This topic contains 8 replies, has 5 voices, and was last updated by Jimmy-T 2 months ago.

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  • #36738
    Avatar
    Whoopi
    Flatchatter

    Hi Flat chatters,

     

    NSW. With the the new laws, came the three tiered types of renovations: Cosmetic, Minor and Major. Our building decided to pass their own versions of the new renovations bylaws. With the Major renovations the OC have included a $10,000 bond. This seemed steep to me. What regulations protect the owner and their bond? If any? When we did our last renovation it was a $2,000.00 bond. Does any one know about bonds? Should they be minuted?

     

    Cheers

    Whoopi

     

     

    • This topic was modified 2 months, 3 weeks ago by Jimmy-T.
    #36749
    Jimmy-T
    Jimmy-T
    Keymaster

    Section 139 (1) says this: A by-law must not be harsh, unconscionable or oppressive.

    Given that all strata schemes must have insurance, isn’t expecting anyone hoping to undertake renovations to have that sort of money lying around (as well as for the costs of the renovations)  all of those things above.

    A $2000 bond is arguably reasonable because it would cover the initial costs of making a claim for damages.  But $10,000?  I would be knocking on NCAT’s door to get this overturned.

    • This reply was modified 2 months, 3 weeks ago by Jimmy-T.
    #36751
    Lady Penelope
    Lady Penelope
    Strataguru

    The bond should be passed as a by-law. A by-law requires a Special Resolution at a General Meeting, and also requires Registration BEFORE it can be enforceable.

    If the OC has not yet voted to amend the by-law regarding the Bond then I would encourage you to try and dissuade as many people as possible from signing it.

    An upfront fee of $10K sounds very excessive to me.

    I agree with JT, if a by-law regarding the bond has already been correctly Passed and has been correctly Registered and you believe that it is excessive then you have the option to take this matter to NCAT based on “reasonableness”.

    Incidentally, I live in Qld where monetary liabilities e.g. bonds are unlawful. The signing of a Letter of Indemnity to cover damage to common property suffices in Qld. If anything goes ‘pear shaped’ regarding damage to the common property or mess during a renovation then the body corp can pursue this through the Tribunal, or can undertake the work itself and then recover the cost from the relevant person.

    • This reply was modified 2 months, 3 weeks ago by Lady Penelope.
    #36772
    Avatar
    Whoopi
    Flatchatter
    Chat-starter

    Thank you for your input, I thought as much. It really shouldn’t be that hard or expensive to live in Strata. Qld seems to be ahead of NSW with a better code of conduct and no bonds . I may have to move !

     

    Cheers

    #37185
    Avatar
    stressed
    Flatchatter

    NSW by-laws requiring renovation bonds are invalid. [s136(2) and s139(1)]

    Part 5 of SSMA 2015 provides for the management of the finances and the keeping of accounts and records of the strata scheme, which the owners corporation is responsible for, pursuant to section 9 (3) (a) and (b).

    Section 73 (2) and (3) detail what funds can be paid into the Administration Fund and section 83 provides for the levying of contributions on lot owners.

    There is no authority under any provision of the SSMA 2015, to allow an owners corporation, to require a lot owner to pay money to the owners corporation, on the chance that there may, or may not, be a debt due to the owners corporation in the future.

    Legally, requiring payment of money when there is no debt due, is unjust enrichment on the part of the owners corporation at the expense of a lot owner.

    If a liquidated debt is owed to the owners corporation, then it can be recovered by litigation in the normal commercial manner.[ s120 of SSMA 2015]

     

    #37187
    scotlandx
    scotlandx
    Strataguru

    Payment of a bond to protect the OC in the event of damage to the common property as a prerequisite for an owner to commence renovations is not prohibited under the Act. It has nothing to do with a debt, it is a form of insurance. Note that if done properly the money would be held in trust, i.e. it does not form part of the OC funds, and if no damage occurs then the owner gets the money back.

    Payment of a bond occurs in a range of scenarios and does not constitute not unjust enrichment.

    #37191
    Jimmy-T
    Jimmy-T
    Keymaster

    I agree with Scottie. There is nothing in the Act, and specifically the parts cited by “stressed” to prevent bonds being charged, and just because the Act doesn’t specifically allow it, doesn’t mean it isn’t allowed.

    The only obstacle would be if the by-law permitting bonds was “harsh, unconscionable or oppressive”. So there is a “reasonableness” test that can be applied.

    On a broader note, conflating disparate areas of the Act in an effort to support a quasi-legalistic argument – or bush lawyerism, for want of a better term – is frowned upon in this forum.

    I know it can be fun exploring legal loopholes, but strata is confusing enough without people plucking bits of the Act out of the air, then presenting an arcane opinion as irrefutable fact “supported” by references that are, in fact, largely irrelevant.

    #37192
    Avatar
    stressed
    Flatchatter

    I am sorry that you, i.e Scottie and Jimmy -T, do not see the relevance and logical sequence of the sections quoted in support of my argument, that by-laws in NSW requiring renovation bonds, are invalid, just as they are in Queensland.

    I acknowledge that there is no specific section in the NSW legislation stating that a by-law must not impose a monetary liability on the owner of a lot (other than an exclusive use by-law) as there is in Queensland.

    However section 136(2) states that a by-law has no force or effect to the extent that it is inconsistent with this or any other Act or law. Also the owners corporation can only do the things which it is authorised to do under the SSMA 2015.

    When a lot owner undertakes either cosmetic work (s109) and or minor renovations (s110) there is a requirement under both these sections that any damage to common property must be repaired by the lot owner. In the unlikely event that the damage is not repaired by the lot owner, then the OC may take action against the lot owner or carry out the work itself and recover the costs as a debt.[s120(5)].

    Requiring a renovation bond in advance subverts the scheme of the Act in regard to owner renovations. What rights does the lot owner have, under the Act ,when the OC refuses to return the bond at all, or only returns a portion of the bond? In my strata block all the renovation bonds have been deposited to the Administration Fund and have been used to increase working capital.

    The OC, in my strata block has refused to return renovation bonds even though there has been no damage to common property.  The amount of the renovation bond was not specified in the by-law and is determined by the strata committee on a case by case basis.

    Finally, I am only interested in the strata legislation being correctly interpreted and followed by all the people involved in the strata industry. However this has not been happening, since each group considers their own vested interests and there is definitely a bias in favour of owners corporations.

     

    • This reply was modified 2 months ago by Jimmy-T.
    #37196
    Jimmy-T
    Jimmy-T
    Keymaster

    stressed said:

    I acknowledge that there is no specific section in the NSW legislation stating that a by-law must not impose a monetary liability on the owner of a lot (other than an exclusive use by-law) as there is in Queensland.

    And there you have it.  That’s why it’s illegal in Queensland – because the law says so.

    The OC, in my strata block has refused to return renovation bonds even though there has been no damage to common property.

    And that’s your problem – not that the law is not being interpreted correctly, but because your committee are crooks.  There are options for you under common law. Send them a bill then take them to court when they don’t pay it.  Then take them to NCAT and have the main culrpits removed from the committee by an order of the tribunal.

    You are reading the wrong parts of the law and trying to make them something they aren’t.  You could take your arguments to NCAT and try to get them to rule on it.  But you will lose – and not because they are biased, but because you are trying to make the law do something it was never intended to do.

     

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