1 Minister announces full review of Vic strata laws

2 Awards for Excellence

3 Remember - Always tell your insurer

4 How sprinkler systems save lives

5 Strata Managers Frequently asked questions

6 Lia’s Guide to All Things Strata Insurance

8 Domestic Building Warranty Insurance – a new trigger

9 Why do pipes burst?

9 Strata Cooking

Rob Beck, GENERAL MANAGERSCA (Vic)1

STRATA LIFESPRING2015GM WelcomeIt’s all about trust, efficiency and for you simplicity! The understanding, due care and diligence offered by a professional strata manager should complement your choice to live and/or invest in a strata titled property.

Many owners ask the question Why do we need a professional strata manager, can’t we self manage?

As many of the one million Victorians affected are beginning to discover, the Owners Corporations Act and regulatory regime has increased the responsibilities for lot owners to such an extent that just being aware of what all the requirements are is challenging…and that’s before complying!

If you are a self-managed owners corporation, you are expected to perform the role of a strata manager; with the expertise of a lawyer, valuer, insurance broker and accountant on tap….just to ensure compliance with the laws. You need to understand the legal, financial reporting, record keeping and insurance requirements, and are well advised to make short and long term plans for ongoing, periodic, routine and urgent maintenance management.

Such processes and the effective operation of owners corporations’ are facilitated and enhanced when a professional manager is appointed to assist, and provide their expertise in the administration of all aspects of owners corporations.

CONTINUED PAGE 5

MINISTER ANNOUNCES FULL REVIEW OF VIC STRATA LAWSMinister for Consumer Affairs, Jane Garrett, announced at the CHU SCA (Vic) Symposium on 21 Aug 2015, a full review of the operation of the Owners Corporations Act 2006.

This is a post implementation review, about eight years after it was completely changed, and will be a full public review.

Our full Policy Position document covers the SCA (Vic) position on all owners corporation matters. These policy positions will proactively inform and assist this review with possible areas of improvement and research to support the suggestions.

The review is expected to begin with an Issues Paper in Nov 2015 followed by an Options Paper in 2016. The review will also incorporate the outcomes that were contained in the draft Bill regarding the review of the regulation of strata managers, and may consider the introduction of less than unanimous decisions for scheme termination and the need for maintenance funds in more strata schemes.

We have recently campaigned for action on strata law reform, and that’s been successfully achieved.

CONTINUED PAGE 6

Rob Beck, SCA (Vic), GM and The Hon Jane Garrett MP, Minister for Consumer Affairs

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STRATA COMMUNITY AUSTRALIA (VIC) STRATA LIFE SPRING 2015

Your 2015 SCA (Vic) Awards for Excellence winners revealed.Announced at the 2015 CHU SCA (Vic) Symposium, the strata industry’s biggest event, the following members of SCA (Vic) were recognised for exceptional strata services.

Thank you too to all of you who nominated your OC Manager and/or the OC management firm for this year’s Macquarie Bank Client Award. It was fantastic to share in so many experiences of our Members going above and beyond for you… unfortunately though there can be only one winner.

Sponsor Category Winner

CHU Owners Corporations Manager John Botha, Network Pacific Strata Management

Tymaline Building Services Rising Star Owners Corporations Manager Aaron Healy, Sentinel Strata Services

HWL Ebsworth Lawyers Owners Corporations Management Business (> 3,000 lots) Network Pacific Strata Management

Buildcheck Owners Corporations Management Business (< 3,000 lots) Ace Body Corporate Management, Balwyn

Macquarie Bank Client Award Matt Twiselton, Excel Strata Managers

Whitbread Insurance Brokers Website The Knight Alliance

WinnersANNOUNCED

REMEMBER – ALWAYS TELL YOUR INSURERAlan Ferré, CHU State Manager VIC & TAS

In all States and Territories relevant strata legislation makes it mandatory for Owners Corporations (OC’s) to buy certain types of insurance, including the full reinstatement and replacement for the building.

Alan Ferré CHU State Manager for VIC and TAS stated “CHU’s primary concern is to ensure all OC’s are protected.”

“OC committees need to understand one of their key legal obligations as an insured.” “This obligation is the duty of dis-closure to insurers.” says Mr Ferré.

In practical terms this means the requirement to advise the insurer of anything that may impact the insurance of the building.

The potential risk of not advising the insurer of any changes to the OC is the possibility of having a claim denied or the policy being cancelled.

To illustrate this requirement let’s look at a current high profile issue facing many OCs.

