This article about approving major maintenance and improvement projects has been supplied by Todd Garsden, Mahoneys.
Bodies corporate are no strangers to carrying out large or expensive projects. These projects can include:
- scheduled body corporate maintenance work;
- unexpected work (eg building defects); or
- improvements that the body corporate might want to make.
Whilst there are a number of critically important steps in any project – for example, how to fund the project and who will undertake the work – there are 2 important matters that are commonly overlooked.
- making sure the body corporate has the appropriate approval to authorise the work to be undertaken; and
- ensuring an appropriate contract is in place to protect the body corporate’s interests.
Proper approval
To properly approve the project the body corporate needs to:
- determine if the project is maintenance (repair to the original standard) or improvement (increase or change from the original standard);
- confirm the scope and costs works, and the terms of any contract that would be entered into – and in some cases with multiple quotations; and
- pass an appropriate resolution which authorises the project and entry into a contract.
These issues need to be dealt with to properly determine whether a general meeting is required, what threshold of resolution is required and how many quotes are required.
In one of our earlier articles we discussed body corporate spending limits in more detail here.
Proper contract
The majority of issues that arise in body corporate project disputes could have been avoided if the contract sufficiently protected the body corporate. In most cases, the body corporate simply signed the contractor’s template agreement that was provided to them (if there was a contract signed).
Accordingly, it is important that the contract the body corporate enters into for the project is appropriate. Unfortunately, many template agreements that are regularly used:
- are heavily weighted in favour of the contractor’s interests; and
- do not factor in the unique nature of a body corporate.
Whilst the body corporate may feel that they do not have a say in the contract they receive, it shouldn’t stop them from understanding the risks and seeking changes where appropriate to do so. If a contractor is not willing to consider reasonable and necessary changes, it may be worth finding one that will.
An appropriate contract would consider at least the following issues:
- scope and cost of work;
- timeframe and milestones;
- payment terms and conditions;
- rights to cease work, or terminate the contract;
- warranties, indemnities and insurances;
- access arrangements;
- damage caused to common property;
- latent defect identification;
- variations to work;
- remedy of defective work;
- dispute resolution mechanism; and
- practical completion.
As the contract is a legally binding document, the body corporate should always engage a lawyer to review (or preferably, draft) the terms of the contract prior to being approved and executed.
In most cases the costs of obtaining such advice:
- would be negligible when considered in the overall cost of the project; and
- can save the body corporate a lot of time and money if a dispute occurs.
Mahoneys has a specialist team of body corporate and construction lawyers who regularly advise on, review, and prepare construction contracts to protect bodies corporate.
Todd Garsden
Mahoneys
E: tgarsden@mahoneys.com.au
P: 07 3007 3753
This post appears in Strata News #497.
Have a question about approving major maintenance and improvement projects or something to add to the article? Leave a comment below.
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This article has been republished with permission from the author and first appeared on the Mahoneys website.
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Query regarding significant maintenance item which was identified by a Lot Owner (Building format plan, item observed of foundation which is considered common property) and the responsibilities of each party to see remediation actioned.
Is it best practice for Lot Owner to raise item with Body Corp Mgr in order to draft and submit motion to the Committee?
If an EGM has to be called, is the associated cost the Lot Owner’s or Body Corp responsibility?
Remediation will involve existing conditions of the Lot to be demolished, costs to replace are borne by Body Corp?
Any strategies Lot Owner can consider and deploy to assist smooth action of Motion/remediation and facilitate healthy relations with Body Corp members and Body Corp Mgt – this could be an unsettling maintenance item / process.
Hello
We recently purchased an apartment which has drummy tiles , we would like to remove all tiles in the main areas not the wet areas and replace with new tiles , body Corp has refused this and said we can only lay hybrid floorboards
Can they actually say no to replace existing tiles
With tiles ?
Hi Sarah
This depends on the reasons why the body corporate has refused the application. If there is no good reason put forward you would need to argue that the refusal was unreasonable..
Thanks for your reply Todd
Reason being they want the new tiles to be acoustic tested however tiles arnt sound tested we confirmed this with the Tile company only floorboards have decibel recordings
The apartment is situated on a ground floor with basement parking underneath , we are lost as to where to go from here .
Hi Sarah
If you wanted some formal advice on the matter and help approaching the body corporate, I would be happy to help. If you wanted to progress that, my email is below:
tgarsden@mahoneys.com.au
It would be helpful to review the correspondence with the body corporate and the by-laws.
Our Body Corporate, in the ACT, has to remedy major building defects due to inadequate waterproofing of a podium area and courtyard subsidiaries situated over an underground parking and storage area.
The executive committee worked with a building consultant to develop a methodology and trade estimates for the work to estimate the amount that would be required to remedy the defects with appropriate quality control and to re-tile all areas. The owners did not like the amount that would be required to be raised by a special levy to complete the work.
A “working group” was then set up to suggest an alternative plan for the remediation. They have come back with a plan that involves downgrading from a tiled surface to a trafficable paint on membrane in all areas with no tiles, one quote from a plumber to redo the drains – the plumber is resident in the complex – and one quote from a contractor to do the remainder of the work who says he can’t give a definite quote until he has a fixed plan (scope of the work was not supplied to him) and until the existing tiles come up and the work can be adequately assessed. The only warranty the group has provided in its plan is for the product, subject to an installation inspection. Despite having no experience in remediation, the group proposes to manage the work themselves at the same time denying responsibility or liability for the work. Further, the courtyards are unit subsidiaries and the group proposes to work in and downgrade these areas without having obtained permission of the owners.
This alternative plan is very concerning to some owners for a number of reasons and we would like your opinion on the plan.
Hi Maureen
Thanks for your questions. Unfortunately, we are unable to offer specific and/or legal advice and suggest you contact a legal professional familiar with ACT legislation for more information.