December 2014

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Welcome

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In this edition our Frequently Asked Question comes from an Owner who would like to know what a Maintenance Plan is and why their Owners Corporation should have one, we introduce Claire Tranquille one of our Managers Assistants, encourage you to sign up for and use our Member Log In area, provide an article from Whitbread Insurance Brokers on Flood Insurance, and ask for your feedback in relation to our performance at your property over the last 12 months.

2014 Thanks
Staff at The Knight Alliance would like to take this opportunity to thank all Owners for their support throughout the year, especially the Committee members who give up their time on a voluntary basis to help with the smooth running of all matters at the building.

Christmas Closing Hours
The Knight Alliance office will close on Tuesday 23rd December at 3pm and re-open at 9am on Monday 12th January 2015.

Member Log In

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Our Member Log In area is a valuable source of information for Owners.
Would you like to receive your Owners Corporation invoices and all correspondence by email?
Not only is this a faster and more effective way to communicate, but it also reduces the cost to your Owners Corporation and saves on paper therefore helping the environment also.
When you sign up to our Member Log In area you are able to choose how you receive documentation by selecting these boxes:

inside-login-area

Sign up today by clicking here.

FAQ: What is a Maintenance Plan?

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Maintenance Plans: What are they?

A maintenance plan is a long term forecast (of at least 10 years) which identifies major repairs, replacement of common property and related services. Based upon the approved maintenance plan, a regular levy will be raised and will be ongoing over the life of the plan.

The benefits of a maintenance plan certainly far exceed the cost of them. Some properties don’t want to spend the money but the reality is that without a maintenance funding plan some owners can be hit very hard in the event of an unforseen event and it usually happens at a “bad time”. Sometimes the unforseen cost can put an owner into crisis.

Under the Owners Corporation Act 2006, your owner’s corporation must repair and maintain:

  • The common property
  • Chattels, fixtures, fittings and services related to the common property
  • Equipment and services that benefit some or all of the lots and common property
  • Property that is its responsibility.

All owners corporations, committees and delegates must exercise due care and diligence in carrying out functions and powers, including maintenance and repairs.

As buildings age, they require ongoing maintenance. Over time, the building envelope will require repairs and in some instances replacement of major components. Good maintenance helps retain the value of the building and makes the property more enjoyable to live in. Poor maintenance or neglect can lead to serious damage and safety hazards. A maintenance plan is a long-range financial planning process that identifies the current status of an owners corporation common building elements and provides a funding plan to offset the anticipated future major common property replacement obligations. It can also increase the resale value of your property. A property that minimizes the risk or potential of an unforseen special levy to cover the cost of an expensive repair or replacement will be much more attractive to the informed consumer (purchaser).

The purpose of a maintenance plan is to have Lot owners within the Owners Corporation pay their proportionate share of common strata component replacement costs based on their period of ownership and on their units of liability. Fairness to current and future owners is assured as irregular non-annual expenses are offset by ongoing regular contributions. This sustains the long term financial health of any maintenance and repair costs through a funding strategy designed to cover future expenditures.

Owners Corporation Committee Members and Owners Corporation Managers can also potentially face increasing liability with respect to fiduciary responsibilities associated with the ongoing maintenance of common property. They can therefore minimize their risk by commissioning a maintenance plan and acting upon the recommendations within the report.

One should also consider that the lack of a maintenance plan can potentially open the door to legal action from any unit owners who suffer an increased financial burden due to a lack of maintenance and repair by the Owners Corporation. This in turn can also potentially affect the committee member’s liability coverage within the OC’s insurance policy. In order to be covered by the insurer all Owner’s Corporations, committees and delegates must exercise due care and diligence in carrying out functions and powers, including maintenance and repairs.

In the event that an owner pursues legal action to seek compensation for their losses, the Owner’s Corporation may be able to use the existence of a maintenance plan to mitigate the damages. By deferring to the maintenance plan, the committee of management is exercising their due diligence and care in ensuring that their building is adequately maintained as they are now relying on the documented advice of the building envelope professionals.

Andrea Pluckhahn
OC Manager

Meet a Staff Member

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Work Related

1. What is your current position, and how long have you worked for The Knight Alliance?
O.C. Managers Assistant since Dec 2012

2. What first attracted you to work in Owners Corporations?
I like working with people and property. I have had other roles in related fields and this job looked appealing.

3. What does your job entail?
Customer Service, arranging property maintenance and obtaining quotes for projects/upgrades, assisting with AGM documentation including budgets, writing and distributing letters/circulars, liaising with owners and agents and supporting the Owners Corporation Manager in all tasks.

4. What are the biggest challenges you face in your role?
Time management and organising all jobs into my working week.

5. What do you like most about your job?
The level of responsibility and the variation of tasks.

6. How would you describe your role in 3 words?
Involved, rewarding and educational.

7. Do you have any amusing stories from your time at The Knight?
We received a few reports from residents that an apartment had a very bad decaying smell. Residents feared for the worst as the property was not tenanted and the Owners would rarely stay at the apartment. We could not get a hold of the Owner and so their agent was called who provided access into their apartment. We found a collection of meat on the kitchen bench which was the cause of the terrible smell.
When we finally got a hold of the Owners, they advised that they had removed all of the frozen items from their freezer upon vacating. They thought they had disposed of them into the bin but obviously they were mistaken!!

