Unit News Online August 2011

The ofďŹ cial newsletter of Unit Owners Association QLD

UOAQ Building Memberships Page 3

The Santai Court Decision Page 4

6 Steps for Best BMA KPIs Page 7

AUGUST 2011 MARCH 2011 Morning Time on Brisbane River many fine units and apartments overlook the Shaftson Reach of the river with the dockside marina in the foreground Cover pic by Forbes

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The Scary Adventures Of Little Lottie, The Lot Owner www.uoaq.org.au

A modern Fairytale

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Once upon a time in a kingdom fringed with pristine beaches, there lived a little girl named Lottie.

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Lottie lived in a big building that was separated into small apartments, called lots. Collectively, all the owners were known as the body corporate.

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Once a year all the owners, or at least those that could be bothered turning up, met to discuss items of common interest regarding their property investment.

Lottie knew there was a special group of people who met more often…they were known as the Committee. They were a bit scary and angry at times, especially if Lottie asked difficult questions.

Sometimes, when Lottie couldn’t get a straight answer to her questions, she went to a kindly sorcerer who was regarded as the keeper of all knowledge about the building…he was known as the body corporate manager and he referred to the knowledge as the body corporate records.

Lottie knew she was allowed to inspect these records but at a cost, because even a sorcerer has to earn a living. The kindly sorcerer made sure that Lottie agreed to pay him before bringing out the boxes and

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Help for Members

Members of the UOAQ are welcome to contact committee members of the association for any help on any body corporate matter.

Disclaimer

Articles contributed to this newsletter are published as a service to members and do not necessarily reflect the opinion or policy of this Association.

To contact the committee of the UOAQ for assistance with a body corporate matter please e-mail help@uoaq.org.au

2

Lottie inspected the body corporate records and when she had finished, made to pay the sorcerer. The sorcerer handed Lottie a legal looking letter which advised that he could charge more than the prescribed fee because politicians in a faraway land called Canberra had imposed a ten percent surcharge called the “GST”. Lottie didn’t think the sorcerer had the right to impose the GST but the sorcerer threatened to turn her into a frog if she didn’t pay. Lottie didn’t think that was very kindly.

Lottie, returning home, logged onto the website of the Commissioner for Body Corporate and Community Management.

The Commissioner was as powerful as the famed Wizard of Oz, and as mysterious.

No-one knew what he looked like for he rarely ventured out into the real world. Still, the Commissioner administered the Body Corporate and Community Management Act which claimed to protect the interests of lot owners. Sometimes,

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Where is your building leading the way?

Coralie Mott

folders of information from their secret hiding place, deep in his cave. Still, the sorcerer couldn’t demand a discretionary amount because the government of the kingdom had imposed limits, known as prescribed fees.

To be continued ..

From the Editor

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PART 1

Every building manages things in their own way and the UOAQ is keen to hear what’s working well in your building. A “GOOD NEWS’ segment is planned for future newsletters that will feature a case study showing how one group is successfully tackling a body corporate issue.

In an environment where many are new to corporate living we need to share effective practice in the interest

UnitNews Online August 2011

of all owners.

At UOAQ we spend considerable time and effort responding to many and varied issues raised by our members and our mainly volunteers do their best to respond in a positive and helpful manner. Many involve complaints that affect their daily lives in body corporate land and these problem issues often become the subject of feature articles in the UOAQ Newsletter.

We would like to highlight some successful practices as well so please let us know about something, big or small, that is working well in your building. Please e-mail, help@uoaq.org.au

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UOAQ Building Memberships

– Money Back Guarantee UOAQ is expanding its services to unit owners by providing a building subscription membership to Bodies Corporate in addition to individual unit owner subscriptions. The UOAQ is so confident of its ability to add value for this new category of membership that all new subscribers are being offered a MONEY BACK GUARANTEE which is: •

UOAQ will provide value adding advice resulting in benefits that are at least equal to the cost of membership or refund the difference between membership fees paid and value initiatives offered.

The terms and conditions applicable to this service are as follows: • Value adding advice will be based on data provided by a committee member (but exclude legal advice) • Annual cost of Building Membership: $500 or $10 per lot if more than 50 lots.

• One committee member nominated to liaise with UOAQ.

Hartley’s Body Corporate Management ‘Looking after all your Body Corporate Needs’

This is one of a number of initiatives generated by the committee since it was elected at the last Annual General Meeting in September 2010.

Body Corporate Committees accessing this service will have access to the wide experience and expertise of the UOAQ committee as detailed on the revamped website www.uoaq.org.au Committee profiles are provided via the Contact tab on this website.

In order to strongly represent owners as the peak body in this industry UOAQ needs a broad support base and to be sound financially. UOAQ is taking a strong stand in its sustainable living policy and addressing the inequities in the legislation specifically related to Management Rights. It encourages owners to take an active role in the management of their building, lobbies government and local authorities over inequities and provides a public voice for unit owners.

