Three Things To Do in Response to a Vague Record Copy Request

THREE THINGS TO DO IN RESPONSE TO
A VAGUE RECORD COPY REQUEST

Here are two-real life examples:

“I request copies of all correspondence from any unit owner to the body corporate requesting for the program of works relating to the water penetration into unit [XYZ] be undertaken and responses.”

“I request a printout of all payments made to any third party in relation to the program of works”

How can the body corporate comply with those requests within seven days (assuming eligibility, form of request, and payment of fee is satisfied).

Must a body corporate comply with every record request?

The answer is, no.

The trick is knowing which requests fall outside a body corporate’s obligation to avoid adverse action being taken by the requester.

Here are some guiding principles to determine whether a body corporate must comply with a copy request:

  • the requester must provide a reasonable degree of specification of the records being requested;
  • a request for a particular class or type of document is usually sufficient;
  • the requested records must be able to be readily identified by the body corporate based on the request;
  • a body corporate is required to perform some search of its records to fulfil a request;
  • a body corporate is not required to read through every document to determine whether it has information being requested;
  • the records must actually exist in order to have an obligation to provide a copy on request.

 

Approach

In the first example above, it is unlikely that an adjudicator would order the body corporate to provide the requested documents because:

  • the document range is limitless;
  • the body corporate would be required to read all correspondence from unit owners to determine whether each correspondence was about the topic of water penetration.

In the second example above:

  • if a document existed that compiled payments made to third parties, then it is likely an adjudicator would order a body corporate to provide a copy of that document; however
  • if the document did not exist, the body corporate would not be required to read the documents and create a summary of payment information contained in those documents.

 

Three Things

  1. Communicate

Ensure that communication is made to the requester (ie that the request has been received or asking for clarification of the records requested), rather than simply not responding, as we find that tends to escalate matters unnecessarily;

  1. Eligibility

Check that the pre-conditions of a copy record request are satisfied (i.e. Is the requester an ‘interested person’? Is the request in writing? Has the prescribed fee been paid?);

  1. Inspect

If you or your legal representative considers the record request to be non-compliant, contact the requester and direct them to the option of inspecting the records of the body corporate, whether it be themselves or their agent.

Article Written by Brendan Pitman (27 May 2022)

Liability limited by a scheme approved under Professional Standards Legislation

Disclaimer – This article is provided for information purposes only and should not be regarded as legal advice.

Internal Emails Between Committee Members – Public or Private?

INTERNAL EMAILS BETWEEN COMMITTEE MEMBERS
– PUBLIC OR PRIVATE?

We are often asked, do emails between committee members form part of the records of a body corporate?

The answer is…it depends (so you need to read on).

Internal communications

This is a critical question because, if they do, those emails may be accessed by an owner or prospective purchaser and there is no restriction on the purpose for which the records may be used.

A committee acts on behalf of a body corporate, and the requirement to keep correspondence is usually understood to refer to correspondence with parties external to the committee.

However, emails between committee members (which includes caretaking service contractors and letting agents as non-voting committee members) may form part of the records of a body corporate depending on:
• the role of the person sending the email at the time in which the email was sent; and
• the subject matter of the email.

Role

Understanding the role of the sender and receiver of an email is part of the process to determining whether that correspondence forms part of the records of a body corporate.

That is because there is no requirement to keep correspondence received or sent between owners, only that correspondence to and from the body corporate (or committee acting on behalf of the body corporate).

Committee members usually have two hats on. One is as a member of the committee representing all owners, and the other is as an owner. It is only those emails sent by or received by a person in the role as a committee member that may caught by the provisions about body corporate records.

Subject matter

Often the role being played by a person (as committee member or as an owner) is not clear but may be inferred by the subject matter of the email.

If the subject matter of the email is about body corporate or committee business, being carrying out the functions under the body corporate legislation, the email is likely to be a record of the body corporate.

Examples

Practical examples of internal written communications that would likely form part of body corporate records:
• a committee member advising of their resignation;
• a committee member proposing a vote outside a committee meeting;
• email exchanges between committee members about a maintenance issue at the scheme.

