fbpx

Monthly Archives August 2018

In a recent case brought under the Equal Opportunities Act, the court held that the Owners Corporation (‘OC’) was a service provider. Consequently, the court determined that a disabled lot-owner was entitled to require reasonable works to be done by the OC to enable her to have sufficient access to the common property.

One important aspect on which the court did not rule, was whether the work requested was reasonable. It returned the matter to VCAT to decide on this question.

The consequences of the case could be far reaching for OCs. It is now the State of the Law in Victoria that an OC could be forced to do work which is required by a single lot owner or a tenant. If the cost of the works is substantial, such as would be the case with, say, the installation of a lift, this is a matter of concern for OC members.

Consequential questions for OC members
The questions which arise for owners include:
1)    What if the work is impractical or impossible to complete in the block?
2)    Who is liable to pay for the work?

What if the work is impractical or impossible?
Consider the circumstance of an apartment block built years before current legislative and other requirements came into force. In such a block it may be impractical, or impossible, to do works which would meet the needs of the party making the request for changes. In our view, the most likely outcome in these circumstances is that it would not be reasonable for the OC to have to make the changes requested and, consequently, it would not be forced to do so. However, until there is greater clarity on what is reasonable there is uncertainty in this area.

Who is liable to pay for the work?
The court did not deal with the allocation of the liability of owners to pay for the required works in the recent case. We expect that the fees levied to pay for works of this type would be treated by the OC as ‘special fees’ rather than ‘annual fees’. We also expect that these costs, rather than being allocated equally amongst lots, would be allocated using the ‘benefit principle’. The benefit principle simply means that those who benefit more, pay more. However, it is not straight forward to determine the share of benefit. For example, the party requiring the OC to carry out the works could argue that completion of the works will raise the value of the entire building and, consequently, suggest that all owners should pay a share.

What can your OC do to protect you and other members from the risk of being required to pay for a share of works carried out at the request of a single owner or tenant?
We recommend that OCs consider reviewing their rules with a view to making amendments, if necessary, which make clear that:

a)    the liability for the cost of works carried out pursuant to the Equal Opportunities Act at the request of one (or more but not all) owners/tenants is to be treated as a special fee and
b)    are to be allocated to the lot owner(s) requiring the works.

This course of action would provide owners with a line of protection against the potential risk.

Please contact Rama Murugesu from Interface Property Group (an Owners Corporation expert) by email at rama@interfaceproperty.com or by phone on 0427 513 239 if you would like to consider such a course of action for your OC.

Read More

A recent article published by Jon Giann1, Director at Knowledge Source, shows that while all the headlines shout that the property market in Australia is in decline, this masks the fact that the majority of the market is still growing, with some parts even going ‘gang busters’.

Before getting into the detailed analysis there are two points to make according to Jon: “Firstly we have had seven property market declines in the past 30 years, so one every four years or so. The property market moves in cycles.” Secondly, this current decline is so far, one of the “tamest cyclical downturns in history”.

The property market is divided into the following segments: ‘Top End’ – the most expensive 25% of houses, the 50% in the ‘Middle Bracket’ of prices and the 25% which are ‘Cheaper’ properties.

The graph below shows that prices in the Top End are falling. This is what has captured all of the headlines. However, the Middle bracket is still experiencing price increase, albeit at a slower pace. At the same time prices in the Cheaper segment are going strongly.

So while prices are only easing in the Top End segment, they are falling far enough, fast enough that they are pulling down the aggregate numbers and are creating all the media headlines.

Why is this happening?
We think that the key driver of the price decline in the Top End is the tightening of bank lending criteria experienced recently.

We anticipate that with the coming wave of interest only loans switching to principal and interest, we will see the price trend begin to impact on other sectors of the market.

What should you do about it?
Times of higher price volatility present increased opportunities for risk and reward for investors. Make sure you are well informed before progressing with any property decisions – whether that be to buy, sell, hold or refinance.

When the market is in decline there are often good opportunities to buy an investment property or upgrade your home. The reduction in prices at the Top End particularly provides interesting opportunities for long term investment.

Please call Warren Tate (0412 328 072) or Grant Lynch (0408 110 001) to request an assessment of your current property or any property you are considering.

1. Jon Giann, Director at Knowledge Source, Ivanhoe, Victoria.

Read More