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I DIDN’T REALISE THAT MY STRATA UNIT WAS ALREADY INSURED!

In Victoria when you purchased your unit you will have received an Owners Corporation Certificate in your Section 32 documentation. This provides all the current insurance details. If the owners corporation (or body corporate in the old language) is not professionally managed you should certainly enquire as to the status of insurance.
Unfortunately, all too often owners purchase their unit and immediately take out building insurance, only to discover that their unit is already comprehensively insured. Not only have they spent money unnecessarily, but have created a potentially dangerous ‘double-insurance’ situation.
The Owners Corporations Act (2006) requires that your strata takes out specialist strata insurance on all the buildings on the Plan of Subdivision. This insurance automatically includes a minimum of $20 million of Public Liability insurance over the common property, which includes the driveway (s).
This comprehensive insurance policy taken out with one specialist insurer ensures the safest and the most cost-effective insurance option. You should be aware that there are some obvious risks if duplicate insurance policies exist.

  • The potential for these insurance companies to dispute which company is liable, holding up repairs for a lengthy period.
  • The specialist policy will have replacement cover whilst the second policy may simply offer a payout, resulting in that owner having to arrange their own re-building.
  • A range of scenarios which can affect two units with a common wall where conflicting insurance policies result in dispute and difficulty.
  • Such scenarios are entirely unsatisfactory if the buildings are connected by common property, resulting in the buildings not being rebuilt at the same time, and disputes about who pays for the adjoining walls and services.
All of the above depend on the buildings being adequately insured. If any of the joined buildings are under-insured then the owners may not get their full pay out, meaning they can’t afford to rebuild.
If in doubt, you should contract a strata specialist for advice.
 

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THE COMMITTEE WON’T DO ANYTHING ABOUT MY NEIGHBOURS CAR

Strata communities generally have either a formal committee, or at least a group of active residents who take on the task of resolving problems that invariably occur in their Owners Corporation. If the strata complex does not have an experienced strata specialist in place, problems can arise if the owners’ committee can not (or will not) agree to deal effectively with such problems.
Unfortunately it is a fact of life that complaints can occur, and managers and committees must have policies and procedures in place to manage and resolve such complaints and disputes.
Disputes within an Owners Corporation are far more common than many people realise. Complaints occur for a number of reasons, most generally involving vehicle parking and noise, however it is impossible to predict the issues that can arise and cause problems. And when nobody is prepared to act to resolve the problem… it generally escalates. This is where the experience and skills of a strata specialist can be invaluable in calming the situation and ensuring that the needs of all residents are heard and communicated .
A strata specialist will initially recommend that basic communication is common sense. Sometimes residents who fail to obey the rules sometimes simply do not know the rules. As a starting point, your committee should ensure that all lot owners and tenants are provided a copy of the Owners Corporation rules. As a follow-up, the committee should encourage neighbours to talk about their concerns to resolve disputes.
If this strategy fails, then the strata specialist will know how to take communication to the next step, which can be arranging for mediation or conciliation, made in good faith by all parties, or if all else fails, applying to VCAT to make a legally binding decision about how the dispute is to be settled.
 

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QNA For a small 4-unit strata scheme


28 Nov 2022

Question: For a small 4 unit strata scheme, are we legislated to hold AGMs or carry out any other activities in terms of the owners corporation?

We’ve bought a unit in a 4 unit strata complex in Northern Melbourne. The only common property is the driveway and the only expense is the strata insurance policy covering all 4 units.

Are we legislated to hold AGMs or carry out any other activities in terms of the owners corporation?

Answer: We recommend that your Owners Corporation at least hold an annual general meeting resolving to raise a budget to cover the common driveway and strata insurance expenses.

The Owners Corporations Act 2006 (Act) requires that the Owners Corporation pass resolutions when it takes actions. Passing resolutions and recording them through meeting minutes or ballot results record the decision of your Owners Corporation when it raises funds for expenses each year.

Further, an Owners Corporation is only capable of making legal decisions and validate its actions when it passes resolutions.

Therefore, at a minimum we recommend that your Owners Corporation at least hold an annual general meeting resolving to raise a budget to cover the common driveway and strata insurance expenses.

Rochelle Castro
RC & Co Lawyers