There is a David and Goliath difference in the respective financial resources of this organisation compared to the well resourced sectional interests of other organisations that purport to represent the industry, but really only represent the very sectional interests of their constituency masquerading as representing owners which they do not

Contact UOAQ via help@uoaq.org.au Subject Header : Building Membership expression of interest Building Name

3379 7455 ■ Financial Management ■ Agendas & Meetings ■ Administration of your Scheme ■ Maintenance ■ Dispute Resolution ■ Compliance

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Feature Story family on several occasions, and I can recommend it for a holiday or weekend away.

• Instead of putting a gym in the resort, the occupiers of the resort have free-of-charge access to a recreation club down the road by virtue the Santai Owners Corporation paying a fee under a recreation facilities agreement.

Practically, the owners of the apartments are paying for the availability of the facilities through their body corporate levies.

• In order for the recreation facilities agreement to be enforceable it had to be supported by by-laws. There was an argument about the validity of the by-laws, and the final decision was that the by-laws were valid.

Not always an easy run

Here are some of the things I find really interesting about the decision

The Santai Court Decision

Buyer beware notion

There has been a very recent Court decision involving one of the owners corporations managed by SSKB in New South Wales. This is a decision which has wide implications for the industry and it is worthy of us thinking about the implications so we can create better strata communities.

It is a decision about “what you can do, and how”, as opposed to some legal decisions which are all about “what you can’t do”.

I have given up being a lawyer, so this article is not an analysis of the legal reasoning behind the decision. I am vitally interested in strata, so this article is about the implications of the decision on:

It is an authoritative decision because it is from the NSW Court of Appeal – 3 judges in a high up Court: meaning that while this is a NSW decision and binding only in that state, there is a good chance other lawyers throughout Australia (not only NSW) may follow the lead.

In brief the relevant facts of the case for the purpose of this article are –

• People who design and build strata communities • People who live in and manage strata communities

• Santai is an Owners Corporation at Casuarina Beach in the Tweed. It is run as a resort. It is a really beautiful facility. I have stayed there with my

This case was about the validity of a by-law.

One factor that the judges took into account when making the decision to uphold the bylaw was that the by-law was in place when the developer set up the strata scheme.

It was concluded that the buyers of the apartments should have been aware of the existence of the by-law and would have taken it into account at the time they made their decision to purchase.

This idea that if “the rules of the game are set up front we won’t change them later” is something we should all find comfort in.

The other extrapolation is that the Courts are going to put some onus on consumers to read the documents they are given and understand them before buying. This decision limits the ability of one party to rewrite the rules after the event. I think this is a good thing.

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Feature Story There may be some implications here where people change bylaws or challenge by-laws about pets. If by-laws are clear up front we can go into the purchase of an apartment with certainty that the current situation is not going to be held invalid due to a technicality.

By-laws will be interpreted widely Owners and developers of strata property write their by-laws to create great liveable communities. They put in place by-laws to make the community better and to guide the evolution of the community. Previously, there was a legalistic approach to what could, or could not, go in a by-law. While this is interesting stuff to lawyers, the rest of us just want results. Consequently, a limiting approach meant that we could not create the types of communities we really wanted, in case the by-law was invalid and the whole legal framework came crashing down. The present case allows for more creative results.

Management Rights | Levy Collection | Dispute Resolution Community Management Statements | Review of By-laws Establishment of Schemes | Construction Defects Lot Entitlement Disputes | Exclusive Use

By-laws are tools to create communities One of the arguments in this case was that by-laws had to be limited to the on-site common property. This argument was not accepted. By-laws could be used to join the owners corporation to an arrangement to share a gym off-site.

For residents and developers of strata communities this is a very useful tool. Sometimes the number of residents in a strata scheme is just not large enough to make particular types or standards of facilities an economically viable arrangement. For example, instead of a small gym, if a number of nearby bodies corporate join up, the owners could have a first class recreation facility.

Here is another related idea which is now possible under this approach. Some bodies corporate are presently considering becoming members of “buying groups” to utilise the benefits of mass purchasing power. Empowering by-laws can make these groups a reality.

Conclusion Every Court case has winners and losers, and I empathise with the losers of this appeal. This article is not a comment on the merits of either party involved in the Santai case. Taking a wider view, the Santai decision does have positive consequences for the strata industry.

By Tim Sheehan sskb@sskb.com.au

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Implementing practical initiatives for bodies corporate We were recently appointed body corporate managers for a scheme in Brisbane. After completion of our full audit of the records we found that the committee did not have a thorough checking procedure in place to ensure all maintenance and resolutions that were carried at previous meetings were attended to.

Many items were discussed at committee meeting level and following up on issues was not occurring, the committee were notified, in some instances, when the account for services rendered was presented. The building manager was also spending valuable time preparing in-depth reports which could have been reduced significantly.

We identified that too much talk was taking place discussing items that could be resolved immediately with a site inspection. In our role as community manager we instigated a ‘site inspection’ to be held prior to each committee meeting in order to identify issues and resolve these at the committee meeting.

As a standard agenda item the ‘site inspection’ is held before each committee meeting whereby the building manager, the committee and community Manager walk around the property, identifying maintenance items, safety items and ensuring that previous items identified have been attended to satisfactorily.

