Community title schemes affected by flooding

AccomNews Sunday, February 10, 2013

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The BCCM Office extends sympathy to those in community titles schemes who have suffered loss or damage as result of the floods and cyclonic conditions in Queensland.

Lot owners and anyone involved in a body corporate are encouraged to work together and to recognise the stress that others may be experiencing during this difficult time.

Lot owners and occupiers affected by flooding should consider the general flood clean-up options for their own lot and for common property areas. Local authorities such as the Brisbane City Council at www.brisbane.qld.gov.au are providing practical information for residents affected by the extreme weather events.

Damage

Frequently asked questions relating to rights and responsibilities where damage has occurred are set out below. You may also wish to refer to the fact sheet titled Maintenance for more detail on maintenance responsibilities and the fact sheet titled Insurance for more details on insurance responsibilities. The fact sheets are available by visiting: www.justice.qld.gov.au/bccm.

Please note that the following information provides a general guide only and does not purport to cover all issues or circumstances that may arise in regards to flooding. The body corporate legislation can be complex and qualifications may apply in different circumstances. The following information does not constitute legal advice. You are encouraged to obtain independent legal or financial advice if you are unsure of how the body corporate legislation applies to your situation.

Is the damage covered by insurance?

The body corporate is required to hold property insurance. However, many insurance policies do not cover flood damage. The insurance policy may also require the body corporate to take steps to minimise any damage.

Steps you should consider include:

• checking whether your insurance policy covers damage from major flood events

• contacting your insurer or broker to discuss any damage your property may have sustained

• documenting any damage including photos or videos of any damage; and

• cleaning up your property after the flood to minimise the extent of the damage.

Who will pay when insurance does not cover flooding?

Bodies corporate and their members will need to cover the costs of restoring the scheme to a good and structurally sound condition if the damage is not covered by insurance. In general, lot owners will need to individually cover the costs of fixing their own lot. Owners will also need to contribute, according to their lot entitlements, for the costs incurred by the body corporate in fixing areas for which the body corporate is legally responsible.

Significant differences in the extent of the body corporate responsibilities occur depending upon whether the lot boundaries are defined by survey pegs (group titles plan/standard format plan) or by the walls of the building (building units plan/building format plan). If the lot boundaries are defined by the walls of the building then the body corporate is likely to be responsible for the exterior of the building and for all doors and windows in those external walls.

What if the building is no longer structurally sound?

If a building is determined to be structurally unsound and is located within the boundaries of lots that are defined by survey pegs (group titles plan/standard format plan), then individual owners will normally be individually responsible for that part of the building that is within the boundary of their lot. Any common walls will be the responsibility of both adjoining owners.

If separate units are located within building walls that also define the boundaries of the unit (building units plan/building format plan) then the body corporate is likely to be responsible for maintaining the foundations, roof and load bearing walls in a structurally sound condition.

What if the scheme is so badly damaged it needs to be redeveloped or terminated?

All owners may enter into an agreement to allow for a scheme to be terminated or redeveloped.

If there is even one owner who expresses a reasonable preference in favour of rebuilding the scheme rather than terminating the scheme then all owners must proceed to rebuild the scheme. However, an application may be made to the district court for a determination that the circumstances are such that it is just and equitable to terminate the scheme despite the objections of some owners.

What if I can’t pay the costs of fixing the building?

Any owners who cannot afford to fix their own lots and contribute to the costs of the body corporate fixing common property are obviously in a very difficult situation. This is especially so if these owners cannot sell their lot at a price that covers the amount they have borrowed to purchase the lot.
However, owners should consider the consequences if they are ultimately unable to meet their share of the repair costs. Lot owners may be liable for additional penalties and costs if they do not pay body corporate contributions as they fall due. An example of this situation can be viewed on the Austlii website: www.austlii.edu.au/au/cases/qld/QBCCMCmr/2010/433.html

Liabilities could also arise if the failure to undertake repairs contributes to further damage suffered by others.

Some government financial assistance may be available, for further information visit: www.disasterassist.gov.au/queenslandfloods

How long can we take to fix our lots?

The body corporate has a statutory duty to act reasonably and perform certain maintenance duties. The body corporate will be in breach of this statutory duty if it fails to rectify maintenance problems within a reasonable time of becoming aware of the problems. An example of such a case is available by visiting: www.austlii.edu.au/au/cases/qld/QBCCMCmr/2010/522.html

Some bodies corporate may face difficulties in obtaining qualified tradespersons to perform repairs after significant flood events. It may be prudent for individual owners to take an active interest in assisting their body corporate to fix damage as soon as possible. This would avoid owners subsequently having to contribute to potentially substantial damages payments to anyone who suffered loss as a result of any unreasonable delay in the body corporate performing necessary repairs (eg Magog (NO. 15) P/L v The Body Corporate for the Moroccan [2010] QDC 70. Available on the Austlii site mentioned above).

Individual owners also have similar duties in respect of their own units. Therefore, an owner would be prudent to consider whether delays in fixing their own unit will result in someone else suffering loss or damage.
What if I am suffering loss because owners are not fixing the scheme?

Individual owners and the body corporate made up of those owners have statutory maintenance duties for the scheme. If you believe you are suffering loss because these statutory duties are not being complied with then in the first instance you should contact owners or committee members to discuss what action is proposed. There are likely to be some steps that you can take to minimise your loss or to suggest particular maintenance actions that could be taken.

Initially, you should make an application for conciliation. If necessary, you may wish to lodge an application with the BCCM Office. You may also wish to seek independent legal advice.

What if the committee wants to engage tradespersons to perform urgent work but the cost of this work is above the committee spending limit?

If urgent work that is going to cost more than the committee spending limit is required and there is insufficient time to call a general meeting to authorise the spending, then an application for adjudication can be lodged with the BCCM Office seeking authorisation for the body corporate to engage in emergency expenditure. It is preferable that a copy of a resolution confirming that the majority of committee members support making the application is attached to this application. Ideally, at least two written quotations will also be attached. The BCCM Office will deal with these applications on an urgent basis.

What if the body corporate needs to perform maintenance work but the majority of owners vote against the body corporate performing this work?

If owners vote against the body corporate performing work that you consider to be necessary then you may wish to lodge an application with the BCCM Office seeking to require the body corporate to perform the work. It is preferable that minutes of a meeting showing that owners voted against performing the work is attached. If the work will cost more than the committee spending limit then an adjudication application is likely to be more appropriate than a conciliation application. It is preferable that you provide a detailed description of how you have attempted to resolve the issue and the circumstances of urgency relating to the matter.