Practical examples of internal written communications that would likely not form part of body corporate records:
• select committee members discussing their personal opinions on a matter to be voted on at an upcoming meeting;
• a committee member seeking personal advice (not on behalf of the body corporate) on a body corporate or other matter.

This is a touchy topic, particularly where committee members wrote an email with sensitive information thinking it was not available to the public. To allay any concerns, a body corporate should seek advice either before or during the seven day turnaround time for a record request.

Article written by Brendan Pitman (5 April 2022)

 

Liability limited by a scheme approved under Professional Standards Legislation
Disclaimer – This article is provided for information purposes only and should not be regarded as legal advice.

Further Pending Changes to the Role of Building Managers in NSW – Part 2

FURTHER PENDING CHANGES TO THE ROLE OF
BUILDING MANAGERS IN NSW – PART 2

In last month’s article, I outlined some of the key issues raised in the current review by the NSW Government of the Strata Schemes Management Act 2015 and Strata Schemes Development Act 2015.

These issues included:

  1. Amending the definition of a Building Manager under the Act to more clearly distinguish the role of Building Managers from that of other contractors who engage with the Owners Corporation from time to time; and
  2. Imposing on Building Managers a higher degree of disclosure to the Owners Corporation of potential conflict of interest issues when engaging contractors and receiving referral fees etc.; and
  3. Further consultation in relation to the ongoing review of the term of Building Management Agreements (currently capped at 10 years).

Further recommendations which directly relate to Building Managers include:

  1. Building Managers be subject to a statutory duty to act in the best interests of the Owners Corporation in carrying out their duties.

               Background – Some stakeholders argued that, in addition to conflict of interest controls, Building Managers should be subject to an explicit statutory duty to act in the best interests of the Owners Corporation. For example, the Property and Stock Agents Regulation 2014 requires managing agents conducting letting to be licensed professionals subject to a fiduciary duty and an explicit duty to act in the best interest of their client.

  1. The Department of Consumer Service to consult with the strata and facilities management industries about ways to improve the expertise of Building Managers, especially in the management of defects, including the possibility of a licensing framework in the longer term.

          Background – The review panel noted that the maintenance and repair of common property is a critically important duty of the Owners Corporation, in order to ensure the ongoing safety and amenity of strata buildings throughout their life. In complex, multi-storey strata buildings, the Owners Corporation of necessity relies more on the Building Manager than in simpler buildings, for expert advice on managing defects, safety, repairs and maintenance. The lack of expertise of the Owners Corporation when dealing with issues of building defects, fire safety and maintenance has led to suggestions that overall management of maintenance and repairs should rest with an accredited or licensed Building Manager, who is subject to statutory duties to ensure the upkeep and safety of the building.

               The Facilities Management Association of Australia argued for the licensing of facilities (or building) managers and for a requirement to engage a suitably qualified Building Manager for buildings of a certain complexity. Other submissions were concerned that placing such a duty on a Building Manager would be unfair if, for example, they requested approval for repairs or upgrades but were refused by the Owners Corporation. The review considered that any proposal to delegate the obligation of the Owners Corporation to maintain and repair the common property to a Building Manager would require suitably qualified Building Managers supported by a licensing scheme and compulsory qualification requirements. Without such uniformity and oversight of qualifications, imposing such a duty could be unfair to some Building Managers who would not have the right expertise, and could risk dangerous practices and Owners Corporations placing their trust in unsuitable candidates.

              However, it was noted that at this time, there is a lack of a properly recognised qualification in the vocational educational framework that could be used to support such a scheme. Further, developing and implementing a licensing scheme would involve substantial costs which would be borne by the Government, the industry and Owners Corporations as the end consumer. The review therefore did not consider that a licensing scheme is a viable or supportable option at this time. Nevertheless, the review recognised that there is substantial support for improving the expertise of Building Managers, especially in the management of defects.