Personal

8. What are your hobbies?
Going to the gym and walking

9. What is your ideal holiday destination?
Somewhere in the country with lots of outdoor activities and wineries!!

10. What is your mantra/motto?
Good things comes to those who persist

Insurance and Flood Cover

Confusion still reigns in the market place as to what constitutes a flood and how Strata Insurance policies respond.
After the floods of 2011, the insurance council of Australia introduced a statutory definition of flood for insurance contracts in an effort to standardise the scope of cover and reduce consumer confusion. As of 19 June 2014, all insurers were required to apply the statuary definition of ‘flood’.

Flood Definition:
The covering of normally dry land by water that has escaped or been released from the normal confines of any of the following:

  • A lake
  • A river
  • A creek
  • Another natural watercourse
  • A reservoir
  • A canal
  • A dam

What is the difference between floodwater, rainwater and run off?

Whitbread recommend you refer to the definitions in the specific Strata Insurance policy wording, but generally:

    • Floodwater means the covering of normally dry land by water escaping or released from rivers, lakes, channels, dams or canals.
    • Rainwater means water falling from the skies that runs off over the surface of the land(and may include water overflowing from stormwater drains).
    • Run off means rainwater that has collected on or has flowed across normally dry ground or has overflowed from swimming pools or spas.

How does an insurer decide whether the damage has been caused by a flood, rainwater or run off?
The insurer will appoint a loss adjuster to inspect and provide their opinion on the cause. However, where there is doubt, the expertise of a hydrologist is employed to determine whether the water damage to a property has been caused by flood, rainwater or run off.
The hydrologists look at where the water originated from ie a river or storm water run-off, the direction the water flowed and when and how the water entered the property.
In the event that the property has been damaged by rainwater and flood water, the hydrologists have to determine what happened first.

How do insurers rate eligibility for flood cover?
Insurers are utilising a combination of the Insurance Council Australia’s National Flood Identification Database and their own modelling to rate flood at a property address level. This enables insurers to assess the specific level of flood risk to each individual property and apply a risk based premium.
CHU is no providing flood cover as a mandatory inclusion where the property has been rated as negligible to low risk.
Whitbread will highlight this inclusion when we provide you with the Owners Corporation insurance terms.

If a strata insurance policy EXCLUDES flood, what does it cover?
Most Strata Insurance Policies will cover the OC for ‘storm’, ‘rainwater’, and ‘run-off’, but the exact definition of each of these words will depend on the relevant Strata Insurance policy wording. These policies commonly include damage resulting from rain and rainwater run off resulting from storms.

If a strata insurance policy includes flood, what does it cover?
In addition to storm, rainwater and run off, a strata insurance policy that provides flood cover will also respond to any water that escapes or overflows when a river, creek, lake, reservoir, canal or dam bursts its banks.

The Knight in the News

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Owners’ corporations across Melbourne are joining forces, with three different groups formed over the past year.

While not all of the group are officially registered associations, they all involve networks of owners’ corporation members, including representation from Docklands, Southbank and the CBD.
The Owners Corporation Network of Victoria (OCNV), which is headed up by Docklands Community Association president Roger Gardner, was formally registered in July and, according to Mr Gardner, has 10 committee members.

The group is modelled on similar bodies interstate and Mr Gardner said he was liaising with these groups and, in the long-term, it was hoped a national network would be developed.
“The OCNV is intended to do a lot of good, as has been done interstate,” Mr Gardner said. Apart from the OCNV, a separate group, the Metropolitan Owners Corporation Committee Association (MOCCA) started meeting in September.

Group co-ordinator Helina Marshall said, the group was not currently a formal, registered association and said this may or may not happen depending on how the group developed.
She said the group was formed to allow OCs to share information and knowledge and learn from each other and did not currently have a political agenda.

Currently 11 buildings are involved with the group, with representation from the CBD, Yarra’s Edge, New Quay and St Kilda Rd. All but one Yarra’s Edge tower is represented in the group.

The third OC group to recently form is the Chairman’s Council, a network of owners’ corporation chairs from building managed by strata management group The Knight Alliance.

The group is not currently an official association, with only preliminary discussions having taken place so far.

Discussions about developing an OC network were initiated by The Knight Alliance’s Robert Evans after holding a “Chairman’s Supper” attended by 65 chairs from within The Knight Alliance’s property portfolio.

The three groups are currently operating independently, although there has been some communication between the groups.

It’s understood the Chairman’s Council has had representation from Mr Gardner and has been contacted by MOCCA about collaboration.

Mr Gardner confirmed he had presented to the Chairman’s Council and said some members had expressed interest in joining the OCNV.

He described the Chairman’s Council as a “subsidiary group” and said it was “in no way a rival body”.
“I was invited to address their group to explain the OCNV. As a result some of their clients are joining the OCNV and one is on the committee.”

Mr Gardner said he had not heard of MOCCA until asked about the group by Docklands News.
He said: “It is not hard to guess that a few disaffected chairs in Docklands have formed their own group which, again, hardly competes with the OCNV.”
“Unfortunately egos can get in the way and whilst any divisiveness occurring is a shame it is unlikely to make any significant difference.”
It’s understood some of the individuals involved with MOCCA had initially been involved with the OCNV before forming the alternate group.
Mr Gardner said both MOCCA and the Chairman’s Council were different to the OCNV and did not see them as competing groups.
“There is no competition, there may be other groups but they are not the official association which will be liaising with government.”

According to Mr Evans, in order to have an effective voice for owner’s corporations there needs to be one representative body.

“This is now the task of all interested parties to make it happen,” Mr Evans said.