Areas of vital concern in Queensland and New South Wales are the
issues surrounding maintenance and repairs of strata titled
buildings, and the possibility of termination of schemes in
circumstances where there has been a failure to maintain the
building or there is a need for redevelopment.
MAINTENANCE AND REPAIRS
A body corporate has the duty of maintenance and repair of
common property. This duty is a "strict" duty in the
sense that it must be vigorously adhered to. A body corporate must
not delay in affecting repairs.
Both states provide a regime whereby the owners of the lots fund
maintenance and repair by way of levies. To ensure that there are
adequate funds to meet the relevant responsibilities, proper
budgets must be prepared and considered by the owners. In both
states, there is a requirement that planning is carried out on a
long term basis to ensure that there is adequacy of funds available
when the need arises.
Queensland leads the way in ensuring that funding is provided on
an adequate basis. It does this by the simple mechanism of
requiring the establishment of an assets register. That register
sets out all building elements of the scheme. Best practice would
suggest its creation in New South Wales.
Developers have a responsibility in both states of ensuring that
all plans and specifications relating to the scheme are handed to
the owners at the commencement of independent management. It is
suggested that the development and its ongoing management could
only be enhanced by the preparation of a plan of management
relating to all elements of the building, which plan would include
details of maintenance manuals, warranties and other
recommendations regarding the proper upkeep and consequential
repairs when necessary were made apparent. Such a plan would have
the advantage of ensuring that the body corporate adhered to a
proper maintenance program.
From an owner's point of view, even though a plan of
maintenance may not have been prepared by the developer, it is
recommended that the body corporate undertake the preparation of
such a plan. This could occur at any stage in the life of the
management of the scheme.
The preparation of a plan of management would have the clear
advantage of ensuring that a body corporate strictly adhered to the
duty to maintain and repair. In addition, a consequential advantage
would be that the owners provided sufficient funding on a regular
budget rather than be confronted by an unexpected event which could
lead to financial hardship.
The constraints of population increase and the need for urban
renewal has prompted debate about facilitating a process whereby a
scheme can be terminated. Both states have similar provisions
whereby if the scheme was to be terminated by a vote of the owners,
then in effect it must be passed by a unanimous resolution. There
have been complaints that the bar is set to high.
In both states there is another avenue available to persons
wishing to terminate a scheme. It is possible for an application to
be made in the appropriate court to have the scheme terminated on a
"just and equitable" principle.
To avail this principle, evidence would need to be obtained that
there were circumstances in existence which made the continuance of
the scheme not viable (for example, the building liable to
significant repair costs and/or demolition) and there was no
appropriate alternative to address the situation available. Such
means may involve the demolition of the building and erection of a
new and enlarged building. In circumstances where the individual
units have been rebuilt and/or increased in number, current owners
would commercially benefit. There certainly should be no
deleterious impact on owners in circumstances where the court was
prevailed upon to make appropriate orders.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Warranties can be risk-shifting mechanisms when the party giving the warranty is not the party at fault for the defect.
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