As you will likely be aware there was a major fire at the “Lacrosse” high rise residential apartment block in Melbourne’s Docklands in November 2014. Due to the nature and severity of this fire it has received wide spread media and government scrutiny.

Major concerns have been raised about the suitability and compliance of the external cladding used in construction and how this poor quality cladding contributed to the severity of the fire and speed of it spreading.

The Victorian Building Authority (VBA) announced it has issued audit notices to builders and surveyors for 170 buildings around inner Melbourne to ensure they had been built with compliant cladding. The inspection will cover public and residential properties constructed since 2005.

“The audit will determine which buildings will require further investigation and uses the VBA’s coercive powers to compel building practitioners to comply or face prosecution,” VBA said in a statement.

The VBA said the details of “non-compliant” builders would be posted on its website.

Whilst the VBA audit requirement covers a specific number of buildings, it has been widely speculated that the same type of cladding has been used in constructions Australia wide.

If an OC are issued an audit notice or suspect poor quality cladding was used in the construction of its building they should immediately advise their insurance partner and seek guidance on the next steps. This full disclosure means the OC has met their legal requirement for disclosure and allows an OC and the insurer, to work out a solution with all of the facts.

“CHU is committed to supporting all OCs through this difficult situation and we will do everything in our power to assist any of our clients that are impacted by this issue” stated Mr Ferré in a closing statement.

If you have any specific information queries on the insurance aspects of the above or any other strata insurance related matter, don’t hesitate to contact your local CHU office.

This information is of a general nature only and does not take into account the individual needs of Owners’ Corporation or their objectives or financial situation. We recommend that you carefully read the Product Disclosure Statement and Policy documentation provided by the Insurer and any other information before making your decision.

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STRATA COMMUNITY AUSTRALIA (VIC) STRATA LIFE SPRING 2015

Picture of the fire at “Lacrosse” building Melbourne and damage caused.

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STRATA COMMUNITY AUSTRALIA (VIC) STRATA LIFE SPRING 2015

How sprinkler systems save livesMarty Brokenshire, Linkfire Service Manager

Sprinkler systems are an effective way to contain and limit the impact a fire can have on a building and its occupants.

It goes without saying that when maintained correctly sprinkler systems can save lives.

At Linkfire we are frequently asked questions regarding sprinkler systems. We have compiled our top five most asked questions below.

“Why do I have a smoke detector and sprinkler head in my apartment?”The main difference between a smoke detector and sprinkler head is what causes each of them to activate. A smoke detector detects smoke particles within the air and a sprinkler head is activated by heat. A sprinkler head is designed to extinguish or limit the spread of a fire, whereas smoke detectors are an early warning device that smoke has been detected allowing for egress from the building. In most cases the smoke from a fire will be detected before the heat is great enough to activate a sprinkler head. So by having both in an apartment you have early warning in the smoke detector and the sprinkler head can limit the damage caused by a fire.

“If a sprinkler head activates in the car park will the one in my apartment activate too?”The short answer to this is “No”. A sprinkler head will only activate in the area of the fire and in most cases it will only require one or two heads to activate to extinguish a fire. Most sprinkler systems are made up of a series of pressurised water pipes with heads preventing the water from flowing out. The heads are made up of a metal surround holding a glass stopper filled with an alcohol based liquid, this liquid expands under heat usually between 57 to 79 Celsius and the expansion of the liquid breaks the glass globe allowing the pressurised water within the system to flow out over the fire.

“I’m renovating my apartment, can I turn the sprinklers off?”A sprinkler system doesn’t have the capability to isolate individual heads. If work is to take place around a sprinkler head, such as replacing a ceiling, and there is a risk of a sprinkler head being knocked then it is always best to contact your service provider to have them advise on the possibility of draining the system of water and removing the heads to prevent accidental activation.

“How much water comes out of a sprinkler head?”There is a great difference in water discharge requirements for a warehouse as opposed to a residential building, between 55 and 75 litres per minute, per sprinkler head, is generally what can be expected.

“Can I paint the sprinkler head?”No. Painting affects the spray patterns and response time of the glass globe. If a sprinkler head is painted it needs to be changed and a new head installed.

A sprinkler head is only a problem when it is interfered with. This generally occurs when it is hit by something or someone. Some of the most common activations occur due to people hanging something from the head and accidently hitting the glass globe, causing it to break. We are seeing more and more storage cages within car parks having sprinkler heads within the cage area. Try to keep all items stored within the cage well below the height of the head, this will ensure you don’t accidently bump the sprinkler head.

Living with a sprinkler system shouldn’t be stressful – treat it with respect as it may save your life one day.

