Podcast: Hidden issues, fake news and 40k listens

This week on the podcast we hop into the highly dubious story that appeared in the Sydney Sun-Herald this week about a poor old couple who are facing bankruptcy because of a special levy imposed on their block by a heartless and cruel strata committee …

Hang on! Heartless and cruel? Strata committees can’t set special levies.  And owners corporations have to maintain and repair common property.

The block is 50 years old – has nobody been putting money in the sinking fund? (Rhetorical question – don’t even bother).

More to the point, as we explore in depth here, how come the couple paid $13,000 of the special levy but are now $44k in debt.

And if you think Jimmy tends towards the cynical, wait till you hear Sue’s solution for retired couples who can’t pay their levies because they’re on a fixed income.  FYI, it ain’t setting up a Gofundme appeal.

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LISTEN HERE

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Also on the pod, based on this story, we look again at how much you need to tell prospective purchasers about problems in your block (a lot, it turns out).

And we look at a case where two top-floor owners took over their roof space and added rooms, without a by-law or a by-your-leave, but the owners corp over-reached in their efforts to put things to rights.

Finally, we have a new promo for our travel website mildrover.com.  Is it an intrusion or a little light relief?  You tell us via mail@flatchat.com.au.

By the way, in case you were wondering, how can we claim in the intro to pod number 180 that we have had 200 episodes? That’s because in the early days we were on a not-very-good podcast platform and our first 20 episode had just a handful of downloads.

Just as well we switched to our current pod host Blubrry and started the count from scratch, we now have literally ten times as many listeners as we had before.

If you enjoyed listening to this podcast (or reading the transcript), please share it with your friends using the social media buttons on this page.

TRANSCRIPT IN FULL

Jimmy  00:00

We have reached a milestone, in terms of the number of downloads and listens on this podcast.

Sue  00:06

Oh, yes, what’s that?

Jimmy  00:07

 Just in the past week, we have ticked over 40,000.

Sue  00:13

Wow! Is that 40,000 different people who’ve listened to us?

Jimmy  00:16

No, it’s one person, who’s listened 40,000 times.

Sue  00:19

Is that my mum?

Jimmy  00:20

That’s the one person who is most likely to have done that. But no, it’s good. We’ve had 200 episodes (almost; we’re coming up to our two hundredth. In fact, this might be the two hundredth). That works out at an average of 200 per episode. But the early episodes; like the really early episodes, hardly anyone listened to them, and now we’re tracking at just over 50 listens per day.

Sue  00:47

Oh, fantastic!

Jimmy  00:47

 Which is 350 a week, which is pretty good.

Sue  00:50

So people want to keep up-to-date with what’s happening with apartments and also, find out what they’ve missed, perhaps.

Jimmy  00:55

Yes, exactly. I think people listen to it in different ways. Some people listen to it while they’re cooking dinner, or while they’re driving home from work, or whatever…In the bath.

Sue  01:05

At the EC meeting, when they get bored.

Jimmy  01:07

Just switch this on… They feel that they’re getting more out of this, than they are out of their own committee. Oh, we shouldn’t say things like that. I’m Jimmy Thomson, I write the Flat Chat column for the Australian Financial Review.

Sue  01:19

And I’m Sue Williams and I write about property for Domain.

Jimmy  01:22

And this is the 200th Flat Chat Wrap. We’ve been getting a bit legal, on Flat Chat this week. A couple of things have come in. One of them is quite interesting, because I have a question for you… If you had a neighbour who was so awful, that you decided to sell up and move out, would you tell the purchasers, that you’ve got a terrible neighbour?

Sue  02:01

Absolutely not. Because you want to get rid of your apartment, don’t you? You want to sell it for the best possible price, so there’s no way you tell people (voluntarily), that there’s something wrong with it.

Jimmy  02:20

There’s a case that has just come through from WA, where a couple had bought an investment property and discovered their tenants were being driven out, because there’s this guy upstairs, that if he heard the slightest noise, he would bang on the floor with a hammer… Banging on his floor (their ceiling), with a hammer; turning on the shower, or anything. He would scream abuse at them. He was just an awful and quite scary person. First of all, they moved out and they put tenants in there and then, the tenants were moving out, they couldn’t bear it.

Sue  02:52

But didn’t they try and do something about it beforehand? Didn’t they talk to the executive committee?

Jimmy  02:57

There were breach notices issued and the guy just basically ignored them and it just went on. Remember, this is WA, so it’s a very, let’s say, non-mature strata system there.

Sue  03:12

It’s kind of more free and easy there, isn’t it? There’s not as many rules.