  1. Building Managers be subject to explicit statutory duties to:
    • disclose to the Owners Corporation the qualifications and experience that make them suitable for the role;
    • familiarise themselves with fire safety and building safety obligations to which the Owners Corporation is subject;
    • take all reasonable steps to ensure that the Owners Corporation complies with these obligations; and
    • promptly bring to the attention of the Owners Corporation any maintenance, repair or safety problems with the building, and provide a proposal for how these could be best addressed.

               Background – It was the opinion of the review panel that, prior to an Owners Corporation entering into Building Management Agreement, a potential Building Manager should be required to disclose to an Owners Corporation the qualifications and experience that make them suitable for the role. While such disclosure may already be common in practice, mandating it will ensure that all Owners Corporations are required to explicitly consider the qualifications of a prospective Building Manager.

  1. That a failure by a Building Manager to disclose to the Owners Corporation any commissions it has received be added to the existing grounds for termination of Building Manager Agreements under the Strata Schemes Management Act.

Current termination grounds are:

  • a failure to satisfactorily perform the duties;
  • if the caretaking fee is unfair;
  • a failure to disclose a connection to the original developer; or
  • that the terms of the Agreement are harsh, oppressive, unconscionable or unreasonable.

Background – The Discussion Paper asked whether any further grounds for termination of Building Manager Agreements should be added or if the grounds should be the same as those for strata managing agents. Submissions supported the current grounds for termination of Building Managers in section 72 of the Strata Schemes Management Act and the review recommended their retention. Given the recommendation that Building Managers be subject to the same requirement to disclose commissions and training services that applies to strata managing agents, the review recommended that the Tribunal should also be able to terminate a Building Manager’s contract on the grounds that the Building Manager has failed to make these commission disclosures or has failed to make them in good faith.

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Disclaimer – This article is provided for information purposes only and should not be regarded as legal advice

Pending Changes to the Role of Building Managers in NSW – Part 1

PENDING CHANGES TO THE ROLE OF BUILDING MANAGERS IN NSW – PART 1

BACKGROUND

The Strata Schemes Development Act 2015 and the Strata Schemes Management Act 2015 jointly provide the regulatory framework for the creation, governance and termination of strata schemes established in NSW.

Both of these Acts have been recently reviewed by the NSW Department of Customer Service and a report on the outcome of the review was tabled in both Houses of the NSW Parliament in November 2021.

Of particular interest is the section of the report dealing with Building Managers.

The Strata Schemes Management Act defines a Building Manager as a person who assists in exercising any one or more of the following functions of the Owners Corporation:

  • Managing common property;
  • Controlling the use of common property by persons other than the owners and occupiers of lots;
  • Maintaining and repairing common property.

The 2003 and 2015 strata reforms limited Building Management contracts to a maximum of 10 years (including options) and provided that both the entering into and the termination of contracts with Building Managers had to be approved by an ordinary resolution at a general meeting of the Owners Corporation.

The reforms also provided that the appointment of a Building Managers by the developer cannot extend beyond the date of the first AGM, and that a Building Manager must disclose any connection with the developer, or any direct or indirect pecuniary interest that the Building Manager may have in the strata scheme.

The recommendations noted that the current definition of a Building Manager encompasses a wide range of contractors – from concierges, gardeners, handypersons, and cleaners, all the way to facilities managers, who look after the facilities, maintenance and safety (including fire safety) in a complex multi-storey building.

The review noted the difference between strata schemes – small schemes that may simply engage outside contractors as needed to undertake repairs and maintenance of the common property versus large, complex, multi-storey schemes who often engage a person as a Building Manager, whose role is to manage the safety and maintenance of the building as a whole, as well as facilities including gyms, pools, lifts, and carparks.

The position of trust held by Building Managers in large schemes has led to suggestions that Building Managers should be subject to the same controls as strata managing agents. There is a belief that this would guard against conflicts of interest and ensure that schemes are not locked into contracts with Building Managers who are not competent or acting in the best interests of the Owners Corporation.

