What is leaking more Apartment buildings or Body Corporates (BC)?

[klauster]

Just interested in feedbacks how apartment owners deal with that – on one hand the new UTA tries to fix something but on the other hand BC committees fail to take care or manage buildings. Does somebody know a case of damage to the building or similar taken the BC to court?

Example; In a four years old apartment building the first signs of rust, water marks, etc became visible after two years. Lack of maintenance escalated by replacing the building manager after four years, but still the costs caused by negligence have to be passed on to apartment owners. These additional expenses for remedial work, accelerated insurance premiums (because of insurance claims) and mismanagement are the major increase for raising levies. If you find yourself in a similar situation – what is the good news?

I believe the illustrated situation can be the case anywhere because BC committees rely on BC secretary and building manager to 100% and don’t understand their duties to represent the apartment owner’s interest. The trend of high density housing like apartments and terraced housing and their ill-managed BC - is that the prolongation of the leaking house crisis or the beginning of a new one?

[Keithw]

The BC Secretary's/ (now called managers I believe) will always hide behind the fact that they are simply contractors to the BC, so in theory only do what they are instructed to do by the Committee/BC.
However in practice most BC managers do pretty much as they like, as you say due to the lack of understanding of the Committee / Owners as to what is required of them, or lack of understanding of what the BC manager is contracted to do.

The other complication with trying to sue the BC manager for incompetence or failing to facilitate a repair is that they hold the funds & they will try to charge the BC for the costs of defending themselves, so the owners end up paying twice for the incompetence of the BC managers (the legal costs & the costs of repair).

[Keithw]

The other complication that owners have in taking BC managers to task is the conflict of interest that the BC lawyer usually has.
The BC lawyer is often the same as the BC managers lawyer, so when the BC comes to sue the BC manager, who is the lawyer going to be working for ?
Generally the BC manager, as that is where they get their work from.
This means the BC Manager & Lawyer have access to all information about the BC, including all the back door deals that go on.
Whereas the BC lawyer is reliant only on what is written in minutes or is supplied by the BC manager- a very one sided affair.

WRT BC managers incompetence being brought to task, BC Admin managed to "Lose" a maintenance report which indicated the potential leaky problem in one of my blocks of units. Whether through incompetence, or to pander to a desire for one of the realestate agent owners not to have it released, so they could sell off their units, the failure to distribute the report, as required by the Committee minutes, could have been devistating to the legal claim that was subsequently filed for leaky building repairs. It was a very real threat to the outcome of a $5 mil claim, yet the BC managers have never been held accountable for it, mainly because there was some recovery made in the case, & the focus was on getting the repairs done as opposed to pointing fingers.

[klauster]

Hoped for more anticipation as I stumbled across many situations during my apartment due diligence process.

Another example came up when asking the BC for existing maintenance contracts. All common areas should be clean and in good working order, right? The BC pays huge amounts on those contracts, which increase annually but in some cases the BC was not able to provide the contract papers or they were outdated. That looks to me like printing money on apartment owner’s expense, because nobody ask questions at the AGM when levies increase. Understood, an owner occupied apartment (the resident does not know any better), but most apartments are owned by investors – can you believe that?

But the most bizarre story happened in 2010 when an BC issued back dated hot water bills for approximately 9 months to unit titles holders to be paid on behalf of residents who already departed the building during the given time frame.
The curiosity was not even the BC did know about the billing system (the developer engaged the BC Secretary before the apartment were sold, and the hot water bills were sent by the BC Secretary), and the chairperson of the BC denied any involvement.
Now that case went to court against the BC Secretary, successful defended as the BC Secretary was not liable, and the claim against the BC was rejected because of jurisdiction.
Well, not sure under the UTA 2010 if the Tenancy Tribunal would have done a better job.

Okay – What’s your story, I know plenty of them are out there…

[klauster]

What is when the BC committee is not capable to do its job?

Hi Kaithw, yes that is a very good point I had to deal with that in the past as well.

Regarding the BC Manager (previously BC Secretary) there is something else to be watched – that are the BC meeting minutes. I would not call it manipulation, but the records are done by the BC manager and are phrased in their favour. I have seen wrong recordings or no trace of recordings at all. Who can deal with that if the BC committee is not capable doing its job?

[eri]

Hearing of another big apartment building on queen st needing a full reclad

Possibly new windows

And ripped up decks

Shocking the amount of money and effort being wasted because
All the professionals thought their job was to make money
And not buildings

[Keithw]

I agree Eri, as usual the emphasis is on making money not quality. In my experience, most reclads will end up with window, sliding door replacements due to the requirement for double glazing.