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STRATA MANAGERS FREQUENTLY ASKED QUESTIONSAylie Brutman, Product Manager, STRATA Master

Strata Managers roles and responsibilities can be quite confusing for first time lot owners.

There is often a lot of misunderstanding surrounding strata and what issues are relevant to your strata manager.

Below are some of the frequently asked questions and responses with strata management. This should dispel some of the myths surrounding your strata managers’ role.

Why do I have to pay strata levies?

Strata levies help to maintain the common areas and management of your property’s building. At the Annual General Meeting (AGM) for your building, a budget is determined for the coming financial year. This budget approximates the amount of money needed to cover maintenance and repair costs of the building. Buildings which feature pools, gyms, and large gardens or courtyards can expect larger strata levies due to the increased resources. This budget is divided between all lot owners in your owners corporation according to your lot liability (as identified on your strata plan) and forms the basis of your annual administrative contribution.

Whose responsibility are repairs?

There is often some confusion surrounding the responsibility of repairs: Does my property/real estate manager handle the issue or my strata manager? For repairs inside your lot, it is your responsibility as owner of the lot. If you are a landlord you or your tenant can report issues to your property manager. This can include, internal painting of walls, carpet repair/replacement inside your apartment, air conditioning repairs where you have an individual air conditioning unit servicing your lot only etc. For repairs which are outside your immediate lot, such as painting of walls in common areas, carpet in the shared hallways, heating/cooling via central plant and equipment, lift repairs, etc. the responsibility is that of the owners corporation. So you should report issues to your strata manager.

Why should I attend meetings?

The AGM provides lot owners with an opportunity to discuss issues relating to your property and building. Attending the meeting will provide you with the details of maintenance already conducted, current maintenance operations and proposed future works. Your AGM provides you with an opportunity to be proactive, gauge and be a part of decisions to determine the direction of your investments’ future.

How can I become a part of the Committee?

A committee generally proposes, considers and is an integral part of approval for future building and maintenance works. In order to gain a positon on the committee you will need to nominate yourself at or prior to the Annual General Meeting for appointment. Many lot owners enjoy and actively participate on an OC’s Committee.

Aylie Brutman is the STRATA Master Product Manager at Rockend. Aylie has a Bachelor of Commerce majoring in both Economics and Management and has been working in the strata management industry since 1992.

FROM PAGE 1

Protecting you and your OC’s assets and planning for the future.

The effective operation of any owners corporation is largely determined by the willingness of members to engage with, and assume responsibility for, the operations of the owners corporation. Complement this desire with the guidance of a professional strata manager who is a member of SCA (Vic), and who has your trust and support, and you’re on a winning team!

Speaking of winners… is your professional strata manager a winner of one of this years’ Awards for Excellence? Be sure to read on to find out, and also to discover if you know the answers to the strata industry’s most commonly asked questions; responses as shared by our industry experts. This Spring Edition of Strata Life is sure to put a bounce in your step towards increased strata awareness!

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STRATA COMMUNITY AUSTRALIA (VIC) STRATA LIFE SPRING 2015

Lia’s Guide to All Things Strata Insurance

What is Strata Insurance and what does it cover you for? Lia de Sousa, Whitbread National General Manager, Strata, answers the most common questions we get asked about Strata Insurance every day.

What is Strata Insurance?

Strata Insurance is designed to protect you and your property as a lot owner. It provides general insurance cover for common property under the management of a Strata Title, Body Corporate Entity, or Owners Corporation. The premiums for Strata Insurance are typically shared amongst the lot owners as part of the strata fees and levies.

1. Is Strata Insurance mandatory?

HoldIng Strata Insurance is mandatory under each state’s relevant strata legislation. However, each state and territory has different legislative requirements that deal with insurance for strata title properties. You should always check that your insurance meets those legislative requirements. If your property is professionally managed, your Strata Manager will usually help you arrange this insurance on your behalf.

2. What is covered under a Strata Insurance policy?

Strata Insurance policies cover material damage as a result of an insured peril to structural fixtures including fixed plant, machinery and underground services. These policies also provide cover for owners’ fixtures, fittings and improvements which form part of the building. Some of these items may include built-in ovens, stovetops, kitchen cupboards, hand basins, baths and showers.

Common Policy Features include:

Public Liability

Cover for the legal liability of the Owners Corporation. This does not insure the liability of the unit owner, except where liability relates to the Owners Corporation’s property or common contents.

Common Contents

Covers your appliances, equipment, furniture, carpets, fittings and works of art in any common area for which the Owners Corporation is responsible.