RECOMMENDATIONS

The report goes on to make the following recommendations in relation to these issues:

  1. Amend the definition of a Building Manager in the legislation to refer to a person who is contracted by the Owners Corporation to manage the overall maintenance, repair, and/or safety of a scheme’s common property. In this regard, they propose to conduct further consultation during the drafting of the new definition to ensure that it aligns with industry practice.
  2. Impose on Building Managers the following conflict of interest measures (that currently apply to strata managing agents):
    • Requiring disclosure of whether any entity seeking to enter into contracts with the Owners Corporation is connected to the Building Manager in some way;
    • Requiring disclosure of any referral fees or other commissions or benefits that a Building Manager may receive in relation to any contract that the Owners Corporation is proposing to enter into, before the contract is entered into;
    • Prohibiting acceptance of gifts or benefits valued at more than $60.00 – except for commissions and training services approved by the Owners Corporation;
    • Requiring reporting at each AGM of any commissions or training provided over the last 12 months and any expected over the next 12 months;
    • Imposing clear obligations to provide the Owners Corporation with disclosures about how any Owners Corporation money is paid out or received.
  3. Redefine other contractors who undertake work assisting the Owners Corporation to manage the common property as common property contractors.

 

TERM OF BUILDING MANAGEMENT AGREEMENTS TO REMAIN UNDER REVIEW

Whilst strata managing agents are subject to limited contract terms of 12 months for the first appointment (at the first AGM) and three years thereafter, feedback provided to the Government has suggested that limiting the initial terms for a Building Manager to 12 months is not practical. This is because the Building Manager would almost certainly not commit to properly setting up the systems and processes to manage the property if they have no security of appointment beyond 12 months. Other submissions argued that the limitation of contract terms for Building Managers to three years is also too short, and that it is in the interests of the Owners Corporation for the term to be longer.

While the Department of Customer Service appreciated these concerns, it also took the view that, as with strata managing agents, the concerns need to be balanced against the need to allow lot owners to reconsider the direction of the scheme in its early life, particularly given the vulnerability and lack of knowledge of lot owners at the first AGM.

Consequently, the review recommended that there be further consultation with the strata sector on what the appropriate limitations on contract terms for Building Managers should be. While the legislation currently prohibits a person connected with the developer from being a strata managing agent for a scheme for the first 10 years, the review does not recommend that this prohibition should apply to Building Managers. Developers often operate their own Building Management businesses, which are part of the overall development package and can offer savings and innovative services to Owners Corporations.

Hopefully, there will be no further shortening of the current 10 year term cap on Building Management Agreements!

Liability limited by a scheme approved under Professional Standards Legislation

Disclaimer – This article is provided for information purposes only and should not be regarded as legal advice.

Difference between Old System, Torrens, Company, Strata and CT in NSW

UNDERSTANDING THE DIFFERENCES BETWEEN
OLD SYSTEM, TORRENS, COMPANY, STRATA AND COMMUNITY TITLES IN NSW

There are different title systems for ownership of property in NSW. The following is a snapshot summary of the different ownership.

Old System Title

In the early years of the NSW colony, there was no system for recording land transactions. In some cases, brief particulars of a sale were written on the back of a land grant but in many cases, ownership changed hands without any evidence at all. This changed in 1802 when the Judge Advocate invited parties to record their land dealings, forming the first book of the ‘Old Register’. From then on, landowners would have to show a ‘good chain of title’ to prove their ownership to land. This was (and still is) called ‘Old System Title’.

Under Old System Title, a landowner had to retain (as evidence) the complete chain of documents that ultimately led to that person’s ownership of a property. This chain of documents would often go back over many generations.

(These days, we see very little Old System Titles in NSW.)

Torrens Title

The Torrens Title system was introduced into NSW with the commencement of the Real Property Act 1863. Torrens Title is based on the notion of ‘ownership by registration’. You register your ownership of land with NSW Land Registry Services (LRS). Essentially, if you have registered your name as the owner of land then you are deemed to be the rightful owner – despite any other claims. Your ownership is said to be “indefeasible”.

(Torrens title is the most common form of land ownership in NSW – being your traditional parcel of land or your house/land package.)