[klauster]

Eri, yes that is a good example where the long-term maintenance plan (LTMP) should do the magic. But why fall buildings beyond repair, is it because of lack of annual maintenance?

I had an interesting discussion about an apartment building (three years old at the time) when the discussion came up of funding the LTMP. The BC spent 4k for the LTMP (the framework for a LTMP I would have downloaded from the Internet for free) only to discover a “full funded” LTMP is financially not sustainable.

Does it make any sense spending 4000 Dollars for a piece of paper but not spending a single Dollar on pro-active maintenance? E.g. I inspected the roof (colour-steel roof) and pointed to roof damage (rust and scratched coating). Why would anybody pay towards a fully funded roof replacement, but doing nothing until the roof starts leaking?

In fact the building manager does his job (caring for his business), the BC Secretary does his job (caring for his business), but what does the BC committee actually do?

[Maccachic]

This is from an article we published back in The NZLawyer Magazine back in November 2011:

"Notwithstanding the risks involved, there are going to be many inadequate maintenance plans and funds established both now and in the future until the true impact of substandard planning and inadequate assessment of a building, its elements, construction, and condition is realised. Consider a plan which inaccurately assesses that $30,000 a year should be put aside to maintain the roof, which subsequently in two years’ time in fact requires replacement at a cost of $300,000. Unfortunately, this type of scenario is going to occur, and it is not only going to catch out the amateurs looking to make a quick buck, but also trained professionals, if a proper assessment and condition survey has not been completed.


A well-maintained building will always provide value to the members of the body corporate. Complying with the Act and producing a maintenance schedule as required, recording both past and predicted future maintenance, will be something that purchasers and their legal representatives will be asking for, and a body corporate which has inadequate information will be exposed to the market. Not enough time and money invested in good planning now will inevitably result in large amounts of time and money invested in the future, when the impact of the new Unit Titles Act 2010 and inadequate planning is truly realised. "

http://www.prendos.co.nz/unit-titles-its-all-in-the-planning

[klauster]

Yes, Maccachic, is a good read like "A long-term maintenance plan prepared in this manner will be comprehensive and complete, and will be easy to review every three years (at minimum) as required by the Act."

The article describes the nature of the LTMP as a workable plan and living document. No problem with that as the LTMP is just paper and funds in place are just money - when indeed body corporates fail to execute the plan (no guaranty maintenance work done) and the money spent does not deliver the desired outcome.

In a recent case unit owners paid three-time for problems in the building they shouldn’t have in the first place, as they paid the building manager, related maintenance contracts, and for remedial work due to damage to the building caused by lack of maintenance.

To simplify, my point here is that the UTA 2010 sounds not like a glamorous piece of legislation with all the amendments already in discussion, but it affects all unit owners (apartments, units and townhouses alike) and does not give the protection needed from their ill managed BC. Why then is the UTA 2010 also seen by BC managers as licence to print money?

[Maccachic]

I spoke to one BC secretary and her advice was don't buy into a BC.

[batterycharger]

Hearing of another big apartment building on queen st needing a full reclad

Possibly new windows

And ripped up decks

Shocking the amount of money and effort being wasted because
All the professionals thought their job was to make money
And not buildings

Yikes, any hints on which one, or are you not at liberty to say?

By the by, eri, do you have any info on the Dilworth building? Are there major concerns of some variety there too?

[eri]

dilworth had an extra levy for remedial work on the roof? a couple of years ago

should show up in the last 3 years of BC minutes

plus as it was built in 1925-1927 it is quite possibly 1 of the 13,000? buildings in nz requiring earthquake strengthening work in the next 15 years

not sure how being listed as Cat-A heritage would affect that....

seems public knowledge now that the most recent? "minor leaker" to need a full re-clad is city gardens

[evie]

yup BC issuing fake invoices and contract quotes and presenting false amount on budget to the committee.
I am so sick of these horrible people. Apartment management is not complicated - but it is the politics and greedy, horrible "business people" who complicate and twist things. Body Corporate Secretary who knows and holds these "secret" meetings, simply deny and play dumb when questioned.
I wish there is some sort of way to expose these bad bad bad people.

got to run but just have so much to tell.

[speights boy]

No GST help for leaky building repair costs

Bodies corporate will not be able to register for GST, Revenue Minister Todd McClay has revealed.

The issue has been a vexed one for some time. Normally, there would not be much point in a body corporate registering for GST because most are in a neutral position with outputs closely matching inputs.
But that changes when there is a big bill to pay to fix a leaky building. Many repair jobs cost millions of dollars.

The argument about whether GST refunds should be available on those bills has gone back and forth for some time.