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Page Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Introduction General Law and Regulation in Real Estate Real Estate Development Agency management Part 1 Strata management Part 2 Community Scheme Part 3 Samples of task performed by property management agent 2 8 14 21 34 38
Reference
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Chapter 1 Introduction
Differences in real estate between Thailand and Australia Geographic and Population Australia is larger than Thailand; in fact, it is fifteen time the size of Thailand. It covers 3,000 kilometers from north to south and 4,000 kilometers from the east to the west of the country. You can imagine flying from Bangkok to Sydney take 9 hours but to go from one side of Australia to the other side will take 4 hours. From the population aspect, however, Australia has only 22 million while Bangkok alone has 10 million people. Australia then has very low population density when compare to Bangkoks. Housing in Australia is spreading out with lot of national park, by contrast to Bangkok with high-rise and density of population. Legal and regulatory enforcement. In Australia, rules and regulations are very strict and compliance is required in much areas. Many professions such as lawyer, accountant, engineer, architect, valuer, surveyor, and property managing agent are required to have professional license. Licenses will be granted only for qualified training and passing the test. Recently, Thailand requires property valuer to have professional license while the requirement exist in Australia for more than 35 years. Labor cost Labor in Australia is quite expensive. At a minimum, it costs 36,000 dollars per year plus retirement benefit of 9 percents and vacation with pay for 3 weeks. Technologies are normally employed to minimize the high labor cost. Thailand, however use labor more than the expensive technology.
perfect title, as it depends on proof of title through documents and events (deaths, grants of probate, etc.). The maximum period required for proof of title is from a date which at the time of investigating title commences with a good root of title at least 30 years previously. Technical rules determine what is a good root of title; it includes dispositions for value such as a sale or first mortgage of the land. The owner must establish title form such a root of title, when selling or mortgaging it. Qualified title (Lang 1989, p.102) The Registrar-General is entitled to issue a qualified folio of the Register for old system title land, in some circumstances, the most important being on registration of a new subdivision or on the sale or mortgage of the land. Usually a qualified folio of the Register will only issue where there has been a relatively recent survey definition of the land accurately identifying its boundaries. Whether a qualified folio should issue is a matter for the Registrar-Generals discretion, but current departmental policy is to encourage this as a means of reducing the number of old system titles in New South Wales. Limited title (Lang 1989, p.102) There are many parcels of land held under old system title whose boundaries have not been verified in a relatively recent plan of subdivision or survey. In the Real Property Act 1900 authorizes the Registrar-General to create limited folios of the Register when the boundaries of the land are not sufficiently defined to enable the Registrar-General to create either an ordinary or a qualified folio of the Register. The most important application is to enable the Registrar-General to create a limited folio when a sale or mortgage transaction has been registered for an old system parcel. Limited folios have been created and are currently an important method used to convert old systems title land to the Torrens system. Torrens title (Lang 1989, p.103) Since the Torrens system was introduced in New South Wales in 1863 new grants of land in fee simple were issued under this system. All remaining old system title land has its source in a Crown grant which issued prior to 1863. There are several important features of title under the Torrens system. First, it is not a system of merely registering documents to enable them to be searched, but it is a system of title by registration. Secondly, persons deprived of an interest in land, e.g. through fraud or some error, omission or misdescription in the Torrens Register, may recover the damages suffered. If damages cannot be recovered from the wrongdoer, an assurance fund has been set up for that purpose. The main aims of this system were to simplify conveyancing and to increase the safety of persons acquiring interests in land. This was attained by providing a register from which persons intending to deal with land can discover the information relevant to the title. It also provides a guarantee that the information in the Register is complete, as regards dealings registered or lodged for registration. It simplifies the investigation of title, by saving the expense and trouble of investigating the acquisition of the title of persons having registered interests, as that title is indefeasible, prior defects in title being cured by registration. There are some exceptions and qualifications to indefeasibility and there is a need to investigate certain matters not apparent on the Register, which render the system less than perfect, but in the main the Torrens system has achieved its objectives.
Strata title (Lang 1989, p.106) After the end of the Second World War, there was an upsurge in the erection of multi-storey residential buildings, and residential flats became an accepted form of accommodation in urban areas. However, before 1961 there was no legal mechanism to subdivide a building in order to create separate title and ownership to parts of buildings. The most suitable legal mechanism used was to transfer ownership of the building to a company whose articles of association provided that the holders of particular groups of shares were entitled to occupy specified parts of the building. Ownership of a unit was secured by relying on shareholding rather than on the title to land. Several thousands of company title home units were created, many of which still exist. Company title did not provide an entirely satisfactory form of title or security for mortgagees who advanced finance for purchasers of home units. The need to obtain secure legal title to parts of buildings led to the Conveyancing (Strata Titles) Act 1961. That legislation enabled land and buildings to be subdivide into common property and lots, with separate legal title to each lot. It also provided by-laws for the management and internal regulation of strata schemes. The 1961 legislation provided to be too unsophisticated and was replaced by the more detailed Strata Titles Act 1973. With regards to strata title, more details will be added in section III which focuses on real estate management, particularly, the handling of strata. Crown lands legislation (Lang 1989, p.108) The main tenure under the Crown Lands Consolidation Act is the conditional purchase. This involves a sale of land by the Crown on certain conditions being complied with by the purchaser (mainly as to fencing or improvements), the purchase price being payable by installments over a lengthy term of years with interest. Title under this system is not guaranteed nor does it confer an indefeasible title. A purchaser can make a tenure search which will establish what the records of the Lands Department show regarding ownership, but title must be established from the grant of tenure. A feature of many tenures held as Crown land tenures is that a transfer restriction is imposed. This prohibits transfers and other dealings with the land (including any lease, but not mortgage) without obtaining the consent of the Minister for Lands. Real right Real Right covers the right of implicit or explicit ownership. It is the right to demand such property or estate by an ordinary person. It is also a law, which includes the ownership rights, estate or ownership, non-possessory interest, easement, various titles, holds and leans over the property or land. In New South Wales, the term used is Realty or Real Property. This article will concentrate only on the rights, which affect the development of real estate. 1. Estate or ownership (Butt 1988, p.98 and Lang 1989, p.98-99) The estate held in land was originally related to the status of the tenant. Land held by a tenant whose status was free was called freehold. Estate refers to the nature of the interest held in land, including the period of time for which that interest subsists. Land may be held under freehold or leasehold estate. The most absolute form of ownership is the fee simple, being the greatest estate in land a person can hold, conferring ownership on its present holder and his successors and assigns forever. Land