Jimmy  03:15

Yes. So they eventually sold to this young woman, who moved in and immediately she just realised she was living underneath a crazy guy. She then thought, well, these people must have known that their guy was a problem and they didn’t tell me. And there’s a thing that you sign in a sales contract that basically says, in the case of a strata unit, is there anything that’s not in the minutes of the owners corporation, that would affect my ability to enjoy the unit or common property?

Sue  03:52

Was that the clause put in, when there was somebody murdered in a house and somebody bought into it, and then felt awful about it, when they heard what had happened?

Jimmy  04:01

It’s similar, although I think that happened in New South Wales, but these things tend to get copied. I mean, it’s the full disclosure clause, basically.

Sue  04:12

Why would you expect anybody to actually confess that they had a problem with a neighbour because really, they might say, well, maybe the neighbour had a problem with me and we didn’t think he’d have the problem with the next owner. Or, I got off on the wrong foot with him…

Jimmy  04:28

But you see, this is the original owner, their tenants, the new owner, and her tenant. Anybody who lived in that place, was going to have this guy… His way of punishing them for making too much noise (by his reckoning), is to turn music up at full volume in the early hours of a Sunday morning and things like that, to punish the neighbours. Now, these things had been in the minutes of the owners corporation, because they’d tried to take action, but the vendors of the apartment said no, no, no, we haven’t had any problems with this guy. It’s just the normal to-and-fro in strata. And then they found out that they’d called the police three times, because of his threatening behaviour.

The court case (I’ll put a link to it on the website); it’s quite sad really, because the judge, this is a Supreme Court in WA… The Justice called it ‘the folly of litigation,’ because he’s saying, look, you’re going to come here. You asked me to rescind the contract… Yep, I’m gonna do that. You’ve asked for damages. Yep, I’m gonna award damages. So the apartment was bought for $390,000; it’s now reckoned to be worth $200,000, because of the crazy upstairs. He said look, these people who have sold you this, yes, we’ll rescind the contract, so it goes back to them… You’re not going to get your money back. You’re not going to get the money that I’ve awarded. You’re not going to get your legal fees; they will just declare bankruptcy and that money will never come to you. You as a young person, you will be around long enough, for your lawyers to sue you, for the money that you owe them, because you will never get that money back from these other people, because they’ve declared themselves bankrupt.

Sue  06:23

Gosh, what a terrible situation.

Jimmy  06:25

And then he said, look, the problem is, the guy is still there. The problem person is still there. This issue has not been resolved and there were things you could have done early on, like sued him under nuisance laws, and said this guy is a nuisance; we want court orders against him. If they’d got court orders against the guy, and he had carried on with his behaviour, he could have ended up in jail. He could have been heavily fined and then ended up in jail. So what you’ve got is, the people who sold the apartment, are now going to have to declare bankruptcy. The woman who bought the apartment is going to be in some financial strife, because she’s going to have to pay her lawyers and she’s never going to get the money back for the apartment, and the guy’s still there.

Sue  07:15

What a disaster! You kind of think, some awful people might actually create a nuisance of themselves, just so they can buy other apartments around them, cheaply. You know, because if he offered the woman $210,000, of course, you’d take it immediately and he would end up with an apartment worth a lot more than that.

Jimmy  07:35

So that’s why you’d take them to court, under nuisance laws.

Sue  07:39

Maybe, under the Mental Health Act, you could actually take action, as well?

Jimmy  07:41

The Mental Health Act is difficult. It’s really difficult for outsiders to get anything done. You really need the authorities to come in and start imposing that kind of thing.

Sue  07:53

Because I always think about the Mental Health Act being used for hoarders in houses, where there’s lots of rats, and it’s a danger to the to the public health; that kind of thing.

Jimmy  08:04

But all that happens is somebody comes in and cleans the house out and then they start again.

Sue  08:04

You kind of think, why is this guy making such a problem? Why is he creating such an issue? I mean, has anyone actually gone and talked to him and try to reason with him?

Jimmy  08:23

This has been going on for years, and various people have tried various things. The police have been there; he’s been taken away into respite care at some point. But you know, he ends up back in the apartment, doing exactly the same thing. Okay, it seems a bit harsh to say, well, let’s get this guy under nuisance laws, because he’s obviously not well in the head. But what else can you do? You know, the community has to be protected, as well.

