law disputes are less likely if there is effective communication

4 Occasional newsletters can profile by-laws and process

4 Speak about them at annual general meetings

It’s time for associations to write responsible rules and review existing restrictions, to eliminate restrictions that are outdated and illogical, and to address specific problems with clear, specific solutions, to realize overzealous, unreasonable (committees) can be more damaging to property values than the violations they so rigorously try to prevent. It’s time to be reasonable.

Author, Kenneth Budd, ‘Be Reasonable! How Community Associations can Enforce Rules Without Antagonizing Residents, Going to Court, or Starting World War III’

For examples of model by-laws go to the following links.

Residential http://www.austlii.edu.au/au/legis/nsw/consol_reg/ssmr2010333/sch2.html

Mixed use http://www.austlii.edu.au/au/legis/nsw/consol_reg/ssmr2010333/sch2.html o

DEATH ON COMMON PROPERTY WHO PAYS?How can you help prevent you and your Corporation being sued when a person dies or is seriously injured at your group.

A case study may help. A $10 latch and 10 minutes work would have saved a boy’s life

Iman Akter Mostafa, aged three, died when he fell from a window of a strata scheme in Kogarah in 2009. He fell because the window had no latch/stop to prevent a child from opening it sufficiently to fall out.

Who is to blame? Some case law helps in this matter. In the case of Wyong Shire Council v Shirt (1980) 146 CLR 40. This case established some principles.

1. Who dies?

2. Obviousness of risk

3. Probability of risk

4. Magnitude of risk

5. Cost or inconvenience of avoiding risk

Applying these principles to the Iman case

o Who - The child of a tenant to whom a duty of care is owed

o Obviousness - Fly screens can't withhold the weight of a child

o Probability - One children's hospital reported 28 such deaths in 1 year

o Magnitude - Risk is greatest between 2-4 years. Toddlers are top-heavy so severe cranial & skull injuries accounted for 38.8% of all injuries resulting from falls from windows & balconies 1998-2008.

o Cost - $10 & 10 minutes work for a latch to prevent the window opening more than 100mm.

In cases of bodily injury the defendants will be the strata or community corporation, their management committee, body corporate manager and property (rental) manager.

Body corporates and their committees need to:

4 put in place safety policies

4 maintain all common property as and when required. Putting off repairs and works will not satisfy the law.

At UnitCare we are undertaking site visits and producing a photographic report for owners and committees. Our reports focus on safety issues and maintenance needs such as the state of timber work, balconies and stairs o

Source & Photo - News Gold Coast by Jessica Elder

Smokers are being banned from lighting up on balconies in a move that could soon extend to apartments, making many highrise buildings smoke-free.

Buildings in Main Beach, Surfers Paradise and Broadbeach already have bans in place and many more are considering implementing non-smoking body corporate by-laws.

The Q1 in Surfers Paradise has been a smoke-free building since it was built, with smoking banned throughout the tower.

A precedent has also been set in other states, with many Sydney buildings also enforcing blanket bans.

The Scalinada building on Woodroffe Ave at Main Beach could have smoke-free balconies within weeks, with unit owners planning to put the suggestion to an annual general meeting.

A resident who did not want to be named said smoke was constantly wafting into the units of non-smokers.

“The smoke blows straight in to other units,” he said.

“We will be asking the body corporate to put the motion to a vote and we hope we succeed. If people want to smoke they should do it in an area that doesn’t affect others.”

The Contessa apartment building, also at Main Beach, introduced a “no smoking on balconies” by-law last year.

Unit Owners Association of Queensland President Wayne Stevens said no-smoking laws had become widely accepted in the community.

He said smoking bans could extend to apartments as well as balconies if owners and body corporate managers wanted it.

Contact us at UnitCare if your group needs help with a no smoking by-law or article o

Here are some suggestions for effective levy recovery

4 Develop a collection policy to hide behind

4 Stop the dance of the delinquent debtor

4 Be firm but fair in collections

4 Budget for the inevitable

4 Be consistent with your collection policy

4 Be seen to be consistent with your collection policy

4 Do exactly what the policy says when the policy says

4 Don’t do things that are not in the policy

4 Once the debt collection agency and or solicitors are involved, let them do the barking

We strongly recommend that all strata and community title groups develop and implement a levy collection policy.

UnitCare & Teys Lawyers can help with the development of a debt collection policy o

MANAGER FAILS TO COLLECT $400,000 (CONTINUED FROM PAGE 1)

o if enforcement is inconsistent

o tenants

o treatment

Mediation both informally (internal) and formally (through government offices) is always worthwhile

4

4 emotion

4

4

4

The Art and Science of Writing Reasonable

For more detail on the to child falling from the window go to...

http://www.smh.com.au/national/man-describes-horrific-moment-when-his-friends-threeyearold-son-fell-from-sydney-unit-window-20091019-h3mr.html