held as fee simple can be disposed of by sale or gift and on the death of its owner forms part of his estate. In contrast to the fee simple which descended to collateral heirs, the fee tail (sometimes called the estate tail, or simply the entail) descended to lineal heirs only; but like the fee simple, the fee tail was an estate of freehold and of inheritance. It describes an estate of inheritance in real property which cannot be sold, devised by will, or otherwise alienated by the owner, but which passes by operation of law to the owner's heirs upon his death. Another freehold estate is a life estate. This may be created by deed (i.e. gift or settlement or by sale) or by will, for the life of the person acquiring the life estate or for the life of some other named person. During the term of a life estate, its holder is entitled to occupy and receive the profits from the land (including grant leases over it) with responsibility for its maintenance and repair. On the death of the person whose life defines the duration of the life estate, this estate comes to and vests in the person entitled to the reversion or remainder. A leasehold estate is the estate of the holder of a lease. This can be for any period from one day to any number of years. A lease in perpetuity is void at common law but may be permitted by statue. A lease may be granted for the life of the lessee or for the life of some specified person. That is not a life estate (which is a freehold estate) but a lease for life. Land may be held by two or more persons jointly. Title to an estate in land may be held jointly either as a joint tenancy or as tenancy in common. A joint tenancy may be created by will (e.g. if the property is devised to several persons as joint tenants) or by gift or transfer for value. Most purchases by spouses are effected as joint tenants. 2. Nonpossessory interest (Lang 1989, p.290) A nonpossessory interest in land is a term of the law of property to describe any of a category of rights held by one person to use land that is in the possession of another. Such rights can generally be created in one of two ways: either by an express agreement between the party who owns the land and the party who seeks to own the interest; or by an order of a court. These entitlements or restrictions may be imposed permanently, affecting all present and future owners and users of the land, or may be imposed only for a specified period of time. These may be imposed to only operate between two adjoining landowners personally to define their position for some years or whilst they remain adjoining owners. 2.1 Easement (Lang 1989, p.290) An easement is an interest in land, its extent being limited by the nature of the easement and the period for which it continues. An easement is not merely a restriction between people, but a restriction imposed on a parcel of land in favour of another parcel of land. The land having the benefit of an easement is called the dominant tenement and the land subject to the burden of an easement is called the servient tenement. Easements cannot be assigned independently of the land to which they are attached and the benefit or burden of an easement passes with the land, e.g. on a sale or lease it will bind future owners or lessees. The advantage of an easement is that it permits joint user of portion of the land over which the right (such as a right of way) is granted, together with user by the owner of that land. A lease confers exclusive possession over that portion of the land,
preventing joint user. A licence does not create any interest in the land and operates contractually, not binding successors in title. Type of easement (Lang 1989, p.291 - 292) Easements may be granted in respect of diverse entitlements, such as the right to affix a sign board, or affix telephone wires or pipes to or under land or buildings, or to permit a building or roof or guttering to encroach over adjoining land. The main types of easement are rights of way, rights of support, rights of light and air, rights in respect of water, sewerage and drainage, and fencing easements. There are other types of easements some of which occur only infrequently, e.g. to use land to load and unload vehicles, to use a toilet on the servient tenement, to commit a private nuisance (e.g. by creating noise, by polluting the air by smoke or smell, by polluting water). It is also possible to create an easement for recreation and enjoyment over a parcel of land in favour of adjoining parcels of land, somewhat akin to a private park. 2.2 Covenant (Butt 1988, p.334 and Lang 1989, p.294 - 297) Covenant is simply an agreement creating an obligation which is contained in a deed. Covenants relating to land involve similar problems to easements, they create contractual rights, but it is more important that the covenant should bind the land. A covenant may be positive (i.e. permitting or compelling something to be done) or negative (prohibiting some conduct such as a restriction on the type of building which may be erected on the land). The following are frequently imposed as restrictions by restrictive covenant: pro habiting the number of buildings to be erected, the position, height or nature of buildings; prescribing the materials to be used in buildings, including the walls, roof, requiring consent to plans; prohibiting particular uses of land, such as for trade, business or profession. Although generally covenants, in order to be enforceable against future owners and to bind the land, must be negative and restrictive, certain positive covenants can be created which bind the land and its present and future owners. Positive covenants may relate to the erection or maintenance of structures, roads, fences and improvements. Although the ability to create and enforce positive covenants, created by novel legislation in 1986, is an important development, these can only benefit statutory and public authorities, and cannot be created in favour of either individuals or non-statutory corporations. Foreigner rights to own properties and buildings Australian laws prohibit companies to engage in land speculation. Companies or corporations may invest in property and land for commercial purposes. Legal residence with over one year stay permit may buy a place to live but must sell it when the legal residence permit expires. Anywhere in Australia Capital Territory, no Australians or any foreigners are allowed to purchase any land. However, they can lease property up to 99 years! Other rules and regulations These are some of the laws governing the development of real estate.
Town planning and zoning regulations are kept in different locations. They depend on the types of towns and cities. For instance, Central Coast houses their laws and regulations issue by Wyongshire Council and Gosford Council. Similarly, one can check out Bangkok zoning at the Bangkok town planning office. In other provinces, one can also do so by visiting the respective provincial office. Laws which deal with real estate trading are found in Conveyance Act and Real Property Act 1900 (Torrens Title) Law and Regulations covering the constructing of buildings and other structures including the use of the land come under Local Government Act 1993, which gives authority to city council persons to make a decision. Environment Planning and Assessment Act 1979 governs the use of the land and the subdivision of the land, the erection of a building, a demolition of a building, and the impact on the environment statement. Energy and Utilities Administration Act 1987 deals with the conservation of energy. The actual laws, rules, and regulations can be found at www.austlii.edu.au. This site houses all the laws of all the territories of Australia.
A Statement of Environmental Effects (SEE) is a report which explains the likely impacts of a development proposal and demonstrates to councils how it is
planned to minimize these impacts. A SEE is required by all councils when submitting a development application. Typically the SEE will assess the proposal in terms of the proposal's compliance with the town planning controls of council and state government.
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A development application (DA) is required for all development in local council, except where considered exempt or complying development. Crime Prevention through Environmental Design (CPTED) is a theory that when development is appropriately designed it can reduce the likelihood of crimes
being committed. By introducing such measures it is anticipated that this will assist in minimizing the incidence of crime and contribute to perceptions of increased public safety. (See more information in appendix 1)
2. Measured Drawings This stage is to measure the existing building for the extent necessary, and prepare as is drawings. 3. Schematic Design and assessment This stage is for the development of a concept design with the following components: Review project budget and program Assessment of site opportunities and constraints Preparation of general concept site options for review Initial liaison with consultant team Obtain the approval to sketch design documents estimates and programs Preparation of suitable hand drawn documentation 4. Consultants Fees Submissions This stage is to prepare the brief and scope to obtain fees from consultants and sub consultants to contribute to the preparation of the schematic design. These consultants are: Geotechnical Engineer Structural Engineer Building Code of Australia (BCA) 4 Consultant Civil Engineer BASIX 5 Consultant Access Consultant 5. Presentation to Council / Council Officers 6. Design Development This stage is for the refinement of the masterplan and further Design Development / Development Approval (DA) documentation and includes: Refinement of the concept masterplan Preparation of preliminary concept design up to review and update brief. Pre-lodgment discussions and liaison with Council regarding the masterplan and preliminary designs prior to finalization of Development application documentation including on a meeting with Council officers 7. Landscape Schematic Design This stage allows for the development of a concept design with refinement for DA submission and includes: Preparation of landscape concept plans, sections, elevations and perspectives in hand sketch format Preparation of indicative species list including photographs Preparation of indicative materials and finishes pallet Preparation of opinion of probable costs for budgeting purposes
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The Building Code of Australia (BCA) provides essential technical regulations for the design and construction of buildings, and as a national performance-based BASIX is a recent requirement of the NSW Government that requires new dwellings to be designed to allow the occupiers of the dwelling to reduce their water
document it establishes a uniform approach to building regulation in every State and Territory in the country.