Loss of Rent and/or Alternative Accommodation

If a unit becomes uninhabitable as a result of an insured peril, the unit owner can claim for loss of rent or alternative accommodation during the period that the premises’ are unfit for occupancy, based on the rental value of a unit, subject to approval by the insurer.

Personal Accident for Voluntary Workers

Provides compensation to any person who carries out voluntary works on behalf of the Owners Corporation. The volunteer worker’s name must be recorded in the books of the Owners Corporation.

FROM PAGE 1

On behalf of the strata sector, we applaud the Victorian Government and Minister Garrett on this most important commitment to strata reform that potentially will take us forward for the many decades to come. In recent editorial Rob Beck, General Manager, SCA (Vic) was quoted as saying “The strata sector is set to continue as a major player in Victoria’s property market and we’re pleased with the forward thinking approach taken by the Minister through this review of critical legislation”.

“We’re confident the Minister shares the same vision for the strata sector in Victoria to take the sector forward for the benefit of our many thousands of stakeholders.”

“We’re wary that this issue needs to be kept firmly in the sights of State Government and the timeline put forward by the Minister is one we consider to be reasonable provided the Government sticks to it.”

“We have every reason to believe that positive change is coming.”

“We’d like to thank the Minister, the Department and her staff for their courtesy and collaborative input throughout this whole process. It has truly been a breath of fresh air.”

3. What is not covered under a Strata Insurance policy?

Strata Insurance specifically excludes contents within individual units such as carpets, curtains, blinds, light fittings and electrical appliances not actually wired into the premises. These items should be insured by your Contents Insurance or Landlord Insurance policy.

4. Does the Owners Corporation need to get a valuation on the building?

The law requires that buildings are insured for their full replacement and reinstatement value. Whitbread recommends that the Owners Corporation obtain a professional property valuation every three years.

5. What if I rent out my strata property?

Strata Property owners who rent out their property need to purchase Landlord Insurance as a separate policy to the Strata Insurance. Landlord Insurance provides insurance protection for your liability as a Landlord. In addition, the insurance provides for Landlord’s contents, loss of rent by an insured peril and various other benefits.

6. What if I live in my property?

As an owner occupier of a property, you should arrange a Contents Insurance policy. This will cover your furniture, personal contents, jewellery, collections and other special items. In addition to this, Contents Insurance policies provide legal liability protection for any damage to third party property or third party injuries that may occur anywhere in Australia.

If you require any information about how you are covered under a Strata Insurance policy, including optional extras that are available, please contact your Owners Corporation Manager or speak with one of our specialist strata insurance brokers.

This insight article is not intended to be personal advice and you should not rely on it as a substitute for any form of advice. Please contact Whitbread Associates Pty Ltd ABN 69 005 490 228 License Number: 229092 trading as Whitbread Insurance Brokers for further information or refer to our website.

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STRATA COMMUNITY AUSTRALIA (VIC) STRATA LIFE SPRING 2015

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STRATA COMMUNITY AUSTRALIA (VIC) STRATA LIFE SPRING 2015

DOMESTIC BUILDING WARRANTY INSURANCE – A NEW TRIGGERAndrew Whitelaw, Partner, TressCox Lawyers

As at 1 July 2015, a new trigger has been activated for owners corporations and lot owners alike to make a claim against a warranty insurance policy for the costs of rectification of defective building works. Previously a claim could only be made if the builder was dead disappeared or insolvent (“DDI”).

It is an unfortunate reality for many owners corporations that areas of common property can suffer from defective building works requiring rectification and repair.

Defects can be varied and range from failed foundations, cracks to concrete driveways, lift issues, waterproofing failures, flaking render and paintwork to failed window systems and facades.

Sections 4 and 46 of the Owners Corporations Act 2006 state it is a function and obligation of the owners corporation to manage and administer the common property and to repair and maintain the common property including the chattels, fixtures, fittings and services related to the common property or its enjoyment.

In Victoria, an owners corporation or lot owner may have a legal right to make a demand and issue legal proceedings against the original builder if it can be established defective building works are due to a breach by the builder of an implied warranty set out in section 8 of the Domestic Building Contracts Act. Those warranties state that a builder in carrying out domestic building works must:

a) carry out the works in a proper and workmanlike manner and in accordance with the plans and specifications set out in the contract;

b) all materials to be supplied by the builder for use in the work will be good and suitable for the purpose for which they are used and that, unless otherwise stated in the contract, those materials will be new;

c) carry out the works in accordance with, and will comply with, all laws and legal requirements including the Building Act 1993 and the regulations made under that Act; and

d) carry out the works with reasonable care and skill.

