When I train strata managers, I ask one threshold question:

“What comes to mind when I say Strata?”

I usually hear the following:
• A building;
• Common property;
• Lot owners;
• Head aches;
• Stress; and
• Pain.

No wonder there is a dearth of people wanting to train to be strata managers. I have at least one phone call a week asking whether we can refer an organisation to a strata manager. Maybe, this attitude is causing those in the industry to turn away.

What we forget, is that a strata scheme is a place where people live. It is a home or it is a place of business. Some own their property. Some rent their property. Nonetheless, to all of them, it is their home.

There is often a divide that exists between lot owners who are residents and those who are investors. Those who live there, have a very different perspective on the strata scheme than those who invest in the strata scheme. It often causes factions to develop within large strata schemes, which often result in a dysfunctional complex.

Most often, we see a failure to consider the problems of a tenant. If a tenant suffers, the owner’s corporation says it is the responsibility of the landlord. Leverage is dealing with two situations at the present time where the owner’s corporation has had little respect for the rights of the tenant.

The first case is a situation where, every time it rains, mud flows from the common property into the courtyard of the tenant. The courtyard forms part of the common property but has become unusable by the tenant. On a pro rata basis, the tenant has lost 25% of the use of the property, NCAT has not only reduced the rent, but has directed that the tenant pay no rent for almost 12 months. This means that, the landlord is out of pocket.

In another building, a tenant moved into an apartment, which leaked. It was difficult to get the waterproofing done and it took 3 years to get the owner’s corporation to fix the waterproofing. This tenant is now claiming rental rebate in the amount of $96,000. Yes, it is over the top, but it will force the landlord to have to defend this in the local court.

What is the landlord left with? Yes, they will have to continue the case against the tenants to recover the rent. Their best approach is to allow themselves to be sued and to join the owner’s corporation in the action. For example, in the incident where the leak occurred, if the tenant sues the landlord, we will do two things:

• Put on a defense; and
• Cross claim against the owner’s corporation.

A change in the Strata Schemes Management Act 2015 makes this entirely possible and plausible. Section 106(5) of the Act allows a lot owner to take action against the owner’s corporation for any loss caused by the owner’s corporation’s failure to fix common property. Clearly, these are common property issues, which are clearly traceable back to the owner’s corporation.

Tenants may not be theoretically, the owner’s corporation’s responsibility. But practically, a failure of the owner’s corporation to consider the rights and obligations of tenants will leave the owner’s corporation vulnerable.

This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.

To get in touch with Bailey, please email info@leveragegroup.com.au or call 1300 438 538