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Refinement of concept designs 8. Council Lodgement Collation of all development application documents into sets as required for submission to Council 9. Preparation of SEPP 65 6 (State Environmental Planning Policy No 65) Report and documentation to include: Site analysis report Design Report 2 off photomontage images (1 off streetscape elevation, 1 off perspective view) 10. Construction Certificate Documentation This stage is for the preparation of general arrangement drawings and specification suitable for lodgement of Construction Certificate Application and including: Review of proposed works in accordance with Building Code and Regulations requirements Completion of documentation suitable for Construction Certificate Application to include the following: o 1:500 / 1:200 Site plan o 1:100 General Arrangement Plans, Elevations and Sections o General Specification (Construction Certificate Application Issue Only) o Schedule of Materials and Finishes (internal and external) Schedule of external colours and interior colours concepts Coordination with consultant team sufficient for the application approval Liaison with Principal Certifying Authority prior to lodgement of Application 11. Landscape construction Certificate Documentation Landscape Construction Certificate plans includes all hardscape and softscape, including a technical specification. For instant: Softscape are as include all turf and planting areas Hardscape are as include all footpaths, fencing, garden retaining walls (below 1m in height), irrigation, feature paving and seating areas, feature lighting, play equipment and road thresholds Contract Documentation Stage 1. Prepare the documentation and construction in accordance with suitable forms of the contracts and includes: Coordination with specialist consultants preparing design and construction tenders, these consultants are Electrical Engineer
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SEPP65 is generally covers designs of all residential flat buildings of three or more storeys with more than four self-contained dwelling units. All designs have
to be submitted to a design review panel. Each Council appoints a design review panel which consists of up to five members, with expertise from the following: urban design, planners, architects, and others as appointed. Councilors and employees are not qualified for appointment.
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Mechanical Engineer Hydraulic Engineer Fire Service Engineer Lift Engineer Section J Consultant Incorporation of requirements of specialist consultant on the DA drawings Specification of sufficient detail for calling documentation and construction tenders Preparation of schedules for internal finishes, external finishes, fittings and door furniture Conduct weekly consultants co-ordination meetings, prepare minutes and distribute Preparation of conditions of tendering Preparation of tender form Supply DA drawings to quantity surveyor for preparation of updates cost plan Selected list of contractors for documentation and contract tender Preparation of nominated subcontractors and suppliers list Prepare a drawing schedule and a schedule of other documents required to be prepared for successful documentation and contractors Provides a list of provisional sums to be included in tender documents Co-ordinate consultants schedule of documents required to be supplied by contractor. 2. Tender Issues This stage allows for general co-ordination of the tender process includes: Calling tenders from contractors Collation of tenders documents for forwarding to tenderers, and general co-ordination of the tender process QS in clarifying tenders and preparation of a QS tender report Tender analysis and report Construction Stage 1. During construction Undertake periodic site inspections, check work in progress regarding design quality, material selection, workmanship and performance against the contract documents and conditions Review shop drawings and other contractors submissions Arrange and attend site meetings Coordinate site inspections by sub consultants Assess progress claims and issue progress certificates Assess extension of time claims and provide notices to contractor Maintain records of contractual matters including the financial status of the contract Adjust provisional sums as required Prepare lists of incomplete work or defects prior to practical completion
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Inspect rectification and issue notice of practical completion Arrange and superintend the builders rights and obligations under the defects liability provisions of the contract Confirm and certify that all defects liability obligations have been discharged coordinated certifications from sub consultants and others as requested for final building approval 2. Post Construction Respect of building performances Prepare schedules of defects for rectification by contractor Assess final contract price and certify final contract payments Obtain all warranties, guarantees, certificates, manuals, maintenance schedules etc from contractor The development of real estate by local council The development of real estate by district council in Australia is very much the same as private real estate development but the benefit for the local citizen is the primary concern. When there is a negative impact, public hearing is mandated. Normally public benefit is the main criteria but profit still can be made from the development. There are examples as follow. 1. Development for the districts benefit Example of public swimming pool A developer was interested in developing an empty lot in the district of Mosman. The lcoal council was willing to grant the construction of apartments with the condition that the first floor of the apartment building will be given to the district and a public swimming would be built for the benefit of the local people. There are many other examples such as building public parking, or building public library etc. in exchange for the building permits. 2. The development for future profit Example of shopping center for the community This is the case of Campbell town. The local council built a shopping center from an empty lot for the people in the district and operated successfully for 20 years then sold the center to a private developer for profit. Not only the council can develop land in their district, they can purchase additional land if it has reasonable base for the development. With the plan for improvement of the district, they can request subsidy from the state. If the fund is not sufficient, they can use profit from the real estate that they own or even join with private developer for the development of the district. The differences compare to Thailand 1. Getting construction permit in Australia is more complex than Thailand. It requires specialist in many areas. Environment impact studies are needed. For example, if there are old trees that need to be preserved, animals specially the endangered species. Then, area of sanctuary replacement must be found for the animals: water shed alternative, drainage and sewerage system. Ecologist must be involved and construction or development might be difficult or even impossible. In Thailand, forestry and green area have been established and construction is not permitted. Other
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areas that are not prohibited are automatically permitted without any environmental study needed. Area near seashore must be receded and provide necessary sewerage system. Vegetarian and sea life study are not required. 2. Some lot may have old structure of which study and evaluation of future impact must be made and heritage assessment may recommend the old building structure as a protected heritage site. There was an example that a developer was allowed to develop a piece of farm land that has a rice mill over a hundred years old with the condition that the outside structure of the rice mill must be kept as historical site. In Thailand, only registered sites are protected. 3. Australia has vast area of forest (green area), bush fire assessment may require certain distant from the green area, and specification of construction materials, but Thailand has no such requirement. 4. City zonings are colour coded. The developers may petition for rezoning to the city or district council. Thailand does not allow any type of rezoning request. 5. In Thailand, the development of real estate at district council level is normally for the benefit of the local people and is done on long-term lease basis. Only the National Housing Authority project called EUA-ATHON that is constructed for sale.
