Published: Sunday | August 23, 2009

Apartment owners and other shared-space dwellers will be saddled with bigger monthly bills if the draft legislation as it is now crafted were to be passed by lawmakers, the Trafalgar Council is charging.

The council, which represents the interests of residents in Seymour Lands, New Kingston, Trafalgar Park and adjoining areas in the capital, is pushing for community consultations before the new strata corporation bill is debated.

The proposed amendment to the Registration (Strata Titles) Act of 1969 was tabled in Parliament on July 22, and lawmakers are due to begin debating the bill in September when the House reconvenes after its summer recess.

There are seven areas in the bill that concern strata owners, according to convenor of the Trafalgar Council Joseph Cox, including the new provision for a regulatory commission with which all strata corporations will be required to register.

Cox, an economist and consultant, said stratas will be required to pay an annual fee to the commission and this “could well drive up maintenance charges and rental charges further”.

But the commission’s authority would also supersede that of the stratas, stripping the owner-selected management or executive committees of some of their autonomy.

It would, for example, have the power to, at the expense of the owner, order the demolition of any extension wall erected in breach of regulations, or for the removal of items, such as abandoned vehicles, where its presence breached by-laws.

The revision to the existing strata law is happening within the context of deteriorating real-estate properties that are largely uninsured, and in some cases, have become a blight on their own neighbourhoods.

Mortgage lenders are increasingly reluctant to write loans for strata acquisitions, especially those plagued by unpaid maintenance fees.

The lack of repair has also depressed property values in some strata holdings, even when other properties are gaining value.

The strata bill has been 14 years in the making, but the Trafalgar Council is insisting that owners were not part of the process, and that they have concerns with elements of the bill to be debated into law.

Stakeholders

Cox told Sunday Business that members of the Trafalgar Council were not aware that a bill was being prepared until mid-2009, and that when the group requested an electronic copy, the Trafalgar Council was told it was only available to stakeholders, including real-estate interests, bankers and others.

“We have since made our own proposal and submitted it for consideration when the debate on the bill begins again,” he said.

The bill as crafted makes no allowance, Cox said, for community representation on the proposed ‘strata corporations authority’ and ‘strata appeals tribunal’ – bodies which, he said will be “loaded with bankers and real-estate interests”, as opposed to apartment owners and community-based organisations.

“The council has no problem with reformation of the strata act. It is overdue,” Cox added.

“What we have a problem with is that, in our view, there are new strictures which do not go far enough, and others that go overboard. Under the proposed amendment, if someone is overdue on maintenance for 30 days, this will trigger a process, which can end in sale. This is excessive.”

The Trafalgar Council, he said, has submitted a report detailing its concerns to “our member of parliament, and we have also sent a report to the PM, who is the minister piloting the legislation.”

Regulatory bodies

Cox points to the stipulation for mandatory registration of stratas as another source of aggravation.

“We have a difficulty with forced registration. There are also fees applicable, which will add to the cost structure of running various complexes, which most people recognise are already operating on a margin. It may result in a delinquency problem where there was none.”

The new bill suggests that registration of stratas be made compulsory, and has proposed a fine of $250,000 for the non-compliant.

There will also be heavy fees associated with failed appeals to the regulatory bodies to be established.

“If you appeal a decision and the appellate body finds that you are liable and you fail to implement recommendations in a 30-day period, you are liable to pay a fine of up to $1 million. I think it is excessive,” Cox said.

“There are some elements (of the bill) which we would deem to be draconian.”

He acknowledged, however, that other groups may not have the same concerns, but said the council was putting forward “suggestions which will not in any way diminish the intent of the laws”, but which speak to its desire to remove some of “the more onerous stipulations”.

Trafalgar Council’s 7-point list of concerns

1 – Mandatory registration with new Commission of Strata Corporations and fee-based appeals to the Strata Appeals Tribunal.

2 – Composition of the Strata Commission and Appeals Tribunal excludes community-based organisations.

3 – Strata corporations will be empowered to sell any property for which maintenance payments are in arrears for 30 days, and the withholding valuation of said property for 21 days after the sale.

4 – In cases where a proprietor owns more than 50 per cent of the total unit entitlement in any strata, “the value of that proprietor’s vote shall be reduced to one-third of his unit entitlement without regard to any fraction”.
5 – No legal action can be brought personally against any proprietor who is a member of the strata executive committee in respect of the execution of their duties.

6 – One-million dollar fine for failure to carry through on the ruling of the appeal tribunal.

7 – The relevant minister may, by order subject to affirmative resolution, amend or vary any penalty or fine imposed, which the council says gives the minister the power to overturn court rulings.