Sue  08:49

I mean, we’ve got a friend (somebody we know very well), who lives underneath somebody who’s incredibly noisy and seems to stay up all night and it sounds as if she’s moving her furniture around at night. It’s been driving our friend absolutely crazy. But you know, the thing is, it mustn’t be allowed to put people off apartments. These are very specific issues, that only happen incredibly rarely. But we’ve had friends as well, who lived in a house, and they had a next door neighbour who was a bit crazy and he made their life a misery and they ended up moving as well. In a strata, at least you have some power over your neighbours. You know, you can get the strata manager involved. You can get the owners corporation involved. You can take out orders; you can take police action. You have a lot more power in a strata building, than you do in a regular house on an ordinary suburban street.

[MUSIC]

Jimmy  09:52

The other case that came up this week was of a small unit block, the two upstairs units side-by-side The roof needed fixing, so the people who owned the upstairs unit said look, we’ll pay for the roof to be fixed, but we want to make some modifications. What they did was, they put in dormer windows; they put in rooms and bathrooms upstairs and then the owners corporation were “hey, you didn’t get permission for this,” and they said “well, look, we paid for the roof to be fixed.” The owners corporation went to a tribunal and said “these guys have done this without permission. There’s no bylaw in place. There’s no permission from the council to build these apartments. There’s no change in the unit entitlements. We want them to be told to restore the attic to what it was before, because that attic is common property.”

They lost the case, because the tribunal member said “look, they should have got a bylaw, they should have got council permission, they should have paid you compensation for taking common property. But, I am not going to order them to reinstate the loft to what it was, because that doesn’t make any sense. You haven’t come back and said well, that work will be done by this company, it will cost this much. It will require this kind of permission. I’m not doing it.”

Now the owners corporation appealed and they said “look, you’ve established here that they shouldn’t have done it.” You can only appeal on points of law. And they’re saying “well, look, the law says this and you’ve said they shouldn’t have done it. Therefore, you should have told them to reinstate the lofts to what they were. The appeals panel basically said, “look, we’re going to confirm that they must get a bylaw placed, and they must get council permission, but we have discretion at the tribunal, and our discretion is that we’re not going to tell them to reinstate the common property.”

Sue  11:56

That’s really difficult, isn’t it? Because if somebody applies to change something about the apartment, and the owners corporation says “no,” and those people now, because of that ruling, might think well, I’ll just go ahead and do it anyway, because even if I’m taken to the tribunal afterwards, I’m not going to be told to restore it to how it was originally. Isn’t that a little bit of a carte blanche for everyone to just do whatever they want?

Jimmy  12:18

Well, not many people would do that. If you’ve got a savvy committee; if you’re in a small building, there’s no way you wouldn’t know that there was major works going on. You know, when the roof shape changes, and you’ve suddenly got a couple of dormer windows in there, that’s when you take action. What you can do, is go to the tribunal and get an interim order that says ‘stop work.’

Sue  12:41

What if you’re an investor and you didn’t know?

Jimmy  12:43

Well, somebody knew, because they took them to the tribunal. And if you’re an investor, and you don’t know what’s going on in the building you have invested in, well it serves you, right. You should pay more attention. You should at least have your tenant telling you what’s going on, at the very least. I have no sympathy for people who buy an investment in a building, and then don’t attend meetings, don’t read the minutes, don’t do anything, and then complain when it doesn’t work the way they want it to.

Sue  13:12

It’s interesting, because with commercial real estate, if you rent an office or a retail space, at the end of your lease, you have to put it back to the state it was in originally. And you know, sometimes it seems absolutely ridiculous, if you’ve paid it to have a fabulous office fit-out and you can say to the landlord…

Jimmy  13:31

You can have this.

Sue  13:32

Yes, but they say no, you’ve got to ‘make good.’ So you’ve got to put it back; you’ve got to strip it all out and just take it back to the original condition in which you first saw it. That is so ridiculous.

Jimmy  13:47

I tend to sympathise with the members of NCAT on this one. I think they’ve done the wise thing, rather than possibly, the strictly right thing.

Sue  13:58

Sure. But is that person who did the renovation; are they now going to have to pay more money?

Jimmy  14:03

Yes. They are going to have to get permission; they’re going to have to create a bylaw that gets approved and they’re going to have to pay compensation for having used common property to enhance the value of their apartments. And they’re probably gonna have to get their unit entitlements changed, so that they pay more in levies. So all that will have to happen, but what won’t happen is that the builders will come in, rip the roof out and put it back to the way it was, which I think makes sense to me. When we come back, we’re going to talk about another unhappy story from strata, about people who have been hit by a special levie. Quite a big story in the Sun-Herald this week, about a couple somewhere out west in Sydney. They’ve been in a building since 1972 and the owners corporation have decided to get the windows fixed and they got hit with a special levy of $18,000. They’re a retired couple, and the gentleman isn’t in the best of health and that $18,000 in the past three years, has now become something like $24,000, in terms of what they owe. This story, I was a bit annoyed by it… I think you were too, because it was very one-sided, was’nt it?