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Pricing For new projects initiated by real estate developers, the pricing is usually determined by the real estate development companies. When the original owners themselves want to sell their property, they usually decide on the pricing, or they might ask the agencies to do so. In this case the pricing will depend on the kinds of such property as follows: 1. Commercial and industrial real estate property In the case where the property is for sale without any rent, the pricing is usually done based on the area per square meter. For the property which is already rented out, the pricing is based on the yield. 2. Vacant land Since there is no construction on the property, pricing is calculated from the area per square meter. 3. Residential property The transaction of residential property may also depend on the buyers, in which case the pricing is usually based on location, environmental characteristics, accessibility, view, and etc. In some cases, the estimate of the property value might be taken into account. Auction Auction is another popular way of transaction in Australia. Property for bid can be new or old. In most cases, the property is unique in some ways. The market price of such property is therefore unknown or undecided. It is possible that the owners of the property may need quick cash. Or in some cases, the property may involve many stakeholders, in which case a neutral market may be needed. Customarily, the real estate agencies will hold the bidding by making an announcement or advertising at least 4 to 6 weeks in advance. The actual bidding may take place either on the premises of the agencies or at the site where the property is located. In some cases, the place of bidding may be rented just for the occasion when the property owner (who is called the vendor) will shoulder all the expenses from the rent to the advertising of the owner. The commission from the clients, as in any property transaction, usually amounts to 3%. In this case, however, the agencies also accrue another benefitfree advertisement because in many cases, property bidding may become the talk of the town or become very successful and get the chance to hit the headlines. The deal can also be closed quickly. For property bidding in Australia, the real estate agencies must have a specialized license to make sure that the agencies are unbiased and the pricing fair for all parties. Real estate renting management In General, for the opened agreement, the owner has the right to have more than one agency to manage the rental agreement. However, for the exclusive agreement, the owner has no rights to hire other agencies. In case there are more than one agencies searching for customers, the first agency that can find customer will be paid, except there are other types of agreement made among agencies. In this case, although the agencies that can not find customer will not be paid, but most likely the owner must pay for the advertisement costs. Thus, the agency can earn some income from advertising.
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Pricing Normally, the owner will set the price, sometimes, however, they will let the agency to set the price because the agency already has the database for renting rates in the system. Therefore, the pricing is likely to set by using the information from the local area, which can be in the same estate or from very close range. If there is no information, the range can be expanded to be able to compare with other estates. In general, for real estate that is rented for commercial and industrial purposes, the pricing is very similar, so it is possible to compare the price from different areas. When the price is set, the rental rate will be set at 5-10% higher than the market, in case customer would like to negotiate. Lease Contract For the residential real estate, the contract must be in the form that has been set by Real Estate Institute of New South Wales. For commercial or industrial real estate, the contract will depend upon both parties. The contract will indicate the scope of services and other agreements. The cancellation and modification will be able to make after the contract is due or before the names are signed. Since the rental management can be done in two ways, which are between the agency and the landlord, and between the landlord and the renter. The contract between the landlord and the renter usually has two types: 1. Nett rent, which is the rent plus outgoings 2. Gross rent, which is the rent inclusive of outgoings Outgoing cost Outgoing means all rates, taxes, outgoings, cost and expenses incurred by the landlord in the control, management, operation, repair, maintenance and ownership of the premises and the centre, and without limiting the generality of the foregoing, includes the following: All rates, charges, assessments, duties and fees of any Statutory authority of council. All land tax All insurance premiums for policies covering the improvements and fixtures and fittings at the premises and the centre, at reinstatement value and against all usual risks. All cost f supplying water and removing waste, sewage and garbage from the premises and the centre. All payments made or liable to be made under any administration fund to the owners corporation by the landlord pursuant to determinations under the Strata Schemes Management Act 1996. All payments made or liable to be made under any special levy to the owners corporation pursuant to determinations under the Strata Schemes Management Act, 1996 but only if that special levy relates to the tenants use or occupation of the premises. The cost of providing all utilities and services to the premises and the centre. All costs to repair and maintain the premises and the centre and keep it operational, but not including the cost of any structural work nor any cost which is the responsibility of a tenant of the centre. All costs of pest control.
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All costs of cleaning the premises and the centre. All gardening and landscaping costs. All security costs. All costs of repairing, maintaining and providing air-conditioning in the premises and the centre. All insurance premiums for workers compensation. All insurance premiums for public liability. All costs associated with the management, control and administration of the premises and the centre, including management fees, other fees and remuneration paid to centre management and/or to any the premises and/or the centre, and the salary and remuneration of the landlords employees or the managers employees engaged wholly or partly in performing these functions. These outgoing costs will depend upon the agreement between the renter and the landlord in terms of who is responsible to which costs. Sometimes, the renter does not have to pay for anything or the renter can pay for all costs. Other than that, the renter can pay partly in percentage (share of outgoings) for the costs as both parties have agreed. For examples, the renter can be responsible for paying 80% of the water and electricity. Generally, the contract is short-term. Before the contract is due, there must be a period of time when the renter is noticed and offered an option to renew. In some contract, the renter has the rights to buy the estate from the owner within a time period (option to purchase) as stated in the contract. Price Raising To raise the price, it can be done on yearly basis, except it has been indicated otherwise in the contract. In case that the economy is not good, it may be impossible to raise the price. There are three ways to calculate the yearly growth rate. The chosen way to calculate should be indicate in the contract. 1. Fixed amount or percentage this calculation uses fix rate for price raising, for example, 3% yearly, 1,000 dollars yearly, or 3% biyearly. 2. Current Consumer Price Index - C.P.I. This normally compares to Sydneys C.P.I., which can be view in www.abs.gov.au and the calculation method would be: take the yearly rent as of the last review date or if none, the rent at the commencement date ($X), divide that rent by the Consumer Price Index Number for Sydney (All Groups) for the quarter ended just before that date (CPI 1), multiply the result by the Consumer Price Index Number for Sydney (All Groups) for the quarter ended just before that review date (CPI 2). The product is the new rent for the year beginning on the review date ($Y), written as a formula
$X CPI 2 = $Y x CPI 1
3. Current Market rent In this case the rent is to be the current market rent. This can be higher or lower than the rent payable at the rent review date. The landlord or the tenant can
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inform the other in writing at least 60 days before the rent review date of the rent that the landlord or tenant thinks will be the current market rent at the review date. If the landlord and the tenant do not agree on the amount of the new rent 30 days before the rent review date, the current market rent will be decided by a valuer appointed. Expected yields The expected yields that the landlord can expect are up to the length of the rent. If it is a short-term lease, the expected yields should be around 8-8.5%. For the long-term lease, the expected yields are mostly around 6%. Normally, the long-term contracts are most likely to deal with government. Subleasing The subleasing has to be allowed by the landlord. The agency will then be the one who find a sublease and manage all income and expenses for the leaser. However, it depends on the leaser whether to choose to let the agency to manage the income and expenses or not. After-rent management After the real estate is rented, the agency usually takes care of collecting the rent and payments for other services that the tenants are supposed to pay to the landlord. The agency will then receive management fee at 5% of the rent, excluding the GST and the $5.50 of document sending from the owner. The management process starts from sending reminders to the tenants 14 days before the payment is due. When the tenant pays for the rent and other services, the management manager will record the data into the system. For the services, such as water, electricity, property tax, etc., whether it is the tenants responsibility or the landlords (except when the landlord does not agree to have the agency manage these payments), the management manager will pay for all payments. After deducting all the payments and the management fee, the rest of the amount will be transfer to the landlord. In case the renter has an agreement with the landlord to pay for the payments, the management manager will estimate the costs to set yearly budget and average into monthly payment, so that the tenants can pay accordingly. In addition, there are other yearly payments such as property tax, management fee for strata assets, etc., which are collected in the trust account, managed by the agency. By the end of the year, after finished all the payments, if there is money left the account, the agency will return it back to the landlord. However, if the expenses exceed the amount available, the tenants have to pay extra. Inability to pay the rent If the tenant has not paid for the rent for fourteen days from the due date, the agency has the rights to not allow the tenant to use the property. But it also depends on the landlord permission. If the economy is bad, the landlord can let the tenants do the installment for the rent. On the other hand, if the economy is good, it is easy to find a new tenants, the landlord can cancel the contract and find a new tenant. The inability to pay the rent has 12% fine per year. Damage to the assets In case of asset damages, the agency will report to the landlord and estimate the costs that need to be paid. Normally, if it is not the damage that caused by the tenants, the