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Since SSKB have taken over this particular building and introduced the ‘site inspections’ committee meetings are shorter, more decisions are made and relations have greatly improved between the building managers and the committee. A simple yet practical initiative of SSKB to help ensure the body corporate is well maintained and everyone is well informed.

For more information about how SSKB can implement a similar system to help your body corporate, please contact the Group’s Chief Operating Officer Peter Cassels at pcassels@sskb.com.au or call 07 5504 2000.

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Developers view in the debate for reform written by a developer There appears to be a large proportion of blame on developers for some reason where this forum relates to legislation which is ripe for reform and has been for many years.

There are 1. 5 million Queenslanders living under body corporate legislation with the largest concentration in Surfers Paradise.

There are a number of issues I’d like to discuss the first being management rights. I am actively involved with the development of residential apartments and to make a project commercially viable it has to ‘stack up’. What I mean by this is the land content per unit needs to pertain to the location with all the associated costs. Primarily the land must be purchased well from the onset and this is becoming harder and harder as most landowners believe

there is an oil well below their land and therefore priced accordingly. The selling of the management rights are part of the feasibility (naturally) and depending on the location of the property will determine what module the rights will come under.

Fundamentally this is where the problem lies I believe.

Depending on the percentage of owner occupiers to investors depends on what the rights can sell for. What I have seen the past few years is that potential investors are no longer buying a job but buying managements rights to on sell for capital gain with the provision of continually applying for ‘top ups’ – what once would be a depreciating asset is now an

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appreciating asset and I have witnessed this first hand on many occasions. I believe it would take the pressure off owners and building managers if the terms were decreased and this would also be factored in to the developer’s feasibility if the formula was for a less amount of time. I strongly believe that owners should not be subjected to a contract that they have had no say whatsoever but must endure for 10 and 25 years or more... and try terminating an underperforming manager! It is virtually impossible. Try changing the contract – impossible Billions of dollars have been lost on the Gold Coast alone due to over borrowing and paying too much for property with a lot of this being public money. It is no wonder that investors are starting to realise the risks and that due diligence is imperative prior to any investment.. Owners should be empowered but aren’t due to lazy apathetic reform in this industry.... just look at the lot entitlement debacle as an example.

We encourage debate in the industry any article that you would like to send in to the editor will be considered on its merits and published if the UOAQ committee approve. Send to help@uoaq.org.au

Body Corporate Record Search Most Owners are unaware that the Body Corporate Books and Records are available to be searched by owners, mortgagees, perspective purchasers or interested parties that satisfy the body corporate they have an interest e.g. A Solicitor working for a perspective purchaser. It is a legislative requirement that as the custodian of your records the Body Corporate Manager must make these records available upon request unless the body corporate reasonably believes the record contains defamatory material.

Searches are increasingly becoming more popular as perspective purchasers and owners within schemes wish to educate themselves more about their investments.

Owners also have the option to request specific body corporate record without even having to attend the Body Corporate Managers Office. All that is required is the completion of a Form 12- Requiring Information from a Body Corporate. This form is available through the Justice Website- www.justice.qld.gov.au/ justice-services/body-corporate-and-community-management follow the links to Forms and Publications. As prescribed under the BBCM Act 1997 The Body Corporate Manager may charge a fee depending on the amount of documentation requested and who is making the request.

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The 6 Step Process to Developing the Best KPIs for Your Building Management Agreement Part 1 Step 1.

Step 2.

Step 3.

Step 4.

Step 5.

Step 6.

Read the caretaking agreement – this is the framework that presently binds the parties and the framework that you must work within unless both parties mutually agree to vary the contracts.

Interpret the caretaking agreement “for the real world”.

Review the committee’s strategic plan, and produce a subset of goals which the BM should be involved in.

Agree the measurements that indicate the goals are being achieved Give them teeth Reduce everything to writing in one coherent document and pass a committee resolution adopting the document.

For more efficient bodies corporate and so that we all have fewer headaches I have been advocating the evolution of the relationship between a resident unit manager or building manager (a BM) and the body corporate committee through the use of key performance indicators (KPIs).

Key Performance Indicators are a common management strategy used by people in commercial relationships. The Wikipedia definition of Key Performance Indicator (reproduced below) provides insight into why they might be useful for the Committee and BM to develop together: Key Performance Indicator (KPI) is an

industry jargon term for a type of Measure of Performance. KPIs are commonly used by an organization to evaluate its success or the success of a particular activity in which it is engaged. Sometimes success is defined in terms of making progress toward strategic goals, but often, success is simply the repeated achievement of some level of operational goal (zero defects, 10/10 customer satisfaction etc.). Accordingly, choosing the right KPIs is reliant upon having a good understanding of what is important to the organization. ‘What is important’ often depends on the department measuring the performance - the KPIs useful to a

Need not be a feast Finance Team will be quite different to the KPIs assigned to the sales force, for example. Because of the need to develop a good understanding of what is important, performance indicator selection is often closely associated with the use of various techniques to assess the present state of the business, and its key activities. These assessments often lead to the identification of potential improvements; and as a consequence, performance indicators are routinely associated with ‘performance improvement’ initiatives. A very common method for choosing KPIs is to apply a management framework such as the Balanced scorecard.

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