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How strata apathy can cost you big-time

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Owning in strata is not easy.  The personalities and power games, the complex laws, the myriad variations of by-laws, and the differing levels of respect for them are deterrent enough for getting too involved in the day-to-day of apartment living.

You can understand why so many investors just hand the keys to an agent and don’t even bother to vote by proxy at their AGM. The same goes for a substantial proportion of resident owners.

But, if you think your vote won’t make any difference, consider the case of the pet-by-laws that were challenged last year at the NSW Civil Administrative Tribunal (NCAT).

In the first instances, two low-level tribunal Members, in separate cases, ruled that blanket pet by-laws that ban animals from their buildings, were harsh and therefore invalid.

In one of the cases, the owners’ corporation’s subsequent decision to appeal the ruling was only passed by less than one per cent of a vote.  Imagine if you’d been an owner who wanted pets in the block and hadn’t bothered to turn up or send a proxy vote.

Imagine if the Appeals Board hadn’t overturned the decision and you’d been compelled to pay your share of the other side’s costs.

And there are so many ways that the three wise monkeys approach – see, hear and speak no evil – could cost you dearly in strata.

In the early days of a new block, if you don’t push for a thorough defects survey, a check on a feather-bedded building management contract, and a block on corrupt embedded contracts, maybe no one else will.

In an established building, if your committee routinely discriminates against tenants – including yours – who’s going to suffer most?

If, as often comes up in the Flat Chat Forum, committee members casually annex chunks of common property for their own uses, with no one to question their division of the spoils, who is losing out?

If the block looks like a slum from the outside because the long-term resident owners don’t want to pay a cent more in levies than they have to, whose property values are going to take a hit?

Not theirs, in any real sense, because they’re not planning to sell any time soon.  Meanwhile your rents and resale values are heading south.

And then there are the high-risk legal adventures on which your owners corp (body corporate) either embarks or chooses to defend.  Wouldn’t you prefer to at least have a say before they start throwing your money at lawyers.

What’s a high-risk legal adventure? Just about anything that goes to the various state tribunals. Entry-level Members or Referees aren’t always the sharpest tools in the shed.

The Sydney pet issues were a case in point. Basic Members decreed that pet by-laws were invalid because they were either harsh, discriminatory or unconscionable (or all three).

Months later, an Appeals Board overturned the rulings which probably should never have been made in the first place.  But was it worth going to the barricades over,  risking hundreds of thousands of dollars in legal fees?

There’s a reason that the words lawyers love to hear most are: “It’s a matter of principle.” But could there not have been a voice of moderation that asked whether or not there was a potential for compromise? 

Similar cases in Queensland have illustrated the fickle nature of tribunal decisions. 

In one recent case, a tribunal referee overturned a by-law that banned short-term rentals from a gated residential golf course community where two owners had been doing very nicely with weekly and weekend rentals .

The referee cited and rejected findings from the Appeals Court in WA, the highest court in that state, and the Law Lords of the Privy Council, the highest court in the British Commonwealth, in favour of a finding by a similarly lowly member in a NSW Tribunal on a very specific badly written by-law there.

The Body Corproate appealed at a local court and won. The owners of the house appealed at a District Court in Brisbane and lost. The by-law stood.

In the meatime the higher court ruled that short-term lets were not “residential” … a ruling that could have far-reaching effects, according to our friends at the Unit Owners Association of Queensland (UOAQ).

And it’s interesting to note the dismay this has caused among some Queensland lawyers reporting the result, who seem to favour home owners’ desire to do as they please with their properties over strata communities’ right to establish rules favoured by the vast majority of their owners.

By the way, we hear fewer examples from Victoria because Owners Corporations need a special resolution – i.e. more votes –  before they can take legal action.

The fact that successive governments there have held strata residents with complete disregard, if not utter contempt, means that situation is unlikely to change in the foreseeable future.

The Covid-19 lock-down of nine high-rise blocks, leaving charities and individuals to provide food and household supplies, is just the most recent example of Victorian government’s disdain for those who live in apartments, whether by choice or not.

Looking at the broader picture, the tribunal systems in our largest states have failed to keep pace with the evolution of apartment living. 

That’s why you need to keep a closer eye than ever on what’s going on in your community and the best way to do that is to read the minutes, attend the meetings and vote, if only by proxy.

A version of this column first appeared in the Australian financial review.

One Reply to “How strata apathy can cost you big-time”

  1. Avatar Jimmy-T says:

    This is now being discussed in the Flat Chat Forum

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