If the builder is in breach of these warranties a demand can be made. Any legal proceedings will require a special resolution to be passed pursuant to section 18 of the Owners Corporations Act.

It is also a requirement for domestic builders, when constructing properties to also take out a policy of warranty insurance in relation to the works. An exception applies which is discussed further below. Usually such a policy is taken out for each of the lots to be constructed and the owners corporation has the right to make a claim against such policies if there are defective building works on common property. Each certificate of warranty insurance

allows for a claim to be made up to the value of $200,000, or if the policy was issued after 1 July 2014, $300,000 inclusive of the costs of the rectification works and the reasonable legal costs and expenses of successfully enforcing a claim.

A claim against any such warranty insurance policy however can only be made if the builder is DDI and must be made within 6 years of the date of the Occupancy Permit or perhaps later, but only if the defective building works arose within the insurable period

As at 1 July 2015, a new trigger has been activated.

In addition to a claim being made if the builder is DDI, a claim can now be made against any such warranty insurance policy if the builder has failed to comply with a Tribunal or Court order after 28 days, provided the following conditions have been met:

a) The order must have been made either at the Victorian Civil and Administrative Tribunal (“VCAT”) or a court including a Magistrates Court, the County Court or Supreme Court of Victoria;

b) The order must be a final order (i.e. not an interlocutory order);

c) The builder must have failed to comply with the Order; and

d) All appeal periods must have expired.

The advantage for owners corporations, lot owners and private owners alike, with such a new trigger being introduced is that once a final order is made at VCAT or a Court against the builder, the owners corporation or lot owner will not be required to incur the time and costs of sending the builder into bankruptcy in order to trigger the right to make a claim.

While this is all good news, in one sense, it will only apply if warranty insurance was required to be taken out in the first place.

The exemption for builders not to take out warranty insurance at all for buildings being constructed which are multi-storey residential buildings, namely a building that has a rise in storeys of more than 3 and that contains 2 or more separate dwellings still exists. In other words, a suburban standalone property will have warranty insurance but an apartment or common property in a high rise building more than 3 storeys will not. Perhaps an area for further review.

Why do pipes burst?There are many reasons why…

Old galvanised pipes corrode internally and eventually this corrosion weakens the walls of the pipework causing the pipe to leak.

Ground movement, generally at seasonal changes, can cause pressure to be applied to pipe-work and also cause pipework to shift. This movement over time weakens the pipework causing pipes and fittings to split or crack causing the pipe to leak.

In many older buildings copper and galvanised pipework was laid in the concrete slabs. This means that any building movement can cause pipes and fittings to split and crack.

In some cases the steel reinforcement mesh comes into contact with the pipework causing a corrosive reaction, which in turn results in the eventual degradation of the pipework material and eventually – a burst pipe.

Questions? Comments? Articles?Contact: info.vic@stratacommunity.org.au or phone 9416 4688

STRATA LIFE

STRATA COMMUNITY AUSTRALIA (VIC) STRATA LIFE SPRING 2015

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Copyright and disclaimer:

This publication is for general information purposes only.

SCA(Vic) has taken all reasonable measures to ensure that the

material contained in this newsletter is correct. However,

SCA(Vic) gives no warranty and accepts no responsibility for the

accuracy or the completeness of the material. Readers are

advised not to rely solely on this information when making any decision. Readers should seek

independent advice before making any decision.

SCA(Vic) reserves the right at any time to make changes as it deems

necessary.

Copyright strictly enforced. © 2003–2015 Strata Community

Australia (Vic) Inc.

STRATA COOKINGSpring Garden Vegetable Strata Recipe by Kraft

INGREDIENTS

» 2 tbsp margarine or butter

» 1 onion sliced

» 1 green pepper, cut into strips

» 1 zucchini sliced

» ¼ tsp garlic powder

» ¼ tsp ground black pepper

» 40 saltine crackers, coarsely broken (eg salada)

» 6 eggs

» 1 cup milk

» ¼ cup KRAFT grated parmesan cheese

PROCEDURE:

1. Melt margarine in large skillet on medium-high heat.

2. Add vegetables; cook and stir 3 to 5 min. or until crisp-tender.

3. Stir in seasonings. Remove from heat and set aside.

4. Layer crackers and vegetable mixture in 2-qt. casserole sprayed with cooking spray.

5. Beat eggs and milk with whisk until blended. Stir in cheese; pour over vegetable mixture. Cover; refrigerate several hours.

6. Heat oven to 165°C. Bake casserole, uncovered, 45 to 50 min. or until knife inserted in centre comes out clean. Serve warm.

Serves 6