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Editions
August 09 Edition Cover

Owners’ Corporation Law

30 Sep 2020

The future of apartment living - post COVID-19

By Tom Bacon - Principal, Strata Title Lawyers

We’ve all spent far too much time over the winter months holed up in our apartments working at home, educating at home and living at home.

Home has become our lives, and perhaps not for the better. And so, as spring thaws on our winter of discontent, and as restrictions ease somewhat, it is perhaps time to re-think what we need from our apartments and our common areas and facilities, and from the service we get from our facilities’ managers.

At the very top of the list for the committees of owners’ corporations (OC) has got to be some serious budgetary reform. Without exception, every single service contract has to be renegotiated in order to deliver value for money.

Having acted for OCs for more than 10 years all around Australia, I have said it before and I’ll say it again, Victoria is by far the worst state for overinflated service contracts. I have never seen such largesse in any other state or territory. Five-year OC manager contracts, 10-year cleaning contracts, 20 -ear embedded network agreements, 25-year caretaker agreements. The list goes on.

No other state or territory permits this. Of course, the fault lies with Consumer Affairs Victoria for failing to regulate this. They have known about the issue for many years, and have done nothing to bring about reform.

Be that as it may, it is now up to OCs to investigate all possible options to escape these contracts. Most will be completely unenforceable, and many more will have been void ab initio. OCs could begin to take charge of their finances and repair the great holes in their budgets, only once they have renegotiated these contracts.

The next step for OCs is to think creatively. It appears that a very high number of OCs have deferred their remedial works, painting, and internal upgrades contracts indefinitely, in order to undertake budget reform. While this seems sensible and practical for most buildings, some buildings could actually take the opportunity of the very-quiet economic conditions and could decide to undertake their planned projects (or bring them forward) if they can negotiate very good deals with contractors (who will no doubt be desperate for the work).

Now could also be the time to discuss with your contractors about a re-deployment of services. Perhaps less hours from security or the concierge is required, and the cleaning contractors can be re-deployed to provide more hours to dedicate to extra cleaning.

There may even be some possibilities for the rooftop and unused facades to be used for signage and telecommunications antennae to derive extra income for the building.

Of course, there are only limited opportunities for a building to make costs savings. The fixed costs are sometimes too difficult to move. But if you don’t try, you’ll never know •

 

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