Company Title

Under Company Title, the building is owned by a company. When purchasing a unit within the building, buyers do not actually own the unit. They are effectively buying ‘shares’ in the company, which in turn allows them the right to occupy a particular unit.

You also receive a ‘Share Certificate’ rather than a title deed.

The good thing about Company Title units is that they are generally cheaper to buy and, because of the restrictions on shareholders, many company titled properties are occupied only by the owners – meaning less turnover and less risk of noise and other issues that occur with short-term rentals.

The downside with Company Title is that you do not actually own the unit, but rather you own ‘shares’ in the company.

Also, banks are more reluctant to issue loans for company titles units and interest rates are generally higher.

Renting your apartment out may not be possible (or could involve limitations) depending on each company’s constitution (which can vary significantly).

(It is my experience that Company Title works very well in certain limited situations. It is ideal for smaller complexes, where owners want control over who their neighbours may be and also don’t require bank funding to purchase their property.)

Strata Title

The strata system was invented in Australia in 1961, and has since been adopted globally.

Strata Title is ideal for ownership of larger, multi-level buildings, where ownership of each unit is separate, but no unit owner owns the physical building which comprises the units or the land on which the building sits.

The building itself and the adjoining land is referred to as ‘common property’ and includes things such as entrance ways, hallways, swimming pools, tennis courts, driveways, lifts and so on. No single unit owner will own any of these areas. All the unit owner owns is the cubic space inside each unit, other than the paint on the walls.

Common property is managed through the creation of an Owners Corporation. All of the owners of the individual units automatically become members of the Owners Corporation and have a right to participate in the decision-making of the Owners Corporation. The Owners Corporation is created as soon as the strata plan of subdivision is registered with the LRS.

The Owners Corporation is responsible for maintaining and repairing common property, taking out relevant insurances, managing the Owners Corporation finances, keeping records and administering the by-laws (e.g. parking and pets).

The Owners Corporation is financed by the levies that are raised against each of the units. Levies are usually paid every 3 months. The levies that a particular unit owner will need to pay will be determined by the ‘unit entitlement’. When the developer of the strata development first registers the strata plan of subdivision, he or she gives the entire building an ‘aggregate unit entitlement’ (e.g. 100 unit entitlement). A share of the unit aggregate is then attributed to each unit based on their individual value, which involves a consideration of unit size, location, aspect, rules attributable to the unit and so on. In most cases, the allocation of unit entitlements will need to be carried out by a qualified valuer.

The higher the unit entitlement allocation for a particular unit, the more that unit owner must pay in levies to the Owners Corporation. The unit allocation can also affect voting rights, so it is important that the allocation is done properly and fairly.

Community Title

A Community Title in NSW relates to properties with at least two lots that share a common area, such as a driveway or recreational land. Community Title is often used in developing large estates, which could include residential lots, as well as commercial and retail outlets. A good example is a gated community estate. Within the estate there may be, say, 20 houses, each separated by boundaries and each owned by different people. The owner of each house will own all of the building and all of the land on which the building is situated – like a traditional Torrens housing lot.

At the centre of the estate there may be a tennis court, swimming pool and parking area. To enter the estate, you need to pass by an electric gate, which is monitored by a security company.

In this example, each owner still owns their individual house and adjoining land, but they all share common amenities, including the security system, the entrance gate, the tennis court, the swimming pool and the parking area.

A community title scheme is created by the registration of a Community, Neighbourhood or Precinct plan and (much like a strata scheme) is managed by a body corporate consisting of all lot owners, known as the Community Association. All common areas (including all roads, recreational facilities, promenades and parklands) are referred to as Association property. Unit entitlement is based on site values, which determines unit owners’ voting rights and contributions to maintenance and insurance levies.

The management of a community title scheme can be complex and multi-tiered. Usually found in big developments and complexes, they can often span large areas of land and consist of a mix of commercial, residential and retail lots with conflicting interests. Much like in strata titles, everything is managed via Association meetings. The community scheme committee deals with day-to-day issues and general meetings are held for larger issues, which each individual lot owner may attend.

