NEWSLETTER    ISSUE 7   MAY  2012

Welcome  to  issue  7.    We  really  hope  you  find  these  newsletters  useful  and  informative.  If  there  are  any  subjects you  would  like  us  to  address  in  future  editions,  simply  send  us  an  email:  reception@prostrata.com.au  detailing the topic. Enjoy your read!

Docmax  progress – and even more:  Further  to  our  January  newsletter,  we  have  started  to  set  up  Docmax. The  process  is  more  involved  than  first  anticipated.    This  is  due  to  the  ability  of  the  system  to  provide  even  more information to owners than we were previously aware.  More on this in our next issue.

We  are  also  pleased  to  advise  it  is  possible  for  levy  notices  to  be  emailed,  and  so  by  the  end  of  the  year  we expect to have everything in place to commence this service.  We’ll cover this in our next issue also.

Executive  Committee  decisions process:    We  would  firstly  remind  Executive  Committees  of  the  requirement for  meetings  to  be  held  when  certain  decisions  are  to  be  made,  e.g.  engaging  lawyers  due  to  the  provisions  of S80D  of  the  Strata  Schemes  Management  Act  1996  (NSW),  or  undertaking  works.  There  seems  to  be  some confusion  among  those  who  are  elected  at  the  AGM  to  be  the  scheme’s  representative  in  dealing  with  our  office per  the  agreement  between  the  strata  plan  and  PSS.    The  role  of  the  representative  is  to  cover  basic  day-to-day matters,  e.g.  the  approval  of  an  invoice  for  payment  or  to  instruct  us  to  send  a  letter  to  someone  breaching  the bylaws. 

Members  must  note  that  an  “email  around”  between  committee  members  does  not  cover  the  requirements intended  under  the  Act,  which  is  to  let  owners  know  of  an  anticipated  decision,  particularly  where  an  expense is  being  incurred.    If  undertaking  works,  for  example,  when  this  is  in  excess  of  $1000  (which  under  the  Home Building  Act  requires  a  contract),  PSS  needs  authority  under  S238  of  the  Act  to  sign  and  affix  the  scheme’s common seal.  

The  Executive  Committee  has  few  restrictions  under  the  legislation  so  they  can  quickly  and  efficiently  manage the  affairs  of  the  scheme.    However,  the  government  did  anticipate  the  need  for  transparency  when  making  the legislation,  so  a  committee  should  not  be  a  law  unto  itself  by  not  letting  owners  know  what  it  is  doing.    Hence, decisions  can  only  be  made  after  72  hours  notice  from  the  time  a  notice  is  placed  on  the  notice  board  and issued  to  each  member  of  the  committee.    This  allows  owners  who  don’t  want  a  particular  decision  made,  to  rally owners  of  like  mind  to  sign  a  notice  to  prevent  the  decision  being  made.    This  is  provided  for  under  Schedule  3 clause  11(2),  which  states:  “  A  decision  of an executive committee has no force or effect if, before that decision is made, notice in writing  is given  to the secretary of the executive  committee by one or more owners, the sum of whose unit entitlements exceeds one-third  of the aggregate  unit entitlement, that the making of the decision is opposed by those owners.”

Accordingly,  owners  cannot  know  what  the  Committee  is  deciding  if  no  notice  is  placed  on  the  notice  board  (thus sending  emails  around  does  not  cover  the  requirement  of  the  Act  for  disclosure).    So,  if  a  meeting  is  not  validly convened  –  by  making  notices,  placing  them  on  the  board  and  giving  them  to  the  Committee  members  -  then  the decision would be easily overturned by a challenge to the Office of Fair  Trading (OFT).  

Ignore  this  at  your  own  peril.  Imagine  that  you  are  now  in  the  process  of  having  invoices  come  in  for  the work  done  by  a  lawyer  or  builder  and  the  authority  under  which  the  work  was  issued  has  been  successfully challenged.    The  individual  committee  members  would  find  themselves  in  a  very  awkward  position  with  regard to  payment  of  these  bills  as  the  authority  to  use  the  scheme’s  funds  would  not  exist.    It’s  better  to  follow  the  law and  be  protected  from  a  challenge  in  the  first  place.    So  take  the  notice  process  into  consideration  when  making a decision for your scheme, especially one that will incur an invoice at the end of it.

Asbestos legislation:    Recent  legislative  changes,  which  came  into  effect  from  January  this  year,  bring  new requirements  regarding  safe  work  for  buildings  built  PRIOR  TO  31  December  2003.    Of  particular  note  are  those which  may  have  asbestos  materials  in  them,  either  from  the  time  of  construction,  or  due  to  work  carried  out  later –  e.g.  the  installation  of  a  hot  water  service  with  asbestos  lagging,  or  installation  of  fire  doors  which  may  contain asbestos.  Executive  Committees  need  to  carefully  consider  obtaining  an  asbestos  report/register  so  a  program for  containment  or  removal  can  be  undertaken  over  an  appropriate  period.  Fines  are  in  the  order  of  $600,000 for  executive  members  individually  and  $3mil  for  Owners  Corporations  if  they  fail  in  their  duty  in  relation  to  the new  Workplace  requirements.    We  have  posted  further  information  from  Grace  lawyers  on  our  website  so  you can read more about this subject.