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landlord will pay for it, which, sometimes, the damage is covered by the insurance. The agency then will contact the insurance on behalf of the landlord. Advantages of selling / renting management of Australia 1. For the contract, the contract can be made both between the agency and the landlord and between the landlord and the tenant. This can make it more concise for the management and reduce any potential conflicts such as the payment management, etc. that could caused by each party. 2. For the sell management, consumer can search for the property through several channels which fastens the sell. 3. For the real estate bidding, since there is the specialized law, it could ensure that the process is correct and legal and the agency is unbiased. 4. For rent management, the agency will collect the rent and other payment, which makes it convenient to the landlord for property management. Also, since there is the law that controls the agency on how to collect money for the Trust Account, landlord can be assured that there will not be any money problems. The different between Thai agency and Australian agency 1. Contract In the sell or rent management, there will be contracts between the agency and the landlord, as well as the landlord and the buyer/tenant, whether it is the contact between the real estate developer and the agency, or between the agency and regular people. In Thailand, if it is the case for regular people who would like to sell their property, they can just talk informally to the agency without having to sign the contract. 2. After-rent management In Thailand, after the agency has the new tenant to sign the contract, the management for the rent and other payments will be done by the landlord, which is different from Australia where there is always be an agency taking care of those works. 3. Price Raising In Thailand, they most likely use the fixed amount calculation. If the real estate is for residential purpose, the price raising becomes harder. The C.P.I and the Current Market methods are not popular in Thailand, especially the Current Market method, which has to estimate the market value, that would most likely require more investment, which is not suitable for a low rental rate property. 4. Auction In Thailand, the real estates that are on bidding are most likely to come from the Legal Execution Department. If it is new, it could be residential building whose the owner would like to run bidding by himself. On the other hand, Australia has both new and old buildings for residential, commercial, and industrial purposes. And the bidding will be held by the agency. Application for Thailand Currently, Thailand has no law to control real estate management and the agencies. Therefore, in order to apply those ideas to Thailand, all parties must consider the convenience and security of all agencies, landlords, and tenants. These are the issues to consider:
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1. Contract If the contract is as concise as in Australia, which has 3 parties involved, it will reduce many troubles and conflicts, especially between the landlord and the tenant. Normally, in Thailand, if the rental price is not very high, the contract will be simple and does not have much detail about who will be responsible for which damage, the payments that the tenant must pay, the price raising, etc. This could easily cause conflicts. Also, when the contract is made by themselves, the government has no way to monitor and collect the tax. So, if the contract is done by the agency 2. Property Management Practically, it is not suitable to apply the property management system, which the agency manage the property for the landlord, to Thailand during this time because the law like Escrow account which is similar to Trust account in Australia is not yet existed in Thailand. Thus, there will be a hole in financial management. Also, the landlord would not like the agency to manage his property. If the law has been used in the country, this would be another option for the tenants and the landlords convenience, not only in rent collection, but also in other types of management, for example the landlord can have the agency to handle property damage. And, because the agency is working on behalf of the landlord, they will get paid for the management fee. Thus, everyone gains benefits.
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Since the 1973 legislation commenced it has been amended 16 times. The most significant amendments from a management point of view occurred in 1980 and related to the compulsory licensing of strata managing agents. In 1989 a further step forward was made when legislation commenced which introduced a "tiered" owners corporation system. This is called "Community Title". This brought even more adventurous ways of subdividing land and buildings. Community Associations have been established that include vineyards, horse stables, etc. The subdivision and registration aspects of strata developments are now administered under separate legislation the Strata Schemes (Freehold Development) Act 1973 by the Department of Lands. Strata Schemes Management Act 1996 by the Office of Fair Trading administers. The Strata Schemes (Freehold Development) Act 1973 provides a system of title which gives exclusive ownership of part of a building known as a lot, and supporting rights over other parts of the building know as common property The Strata Schemes Management Act 1996 (the Act) provides a system of financial management and decision making by defining the rights and responsibilities of the owners corporation 7 and each owner and occupier in a strata scheme. This includes the management of funds and books of accounts, the holding of meetings of the owners corporation and executive committee, the responsibilities of owners corporation to maintain common property and take out insurance, and the responsibilities of owners and occupiers. The Act also provides a system for setting disputes in strata schemes, including those in the day-to-day management. Introducing about Strata Strata scheme defined A strata scheme is the development of land to allow multiple occupancy and ownership of individual units, or other parts of a parcel, by separate individuals or companies. (The Department of Land, 2008) In addition, a building and the land is subdivided into lots or lots and common property, the lots (or units as they are commonly called) having separate title, the transfer of which is not inherently restricted, the common property being used by the occupiers of the lots but owned by a owners corporation as agent for the owners of the lots in specified proportions. (Bugden, 1993 p.8) Strata schemes are ideal for the control and management of the following styles of development (The Department of Land, 2008) : Villa Homes, Town House, Duplex and Terrace Houses Multi-storeyed development such as: a block or blocks of flats, commercial buildings, shopping complexes, or a combination of units, commercial and shopping development Industrial complexes Single storeyed shopping complexes Rural share farming, with individual residences and a common agricultural area and
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Use only in New South Wales, others states call body corporate.
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Holiday resort style accommodation - such as caravan parks with individually defined sites and shared amenities and recreational areas. Strata Plan (The Department of Land, 2008) is the division of land contained in conventional title(s) into the strata lots and common property. All strata plans must have an administration sheet and a floor plan. A location plan does not always have to be shown. A Strata Certificate (The Department of Land, 2008) is the certificate endorsed on a strata plan. Certificate of Title (The Department of Land, 2008) is the official document of title showing ownership of the land described in it. The Certificate of Title describes the area and location of the land, it shows the registered proprietor (land owner) and all charges (mortgages) and other interests, (e.g. easements) affecting the land. Unit Entitlement (Bugden, 1993 p.14) On the certificate of title of the common property there is recorded a schedule of unit entitlement. This schedule allocates a number of unit entitlements to the various lots in the strata scheme. The unit entitlements are normally allocated by the surveyor at the time the strata plan is prepared. These unit entitlements are most important because they determine the proprietors share in the common property, voting rights when the voting is conducted by means of a poll, used to calculate each owners contributions for levies, right to share in compensation moneys paid by any public authority resuming the whole or part of the common property, and proportion of maintenance contributions. The lots (Office of Fair Trading, 2007 p.25) Lot is including a unit, town house, parcel, garage that you have a right of ownership over. It is made up of cubic air space and is generally formed by the inner surface of the boundary walls, the under surface of the ceiling and the upper surface of the floor. Common property (Office of Fair Trading, 2007 p.18) Common property is all the areas of the land and building not included in any lot. The common property boundaries of each lot are generally formed by the upper surface of the floor, the under surface of the ceiling and all external or boundary walls (including doors and windows). The owners corporation must look after common property and do all repairs (unless it decides by special resolution that it is inappropriate for a particular item and its decision will not affect the safety or appearance of the strata scheme). This includes replacing and renewing common property when needed. The levy (Williams & Thomson, 2004 p.26-27 and Ilkin, 2007 p.203, 204, 223) An amount of money, a quarterly payment, set by the owners corporation according to unit entitlements, which has to be paid by the owners to the owners corporation. It is for the general running of the scheme and includes payments, such as maintenance, cleaning of common areas, electricity for lighting common areas, insurance, water, and keeping the lifts running. These are divides between the administration fund, for the day-to-day running of the building, and the sinking fund which takes care of future capital needs, like painting or repairing the building when it needs it.
