Petty Squabbles in Strata Buildings
Or, is [strata] Rome burning, whilst its Neros fiddle ….
Do strata committees and strata owners squabble instead of dealing with important issues or is that just an all too easy trope? Let’s consider a recent US story arising after the Surfside Condo collapse and why it might be true there, here, and elsewhere.
[6:25 minutes estimated reading time, 1230 words]
Introduction
There’s a well know platitude that says whilst Rome was burning Emperor Nero fiddled … to say that he was pre-occupied with trivialities whilst important and critical matters were ignored.
There is some debate about the source and truth of the Nero story, but I think that it’s fair to say it represents a useful paradigm that might well apply to strata buildings, strata committees, and other strata stakeholders more often than we’d like to admit.
That strata paradigm [like a few others] have been highlighted by the sudden and tragic collapse of the Champlain Towers South in Surfside, Florida as I’ve already written about in the following articles:
An American Lawyer's Take on Strata Failures: More insights for strata stakeholders from our international strata colleagues ...
7 Lessons from Florida for Australian Strata: What can we learn and apply from the collapse of Champlain Towers South …
It's Time for Some Global Strata Help: Let’s focus on what’s most important first in the Surfside collapse aftermath ...
Now, there’s a similar situation brewing in another Florida highrise condominium [strata] building that serves as a good lesson for strata stakeholders.
The Winston Towers 700 story
Bloomberg City Lab has published an article ‘In Florida, Petty Condo Politics Jeopardizes Residents' Safety’ written by Prashant Gopal and with graphics by Mira Rojanasakul about Winston Towers 700 in Sunny Isles Beach, Florida.
It tells the story of long-running problems at this 23 storey building over major building repairs affecting the balconies, facade, and other structures and is a great case study for all strata stakeholders.
Some of the highlights of that story include:
In 2019 the strata building obtained structural engineering advice that repairs were needed [mostly to the balconies] due to deteriorating concrete, balcony railings, and other facade problems.
The engineering advice raised concerns over structural integrity.
Over 2 years, there were strata committee and owners meetings to consider the works and proposals. They became increasingly raucous and angry.
Meetings became filled with yelling, disagreement, and accusations.
Allegations of secret meetings by committee members and others were made including filming residents’ gatherings to prove those things.
Flyers were distributed supporting and opposing the repair project.
And, unsurprisingly, Facebook became a forum for the debate with the usual risks of misinformation, incivility, and other trolling that forum creates.
Finally, in 2020, the $11.9 million [USD$] repair project was rejected by strata owners.
The strata committee was also removed for their support for that repair project.
A new strata committee was elected on the promise of more and better competence, transparency, and saving money [have you heard that one before ???].
The new strata committee proposed a smaller $2.3 million [USD$] repair project.
In July 2021, repairs started.
An excellent graphic representation of the repair details and costs at Winston Towers 700 is included in the article and reproduced here.
It’s a sorry tale with no immediate or happy results.
I’m sure that you, like me, have seen it all before and will do so again.
In fact, the article suggests that the problem of deteriorated strata buildings that are delaying repairs is very widespread in the United States and affects more than 4.7 million strata owners and residents. It also suggests that very few US states require routine structural inspections and reserve funds for strata buildings.
The Australian experience
So, what’s the Australian experience, and is it the same or not?
Well, we haven’t had a strata building collapse due to ageing or deteriorating structures [athough we have had other collapses, partial collapses and serious structural problems in strata buildings].
And, there are some general strata law obligations for strata buildings to maintain, repair, and replace common property structures, create reserve funds for major works, and, [in some states] to make periodic [every 5 or so years] assessments of capital work funding requirements.
But, there are no mandated requirements for routine structural inspections, and, there’s no obligation to raise or keep money in reserve funds for structural works in ageing buildings.
So, perhaps Australian strata buildings are just lucky so far, aren’t old or deteriorated enough, or, are better built.
Unfortunately, there’s very little data and no significant research on these topics in Australia. So, views are mostly opinion or anecdote based.
Either way, I think most observers would agree that there are many older Australian strata buildings that need significant repairs [including for structural matters] that are either:
not aware of the need,
actively [or inactively] avoiding investigating those things,
delaying addressing the need for work by relying on continuous queries and investigations,
deciding to wait to do works based on their [or strata owners’] financial position and/or priorities, and/or
positively deciding not to do those works.
Plus, we all have experiences of intra strata building conflicts between strata owners, committees, managers, and others that have emerged and deteriorated when major works get on the agenda involving significant expenditure.
Is there a solution?
There’s no easy or complete solution to this kind of problem since it’s multifaceted and is affected by the myriad of personal and financial circumstances, preferences, and views of many strata owners.
But, as I’ve written before, there are a few lessons and takeaways from these crises that can help strata stakeholders as follows.
In severe, urgent, or crisis situations there is an issue about who decides what should happen to a structurally impaired building: is it the strata owners, public authorities, an independent authority, the building insurer, a combination of those parties, and/or someone else.
In severe, urgent, or crisis situations a quick decision is better than long-running investigations, consultations, and decision-making processes.
Stakeholders should remember that strata apartments are more than just financial assets and provide housing solutions that are not easy to replace for most strata owners.
Should there be independent and expert people appointed to run strata buildings in some circumstances rather than allowing the incumbent committee members, managers, and strata owners to do so.
When major strata building works are required, there are usually also a myriad of complex, ongoing, and [sometimes] unexpected legal issues.
Unless the value of strata buildings and strata apartments are impacted by building deterioration [even if it's structural], there are few financial imperatives on strata owners to address them.
Usually, the primary cause of conflicts in strata buildings over major works is about the money; between those strata owners who can and are willing to spend it and those strata owners who can’t, won’t, or don’t want to spend it.
Sometimes, there is a need for government assistance to strata buildings with serious crises.
Conclusions
There’s clearly an increasingly serious crisis developing over deteriorating older strata buildings that don’t, can’t, or won’t address structure repairs.
But, unless they collapse or become inhabitable, there’s no incentive or pressure to deal with it. Rather, the combination of the [understandable] predisposition of many current strata owners to not spend money on their buildings, the failure of the market to price in those failures to property values, and, no strict legal requirements to inspect buildings and provision for major works, means that it’s unlikely to otherwise occur.
Plus, it’s very easy in strata buildings to play process, legal, and conflict games to delay and constrain awareness and action on major works.
So, I daresay we’ll be considering this challenging strata issue for many years to come.
October 13, 2021
Francesco …