If  you  believe  there  is  asbestos  in  your  building,  please  email  us  at  reception@prostrata.com.au  so  we  can expedite a proposal for an expert’s report to be obtained for your Executive Committee.

Lot Renovations:  Notification  of  proposed  work  within  your  lot,  whether  changing  floor  coverings  or  updating your  bathroom  or  kitchen,  should  be  forwarded  to  our  office  (reception@prostrata.com.au)  at  least  two  weeks before you propose to commence work.   The same applies for installation of a spa or air conditioning unit.

Depending  on  the  bylaws  or  policy  of  your  scheme  and  the  work  you  are  proposing,  and/or  if  asbestos  is  known to  be  in  your  building,  a  letter  outlining  the  conditions  under  which  the  work  may  be  performed  will  be  provided.  In  some  cases  a  bond  and/or  a  works  bylaw  may  be  required.    This  can  take  more  than  two  weeks  to  put  in  place, so  the  sooner  you  write  to  us  as  to  what  you  propose  to  do,  the  more  likely  you  can  start  on  the  date  you  planned.

The  scheme  should  always  be  informed  of  proposed  work,  first  to  help  you  reduce  the  impact  on  other  residents, but  also  because  action  may  be  taken  by  the  Owners  Corporation  via  the  Office  of  Fair  Trading  (OFT)  if  you interfere  with  common  property.    Far  better  to  know  what  the  rules  are  before  you  start,  so  as  to  avoid  additional costs,  or  an  order  from  the  OFT  to  reinstate  common  property.    If  you  are  looking  to  remove  a  wall,  then  an engineer’s  drawing  and  letter  from  them  confirming  that  no  damage  will  result  to  common  or  personal  property will  be  required.    Further  the  scheme  will  require  their  structural  certificate  (SC)  on  completion.    Not  all  engineers can issue an SC - they must be NPER to do so, i.e. they are on the National Professional Engineers Register.

Finally,  to  fully  inform  yourself,  we  highly  recommend  a  visit  to  the  NSW  Office  of  Fair  Trading’s  website  -  choose the  tab  “Tenants  and  Home  Owners”,  then  in  the  drop  down  find  Home  building  and  renovating:  (http://www. fairtrading.nsw.gov.au/Tenants_and_home_owners/Home_building_and_renovating.html)  This  explains  how  to check  whether  the  contractor  has  a  current  and  relevant  license  to  do  the  work  you  are  undertaking.  Make  sure that  the  license  is  in  the  same  name  as  that  on  your  quote  and  that  insurances  are  current,  and  in  the  same name as all invoices issued. 

Ensure  that  you  obtain  copies  of  the  contractor’s  public  liability  and  workers  compensation  certificate  of currencies.   If  there is damage to  common or an owner’s  personal property,  or the contractor is injured, you are less  exposed  if  you  have  copies  of  these  documents.    Don’t  assume  everything  is  in  order  -  do  the  checking before  work  starts.    If  the  contractor  gives  an  excuse  as  to  why  they  can’t  provide  these  documents,  call  the  OFT and ask them. Finally, for any work over $1000, a contract must be signed between the parties.

Both  you  and  the  contractor  should  sign  the  bottom  of  every  page  and  initial  any  changes  made  throughout.  The  contract  should  state  what  sums  are  due  and  at  what  stages  payments  are  expected  to  be  made.    Standard contracts  from  any  Aust  Post  Office  (prepared  by  the  OFT)  are  basic  and  unbiased.    Try  to  avoid  an  industry contract  as  these  will  generally  be  tilted  in  favour  of  the  contractor.    Attach  the  abovementioned  copies  of  the license  check  from  the  OFT  website  and  insurances  to  your  original  copy  of  the  contract.    By  setting  things  up correctly,  you  will  put  the  contractor  in  the  mindset  that  you  expect  the  work  to  be  done  properly  and  professionally.  Nobody  engages  a  contractor  expecting  things  to  go  wrong,  but  the  fact  is  that  things  do,  somewhere,  every  day. In  light  of  this,  manage  things  so  if  something  does  happen  to  you,  you  have  done  all  you  can  to  protect  your interests.

Finally,  if  work  is  over  $12k  then  a  Home  Owners  Warranty  (HOW)  is  also  required  by  law  in  NSW.    This  will  see an  insurance  company  pay  for  work  to  be  rectified  if  the  builder  is  not  around  or  goes  bankrupt  over  the  course of  the  next  6  years.    Note  that  there  are  now  very  strict  time  limits  to  make  a  claim  under  these  policies.  So,  if you  become  aware  of  an  issue  with  the  work,  write  to  the  HOW  insurer  as  soon  as  possible.  While  they  don’t need  to  act  in  the  first  instance,  and  there  is  a  possibility  you  can  resolve  things  with  the  builder,  you  must  still let  them  know  immediately.    If  a  problem  arises  and  you  can’t  sort  things  out  with  the  builder,  you  will  need  to make a claim with the insurer.

We trust that the above information  is helpful in protecting yourself personally and the scheme you are in.

Did you know?    Our  after  hours  team  deal  with  emergency  repairs  whenever  we  are  closed.    For  this  number visit our website.  Go to the “Contact Us” tab for their phone number.  They will arrange a contractor urgently.