Sue  15:29

It was very incomplete. It very much took their side. And of course, you’ve got to have a bit of sympathy with them. There are many people in a strata, when something happens to the building, and they actually have to stump up a lot of extra money,  it can create real hardship for people. But at the same time, you’ve got to think about the other owners. They’re having to raise the money too, and if they’re having to raise extra money, because some of the residents are not paying their share, it’s really hard for them.

Jimmy  15:56

If you dig under the surface of what is in this story, it sounds like the special levy was imposed; they said they couldn’t afford it (which may well be true), but then they went into a payment plan with the owners corporation.

Sue  16:10

Which is a good idea.

Jimmy  16:11

A good idea, except some genius lawyer told them to stop paying the payment plan. Now, the way that’s presented in this story, is ‘oh, the poor things, they stopped paying this, because they couldn’t afford it and now, they’re being taken to court for bankruptcy.’ Well, any deal that you have under contract, where you have a payment plan, and you stop paying it, that will trigger legal action. It’s probably in the contract that they signed, that if they stopped paying it, or if they were late by more than, you know, one or two payments, then the owners corporation had the option. Now let’s assume that this $18,000 original bill is totally bonafide and it doesn’t surprise me at all, because it costs a lot more to put windows in a high rise building, than it does to put them in a freestanding house, because you’ve got to put scaffolding and safety measures and all that up. So, let’s assume that’s the case. Some of the reader responses on the Sun-Herald were typical ‘oh, this proves that strata doesn’t work and you know, these poor people and why are they being so cruel?’ The headline called it a ‘cruel levy.’ Wouldn’t it be cruel, as you said, to expect everybody else in the building to pick up their bills?

Sue  17:31

That’s right. I mean, this is community living, and we’ve got to get our head around community living, and it’s the way the future. As we were talking about last week, there are a lot more people living in apartments now. There are rights and responsibilities that come along with community living and if somebody can’t afford the upkeep of the building, then it’s very sad, but it’s time perhaps, that they downsize to something that they can afford.

Jimmy  17:57

Well, if they’re paying $18,000, they’re presumably in quite a big apartment, with a lot of windows.

Sue  18:02

That’s right. And they’ve probably got a lot of equity in that apartment, too.

Jimmy  18:05

So they could get a reverse mortgage, quite easily. They bought the apartment for $22,000, back in the day. It’s now worth $770,000. I’m assuming they paid off their mortgage decades ago. They’ve got equity in that. They can do a reverse mortgage and pay their bills. I feel sorry for them, because it sounds like they’ve had really bad advice. I think that the other problem with this is, when there’s a big bill like that for a building, the owners corporation… Well, here’s one thing the owners corporation doesn’t have a choice in; they can’t decide to not fix things.

Sue  18:45

Yes, that’s right; they’ve got to.

Jimmy  18:47

They are legally obliged to fix common property, when it needs to be repaired. So let’s set that aside. This is not a choice (as this newspaper article erroneously says), made by the committee. This is a choice that can only be made by the owners corporation, and they have to follow the law. What they can do then is issue a special levy, raise the money to pay for the work to be done. Or, they can get a strata loan, which again, raises the money. It accrues interest, but it means everybody in the building can pay that off over 10 years, if need be. What you cannot do, is say to the people who’ve got the money, you pay the special levy, everybody else will get a loan to cover that amount.

Sue  19:32

You can’t split it like that.

Jimmy  19:34

The law does not allow you to divide levies, and that’s the problem. Our various Fair Trading ministers have known about this, ever since they changed the law back in 2016, and it was the same before that. They’ve known that this is a problem in the law. They don’t do anything about it.

Sue  19:54

I guess they feel it’s too hard. You know, you kind of split it, it becomes a bit complicated, if somebody sells up. What do they do then?

Jimmy  20:02

Well, that’s why we elect these geniuses. They’ve got civil servants; they’ve got stacks of them. Fair Trading is one of the best resourced ministries, and they’ve got all these people who are running around chasing dodgy mechanics and whatnot… Get somebody on this and come up with a solution, so that either they’re getting help financially, or they’re getting much better advice than what they’ve had.