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Table 2 The levy by different unit entitlement The owners corporation must determine administrative and sinking fund levies. The amount of these levies must be supported by a budget which must be tabled at a general meeting. The budget must take into account actual and expected expenditure and the existing financial situation of the owners corporation. Levies are generally determined at each annual general meeting. The amount of levies is payable by owners based on the unit entitlement of the lot. Levies are usually payable quarterly and a levy notice is issued by the treasurer of the owners corporation or the managing agent. All schemes are required to have a ten-year sinking fund plan for the life of the scheme. The plan has to be reviewed at least every 5 years.
The owners corporation is permitted to transfer monies from one fund to another but this money is to be repaid within 3 months by way of special levy. If a levy is not paid within 1 month after it is due, interest accrues at 10% per annum.
Insurance the owners corporation must have (Office of Fair Trading, 2007 p.14-15 and CHU, 2007) 1. Building insurance A damage policy must cover the building if damaged or destroyed by fire, lightning, explosion or any other thing in the policy: for the replacement (where destroyed) or the reinstatement (where damaged but not destroyed) of the building back to the same condition it was in when new for the payment for removal of debris and the payment of architects and others whose services are needed for the replacement or reinstatement. The building includes owners fixtures and fittings. Fixtures and fittings are items like carpets in common areas, hot water systems, light fittings, toilet bowls, sinks, shower screens, cupboards, internal doors, stoves, common air conditioning systems and
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intercom systems. The building must be valued every 5 years and insured for at least that value. 2. Public liability insurance The owners corporation must insure, with an approved insurer, against damage to property, death or injury for which the owners corporation could become responsible. The minimum amount of cover is $10 million. 3. Workers compensation insurance Indemnifies the owners corporation for legal liability to their employees under workers compensation legislation applicable to the State or Territory in which the building is situated. 4. Voluntary workers insurance The owners corporation must insure, with an approved insurer, against any damage that it may become liable for when a person does voluntary work for the owners corporation in the building or on the common property. A voluntary worker is any person who does work without any fee or reward, or without expecting any fee or reward. Fire safety inspections (Office of Fair Trading, 2007 p.16) The owners corporation is responsible for ensuring that access to all parts of the scheme is provided for necessary fire safety inspections. Large scheme (Office of Fair Trading, 2007 p.17) A large scheme is defined as one with over 100 lots (ie.101 lots or more). Parking and utility lots are not counted in the calculation. Some special provisions apply to large schemes. These provision are: Financial accounts must be audited every year. Annual budgets must list amounts expected to be spent on specific items. At least two quotations must be obtained by the owners corporation for expenditure of over $25,000. Executive committees of large schemes are not permitted to spend more than 10% above the budgeted amount for any item (unless the owners corporation lifts the restriction by a resolution). The 10% limit does not apply to emergency expenditure such as blocked sewer pipes. Proxy votes for an owners corporation meeting must be provided to the Secretary at least 24 hours before the meeting concerned. Small Complex (Two lot schemes) (Ilkin, 2007, p.93, 208, 256) The Act contains special provisions for 2 lot schemes: the 2 owners automatically form the executive committee - the executive committee does not have to be elected Building insurance and sinking fund forecast are not compulsory where the two buildings are detached and there are no additional buildings on common property. The owners must decide this by unanimous resolution by a meeting. Each owner may then insure the structure on their own lot. How does the owners corporation start? (Office of Fair Trading, 2007 p.5, p.14) The owner corporation starts when a strata plan is registered with Land and Property Information NSW. In most cases the owners corporation will initially be the original owner.
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Definitions Owner - a person(s) or company that buys a lot and whose name is shown on the Register at Land and Property Information NSW. Occupier/resident - people who live in the property. They may be tenants, children, relatives, husband, wife, defacto, licensee or any other person who lawfully lives in the property. Owners corporation - the owners of the lots (formerly referred to as the body corporate) constituted under of the Act and known as The Owners Strata Plan No. X. Original owner is the owner of the scheme when the strata plan is registered and is usually the builder or developer. During the initial period the original owner is responsible for all the duties of the owners corporation, even if there has not been a first AGM. Initial period - This begins when the strata plan is registered and ends when one third of the total unit entitlement have been sold. There are some prohibits that the owners corporation must not do. Meetings of the owners corporation (Office of Fair Trading, 2007 p.6 - 10) First Annual General Meeting (AGM) Convening the first AGM, the original owner must hold within 2 months of the end of the initial period, that is, when one-third of the total unit entitlements have been sold. In the first AGM agenda, the set agenda includes the insurance cover, the election of executive committee members, by-laws, appointment of a strata managing agent, accounting records, restricted matters and levies, preparation of ten-year sinking fund plan, and whether a caretaker is to be appointed. (see more information in appendix 1.5) Annual General Meeting (AGM) Annual General Meeting is a meeting of owners and other interested parties (as noted on the strata roll) who have been advised by notice of a proposed meeting. The owners corporation is required to convene and hold a general meeting once a year. This must be held on a date not earlier than one month before nor later than one month after each anniversary date of the First Annual General Meeting. Extraordinary general meetings Any general meeting of the owners corporation that is not an AGM is called an extraordinary general meeting. These meetings should be held when necessary during the year (e.g. to change, cancel or make by-laws, to appoint or dismiss a strata managing agent). There is no minimum number of these meetings each year. There are two ways for convening extraordinary general meetings: by majority vote of the executive committee if owners entitled to vote, and who together hold at least one-quarter of the total unit entitlements How to put a motion on the agenda Any person entitled to vote at a general meeting can ask for a motion to be put on the agenda for a general meeting. Written notice must be given to the Secretary. The Secretary must put the motion on the agenda for the next general meeting. Notices must be given to each owner of a lot, as shown on the strata roll, at least 7 days before the meeting. Notice need only be given to a first mortgagee or covenant chargee if a motion requires a special or unanimous resolution.