Community Title lots can be subdivided by strata titled buildings, which means that sometimes the by-laws of both the strata scheme and the community scheme apply.

All by-laws in a community title scheme are detailed in a Management Statement, which differs with each plan.

As every community scheme varies in nature, the by-laws are therefore far less standardised than strata scheme by-laws.

 

Article Written by Col Myers of Small Myers Hughes Lawyers

Liability limited by a scheme approved under Professional Standards Legislation

Disclaimer – This article is provided for information purposes only and should not be regarded as legal advice.

From the Ground Up – The Application of New STRA

FROM THE GROUND UP – THE APPLICATION OF
NEW STRA LAWS IN NSW

About a year ago, some operators of short-term rental accommodation (STRA) in New South Wales started hearing a strange noise in the air and naturally assumed it was the sound of the sky falling. As the months passed, more and more operators started to hear the same noises and the growing consensus was indeed that the sky was falling. As of 1 November 2021, the sky fell. Or did it?

A new regime of laws that deal with STRA have been progressively coming into effect in NSW over the last 12 months, with the last piece falling into place on 1 November. At first glance, the latest batch of these new laws specifically targeting the use of dwellings for short-term accommodation, appear to affect every person who lets out a house, apartment or room on a short-term basis.

Under the new laws, established STRA operators understandably are focussing a lot of attention on the fact that if your dwelling is not registered and doesn’t have certain physical attributes or safety features, the dwelling cannot be used for STRA. However people who previously didn’t live next to a house, or in a complex, that provided STRA, are now more concerned by the fact that under the new laws, any residence could potentially start offering STRA if the owner ticks all the boxes.

Although the new STRA laws are primarily intended to regulate Airbnb style accommodation and other similar practices, the language used in the laws can be quite confusing and appear to make the scope of the laws reach well beyond the average Airbnb host. This has led many organisations that deal with STRA (such as online booking agencies) to require any and all STRA operators jump a number of hurdles if they wish to continue using their services after 1 November 2021.

This would be an appropriate response if the new STRA laws applied to all short-term accommodation. However, not all STRA operators need to take any action as a consequence of the new STRA laws, as the laws simply don’t apply to every operator. So who do the laws apply to?

The new STRA laws apply to residential buildings that have not been specifically approved by the local Council to be used as tourist or visitor accommodation. Instead of stressing about whether you are offering hosted or non-hosted accommodation, whether you have the right kind of door locks or fire alarms, or if your building is Class 1a or Class 2, the first question you should answer is “What does the Development Approval for my complex say?” Your Development Approval is one or more documents that have been issued by your local Council which states how your building may be used, provided the building is constructed in accordance with the Council’s requirements.

As stated in the STRA Frequently Asked Questions document dated September 2021, issued by the NSW Department of Planning, Industry and Environment:

“Approved tourist and visitor accommodation such as serviced apartments, bed and breakfasts, eco-tourist facilities, hotels, motels, resorts, camping grounds or caravan parks are not required to register for STRA.

They are allowed to continue to be listed on online accommodation platforms.”

If the Development Approval that applies to your building confirms that your building is allowed to be used as tourist and visitor accommodation (or some subclass of that use) it means that the new STRA laws do not apply to you at all. It also means that if you (or anyone else) are operating STRA in the building, the sky is not falling after all.

However, if the STRA laws do apply to your complex, the units you rent will need to meet new safety standards and be registered. You, and all other participants in the short-term accommodation arrangement, will need to comply with the STRA Code of Conduct (this includes the letting agent, the online booking agent, the owner of the unit and the guest). Plus there may be a limit on the maximum number of days the unit can be let each year set by yo

ur local Council (generally between 180 to 365 days a year).

Be sure to get legal advice if you are unsure how to interpret your Development Approval documents, or if you simply can’t find them. And like most laws, be aware that there are exceptions to the exceptions that might apply in your personal circumstances.

 

Article Written by Ben Ashworth of Small Myers Hughes Lawyers

Liability limited by a scheme approved under Professional Standards Legislation

Disclaimer – This article is provided for information purposes only and should not be regarded as legal advice.