Sue  20:31

I mean, look, this sounds really harsh. It does sound harsh. But I was doing a story the other day, about people who can’t pay their rent, because rents have gone up hugely. Obviously, the cost of living is going up; energy costs are rising. Price of lettuce has gone sky-high, everything has. Petrol has gone up; everything’s going up. So there’s lots of people in rental accommodation, who can’t afford to pay their rent at the moment. If they just stopped paying their rent, they’re going to be kicked out. So they either go on a payment plan, or they find somebody else to share their rental apartment, or they move to a cheaper rental apartment.  I mean, this couple; they’re elderly, so therefore, we want to give them more consideration, because they’ve been in the place for a long time. But really, to be honest, if they can’t afford to live there; they can’t afford the upkeep, then I’m really sorry, but it’s time for a change. Maybe, they get one of their children to come and live with them and share the mortgage…Well, they’ve probably not got a mortgage anymore, just levies. Or, they just downsize; they move to somewhere cheaper.

Jimmy  21:38

Or get a reverse mortgage, so that when they eventually pass on or sell up, they can pay the money back and still have money.

Sue  21:46

You can’t just have two people sitting in a huge apartment, saying woe is us. You know, we’re elderly, and we just can’t afford it. I’m sorry, but you’re in exactly the same position as so many other people. If you can’t afford the housing you’re in. I mean, it’s a horrible thing, because housing is so on affordable.

Jimmy  22:06

I think this is the thing that is not in the story is, what offers have been made to them, to help them financially, that would require them to compromise in some way, with a reverse mortgage, or a loan, or something else. That’s what’s not in this story. All they’re doing is this usual nonsense about ‘oh, the strata committee are awful and the owners corporation are awful and the strata manager’s awful.’ Well, what’s the other side of the story? That is what’s missing. Okay. When we come back, we’re going to be talking again, very briefly, about finance and debt.

[MUSIC]

Jimmy

As we at Flat Chat often tell people, one of the great things about living in apartments is you can just lock up and leave whenever you want to take a break. Unless you have pets, of course, but that’s a whole other story.

Anyway, both Sue and I are veteran travellers, and experienced travel writers. So we have used that knowledge to create a whole new website called mildrover.com Subtitled ‘Have Hat, Will Travel,’ mildrover.com has a stack of news reviews and features, some as fresh as a selfie, others going back years into our archives. A

nd although mildrover.com is not about budget travel, we do have a lot of information about some pretty amazing cut -price deals for both early birds and last-minute bookings. These are updated every week. So even if you’re not planning to travel now, sign up for our free weekly newsletter, and you’ll get information on the latest tours, reviews and travel deals, delivered to your email inbox.

Plan your next trip, or just vibe out on some armchair travel, until something catches your eye. Mildrover.com, it’s a holiday website for season travellers. Login and sign up today. It’s as free as you are!

Jimmy

Okay, Sue, what do you think of that little promo, for the Mild Rover website?

Sue  24:12

It was pretty cute, really.

Jimmy  24:15

Maybe cut it back a bit, for the next time.

Sue  24:17

Yes, because it is quite long. But you’ve obviously been putting a lot of work into the website. It’s looking great, Jimmy. There’s a lot of content on there.

Jimmy  24:25

And it’s for people like us, and that may be why we’re the only two people who are looking at it. But, we’re building. Mildrover.com, folks! What I just want to say about debt is that next week on the podcast, I have a long interview with David Sachs of Sachs Gerace Lawyers, who are one of our sponsors. I went and spoke to him about debt, unpaid levies, all that sort of thing… What can you do about it, and why you really don’t want to push your owners to the point of bankruptcy.

Sue  25:04

Oh, very topical.

Jimmy  25:05

Very topical. So that will be next week. Sue, thank you so much for coming and doing this late on a dark Sunday evening.

Sue  25:14

Oh, it’s shocking, isn’t it? It is raining; hopefully it will be off soon.

Jimmy  25:19

I think strata is like the weather, everybody complains about it, but nobody does anything about it.

Sue  25:26

And when it’s sunny and bright it’s fantastic. And when it’s cold and wet it’s…

Jimmy  25:31

When we’re sitting on our balcony having lunch and reading the papers, it’s nice. Thank you again and thank you all for listening. Bye.

Thanks for listening to the Flat Chat Wrap podcast. You’ll find links to the stories and other references on our website, flatchat.com.au And if you haven’t already done so, you can subscribe to this podcast completely free on Apple podcasts, Google podcasts, Spotify, Stitcher, or your favourite pod-catcher. Just search for Flat Chat Wrap with a W, click on subscribe, and you’ll get this podcast every week without even trying. Thanks again. Talk to you again next week.