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Chairperson to preside If present, the Chairperson must preside at all general meetings. If the Chairperson is away, the people at the meeting must elect someone to chair that meeting only. The person elected must be entitled to vote. The Chairperson does not have a deciding vote. Quorum A quorum is one-quarter of the people entitled to vote or owners entitled to vote holding one-quarter or more of the total unit entitlements. If the quorum calculated is less than two persons, the quorum shall be two persons entitled to vote on the motion. The quorum is then the owners and proxies present who are entitled to vote. There must be a quorum at a general meeting before any motion (including election of an executive committee) can be voted on. If a quorum has not assembled within 30 minutes of the scheduled start time, the meeting must be put off for at least 7 days. If there is no quorum within 30 minutes of the time fixed for the adjourned meeting, it can go ahead. You are entitled to vote at a general meeting in person, if you are a company nominee of a corporation shown on the strata roll as the owner, an appointed proxy, and an owner/mortgagee or covenant chargee of a lot shown on the strata roll. Proxies A valid proxy must be on the form prescribed by the regulations. An owner can make any person their proxy. Proxies must be given to the Secretary before or at the meeting. In the case of large schemes the proxy must be given to the Secretary at least 24 hours before a scheduled meeting. Counting votes on motions
A motion at a general meeting is decided by the number of votes cast for or against the motion, with each owner having one vote for each lot they own. Most decisions can be made by a simple majority vote but sometimes a special resolution 8 or unanimous resolution 9 is needed. Even when a simple majority vote only is needed, a poll can be called for. When a poll is demanded, votes have a different value and are worked out by counting the unit entitlements. There are certain matters that can only be decided by:
Special resolution i.e. change by-laws, granting exclusive use of common property Unanimous resolution i.e. sale of common property
Executive committee 10 of the owners corporation (Office of Fair Trading, 2007 p.11) The executive committee of the owners corporation is a group which represents owners or owners nominees. It administers the day-to-day running of the strata scheme and is elected at each Annual General Meeting. It can have from one to nine members, but in a two lot scheme it has two members who are the owners of each lot. Once the
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A resolution passed at a general meeting of the owners corporation against which no more than one-quarter of votes (calculated by unit entitlements) is cast. A resolution passed at a general meeting of the owners corporation against which no vote is cast. Executive committee (EC) or simply committee (depending on state)
10
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executive committee is elected, the members of the committee decide who is to hold the office-bearer positions. Any decision made by the executive committee is treated as a decision of the owners corporation although there are some matters that the executive committee do not have the power to make (e.g. fixing levies). No individual executive committee member can make a decision for the owners corporation. In the event of a dispute between the owners corporation and its executive committee, the decision of the owners corporation prevails. Restrictions of executive committee decisions Any owners corporation can limit the powers of its executive committee if it so desires. A decision of the owners corporation is required before the executive committee may commence or obtain legal advice on behalf of the owners corporation, except where the anticipated costs is less than $750 times the number of lots in the scheme or $10,000 (whichever is the lesser). The responsibilities of the owners corporation (Office of Fair Trading, 2007 p.14) 1. Keep the books and all records Notices, meetings and correspondence The owners corporation must record, by mechanical, electronic or other means, all details of notices given under the Strata Schemes Management Act or any other Act. Orders under the Strata Schemes (Freehold Development) Act and Strata Schemes (Leasehold Development) Act, or by a public authority, local council or a court, must also be recorded. These records must be kept for at least 5 years. The owners corporation must keep minutes of its meetings, including details of motions passed, for at least 5 years. The owners corporation must keep copies of all correspondence received and sent for at least 5 years, notices of owners corporation and executive committee meetings for at least 5 years and proxies given to the owners corporation for at least 5 years after the proxy expires. Financial records and statements The owners corporation must keep accounting records and financial statements for at least 5 years. These include receipts consecutively numbered, a passbook, a bank deposit book, or a statement of deposits and withdrawals in order of date, that are bound or kept in a loose-leaf folder, a cash book, a levy register. The owners corporation must prepare financial statements for the period beginning on the date the strata plan was registered and ending no earlier than 2 months before the first AGM and next AGM Strata roll The owners corporation must prepare and keep a strata roll. The roll must be kept by mechanical, electronic or other means. There must be recorded, for each lot, the owners name and an Australian address for the service of notices, or the owners agent and the agents Australian address for service of notices. The following information must be recorded for the common property and the strata scheme in general: the strata plan number and the address of the building the name of the original owner and an Australian address for notices the name of the managing agent (if there is one) and an Australian address for notices
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the total unit entitlements for the scheme and each lot insurance details the by-laws for the strata scheme. 2. Provide a Section 109 Certificate (Office of Fair Trading, 2007 p.19) Before you buy into a strata scheme you should get a Section 109 Certificate. A Section 109 Certificate gives information about the strata scheme including: the names and addresses of the executive committee members, the managing agent and caretaker (if there is one) the levies to be paid by the owners any outstanding levies the address where the records and financial statements can be viewed any special by-laws made by the owners corporation in the past 2 years. If a levy is outstanding before the Certificate is given and it is not shown on the Certificate, the purchaser is not responsible for the payment. However, if any money becomes outstanding after the Certificate is given, the new owner and the old owner are both liable for payment. If the information is not supplied within 14 days after you ask for it, the owners corporation could be fined up to $220. 3. Pre-purchase property inspection report (Office of Fair Trading, 2007 p.3, 5) A pre-purchase property inspection report is a written account of the condition of a property. It will tell you about any significant building defects or problems such as rising damp, movement in the walls (cracking), safety hazards or a faulty roof to name a few. It is usually carried out before you exchange sale contracts so you can identify any problems with the property which, if left unchecked, could prove costly to repair. With strata scheme and company title properties, the consultant will normally only inspect and assess the condition of the interior and immediate exterior of the unit you're thinking of buying. If you want the consultant to inspect other common property areas you will need to request a special-purpose property report. You should contact the secretary of the owners corporation or company to enquire about the history and cost of repairs to other units and the common property. This information is important as the cost of repairs to common property can in some cases be substantial. Owners normally share the cost of these repairs. By-laws (Office of Fair Trading, 2007 p.20, The Department of Land, 2008) The by-laws are a set of rules that all people living in a strata scheme must follow. A strata scheme must choose and register its own by-laws. When the Act came into being, model by-laws were introduced for the various types of schemes, ie residential, commercial, industrial, hotel/resort, commercial/retail, mixed use. By-laws cover such things as: Keeping of pets Garbage disposal Use of facilities Behaviour of residents - noise, etc Parking Unless customised by-laws are lodged with the strata plan, the appropriate model by-laws are used. A search should also be made at the Land Titles Office to find out details of the registered by-laws.
