By The Paddocks Club Team

Below are examples of two questions on the Discussion Forum on Paddocks Club. We want to show what is available to our Community Members!

Is the body corporate responsible for this structural repair?

Member’s Question:

This query involves repairs inside a section.

An owner, who is an estate agent, is tending to the sale of a unit in the complex. There is a very bad crack running from the roof to the top of the bathroom window. The contractor that the owners contacted to quote on repairs indicated that it is a structural problem and not just wear & tear.

Would the body corporate be responsible for any part of this repair and if yes, in what instance would that be? Would the crack have to go right through the wall for that to be the case?

Anton’s Answer:

The basic principle is that the owner must repair and maintain the section, and the body corporate the common property. There are exceptions that don’t apply to this situation.

If the damage to the section is consequential to a failure of the common property, the owner would have a claim against the body corporate for the reasonable cost of repairing the section. In these situations, it’s probably best for the body corporate to just attend to the whole repair – saves time and money overall.

It’s therefore in the body corporate’s interest to confirm whether the underlying problem is its responsibility or not.

Inflation percentage increase

Member’s Question:
At a recent AGM, the financial statements proposed a specific percentage increase in the levies which same percentage increase was used across the board for units as well as the three types of Exclusive Use Area’s.

Upon receiving an objection, the managing agent responded by letter thus: “It is our recommendation that the Body Corporate uses this rule (Prescribed Management Rule 39 directions and restrictions) at each and every future Annual General Meeting to raise levies by an inflationary amount from…. (beginning of financial year); then adjust either up or down to suit the proposed budget tabled at the Annual General Meeting; usually held 3-4 months thereafter.” This does not seem possible.

Firstly, don’t changes to the Prescribed Management Rule need a unanimous approval?

Then, mustn’t the budget comprise a real projection of real future income and expenditure. The contingency fund is there for unexpected increases isn’t it?

These particular financial statements had no contingency fund because it was explained that there were savings. Somehow I have a feeling that it is in conflict with the Act in other ways.

Carryn’s Answer:

The budget should be based on an itemised estimate of the anticipated income and expenses of the body corporate for the ensuing year.

It should not be based on a percentage increase based on inflation. This is an arbitrary manner of estimating what expenses there might be and what they are going to actually cost.

The more detailed the line items in the budget the less room there is for under-budgeting. The contingency fund is there for unexpected increases.

Obtaining quotes is a better way to gauge how much the expenses will cost. If owners know exactly why the levy is being increased they will be more inclined to approve the budget.

 

Article reference: Paddocks Press: Volume 9, Issue 9, Page 5.

Professor Graham Paddock, Anton Kelly and Carryn Durham are available to answer questions on the discussion forum for Community Members of Paddocks Club. Get all your questions answered by joining Paddocks Club.

This article is published under the Creative Commons Attribution license.

Back to Paddocks Press – September 2014 Edition