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The owners corporation can change or cancel any of the by-laws to assist with the running of the strata scheme. A special resolution is needed. A by-law has no force or effect if it is inconsistent with this or any other Act or law. By-laws cannot prevent guide dogs or hearing dogs being in the scheme, nor prevent children (persons under 18 years) occupying the scheme. Any exclusive-use by-law in place at the time of registration of the scheme, and that remains in place, must be disclosed to purchasers by vendors by a copy of the by-law being attached to the contract of sale. (see each by-laws schedule in appendix 2) Caretakers or building managers 11 Caretakers are a new category of persons who may be employed to assist the owners corporation in carrying out its functions. They do not have the same delegated functions as a licensed strata managing agent. (depending on state) Caretakers may also operate as letting agents within the building and are often referred to as the building manager. They may assist the owners corporation in: the management of common property controlling the use of common property by tradespersons and suppliers and other non-residents the maintenance and repair of common property. Caretakers may not enforce by-laws or carry out other similar functions of the owners corporation. For a large new building, you will probably need a full-time caretaker, particularly if you have facilities like a 24-hour concierge, gym and pool. Even buildings with as few as forty-two apartments will need full-time managers if they have a wide range of facilities on-site. (Office of Fair Trading, 2007 p.12, and Williams & Thomson, 2004 p.114) In case, there are several small buildings with facilities around one area they also share one building manager to look after their building. Strata managing agents 12 (Office of Fair Trading, 2007 p.12, and Sue Williams & Jimmy Thomson, 2004 p.135, Ilkin, 2007 p.147-148) A strata managing agent may carry out some or all of the functions, duties or powers of the owners corporation. Managing agents are licensed under the Property, Stock and Business Agents Act. The appointment and giving of powers to a managing agent can only be decided by a majority vote at a general meeting. A managing agent must write to the owners corporation and tell them what duties they are doing and how they are doing them. A managing agent must give details of trust accounts and financial transactions when asked in writing by the owners corporation. A strata managing agent can not transfer the management of the scheme to another strata management business without the approval of the owners corporation. The owners corporation and its executive committee can appoint a strata managing agent to carry out some or all of the functions of the owners corporation. These duties can include: Preparation of administrative and sinking fund estimates
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Caretakers or building mangers or body corporate managers (depending on state) Strata managing agent or strata manager or manager or agent (depending on state)
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Receiving, receipting, banking, having custody of , and spending money Collect and deposit levy contributions Issue levy notices Maintain all accounting records Assist auditor Organize repairs and maintenance of common property Arrange quotations for services/works Engage cleaners & gardeners/trades people Convene & hold meetings, which include preparation of notices of meeting, attend meeting, take minutes, prepare minutes, dispatch minutes of meeting Attend to harmony problems Attend to correspondence of owners corporation Renew insurances Arranging fire safety inspections Ensuring compliance with occupational health and safety requirements Arrange valuations Arranging for section 108 inspections and section 109 certificates Advice on matters involving SSMA
Differences in the Strata management between Australia and Thailand Overall the regulations of condominium in Thailand and State of New South Wales are similar but differ in details. This paper will highlight the differences and mention both good and bad parts of the New South Wales regulations.
Good and bad parts of the regulations under the New South Wales law 1. Private and common area The language use in New South Wales (NSW) seems to be clearer than Thai language. For example, when address the joint-wall that is used by party A and party B. NSW will define in side the room is private property but Thailand will say it joint property between A and B. Good point 1. By identified inside room as private property it clarify who responsible for maintenance and repair of certain section of the property. 2. In Thailand, walls, ceilings, and floor are considered jointly own by both condominium owners. While it could be considered as building structure and legal owner of the project owners corporation that created to take care of the common property should be responsible for the maintenance and repairs, of pipe lines which is building structure. Water leaks can be an unsolved problem between condominium owners. Bad point 1. Because many repairs and maintenance are for common property, levy for the administrative fund will be higher than Thailand.
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2. In Thailand property and responsibility of water line is determined by the valve that control the water flow as well as the water meter. NSW law is unclear. 2. Ownership of Common property The New South Wales use survey method to identify common property utilizing the size as well as the location of the property in dividing the legal right and responsibility including the charge for Levies, insurance coverage and damage claim in case of losses. After all sections of property are identified, a legal division of private and common property will be performed. Good point 1. The New South Wales method based on size and location for valuation are reasonable. Thailand in the past use selling price and recently use size. Either case is not as good. Bad point 1. If the surveyor is inexperience or lack of professional ethics, the valuation may not be accurate. 3. Levies of common property Levy is imposed on the property owners on a monthly basis. Fund received is divided in to administration fund and sinking fund. Normally annual budget would be prepared to justify the expenditure. With majority vote in the annual meeting, levy may be increased. Special assessment can also be made when needed. In Thailand the sinking fund can be imposed only once and the administration fund needs 75% vote and special assessment is possible. Good point 1. The administration fund helps to pay for routine expenses of upkeeps. 2. The sinking fund help to keep the property in good order and increase property value. In 2005, New South Wales requires fire alarm in the buildings and all doors must sustain at least 2 hours in case of fire. A substantial expenditure was the result of this pronouncement and the sinking fund helps to minimize the impact upon property owners. Bad point 1. Property owners must have the confident that they are financially able to pay for the yearly increase of levy. 4. Insurance New South Wales requires four types of insurance and qualified appraisal company must reappraise the buildings every 3 years. Thailand does not have any insurance requirement so it is rested upon the owner corporation of the buildings. Normally, Thailand would insure the buildings and people in the buildings. The insurance company estimates the insured value. Good point 1. Insurance reduce financial risk that when losses incurs a large sum of money will be needed to rebuild and repair the property. Insurance reduce this burden.
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2. New South Wales requires personal insurance coverage to cover residents, visitors as well as workers and employees that work in the area. 3. The requirement that appraisal company set up the insured value to be covered is good because the company being the middle man will determine the fair value which is not too low yet not to high that create an unnecessary burden. Bad point 1. Increase expenses thus owners corporation has to increase levy. 5. Voting right and method of voting in the annual meeting In New South Wales, votes would be counted according to the right of ownership with one-man one vote for those who attend the meeting only. In Thailand, the new law gives weight of voting according to the size of the property, the larger the property the more vote you received and one person could not received more than three proxies. All other provision is similar with only minor detail differences. Good point 1. One-man one vote reduces the power play. It is still can be done, however, in special resolution or voting the required unanimous resolution by owners. 2. Increase levy needs only majority votes of the attendees while Thailand required special resolution, which make administration of fund difficult. 3. For special resolution , only votes of attendees from an proper forum will be counted while Thailand needs 75% votes from property owners. 4. The unlimited number of proxy per person expedite administration process for New South Wales. Bad point 1. Person who get power from proxy may vote against the wishes of those who grant the proxy. 6. Sinking fund forecast New South Wales mandates that sinking fund needed to be forecasted for the period of 10 years and subject to revision every 5 years. Thailand does not have this requirement. Good point 1. Budget is fix so the plan for expenditure for future can be done efficiently. Bad point 1. Increase expenditure and cash outflow.
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To date 1,000 neighborhood plans have been registered and almost 500 community plans. Though this number seems small in comparison to the number of strata schemes, many of the schemes are large and could almost be small villages or suburbs in their own right.
Normally, in the Community Scheme concept, they can have Neighborhood Scheme, Precinct Scheme, and Strata Scheme included in one project. Each project can subdivided into many phrases. Strata Scheme for example can have first floor for retail shop, second floor for offices and third floor as a residential floor. Therefore, there are three Strata Schemes for one building. Under the precinct scheme, however, 2 projects must be connected or it would be classified as neighborhood scheme. A formal community association or neighborhood association or precinct association (owners corporation in strata scheme) is created to take care of the project. Each project will have committee within the association unit. Each project will send a representative of their committee to join the committee of the community. In turn, if communities are created within the precinct scheme, they will send a representative to join the committee of the precincts association. Levy will be imposed in all successive level of the organization scheme. The differences in the property management of Community Scheme It is quite clear that Thailand does not have community scheme and only has neighborhood scheme. A large project may have the mix of commercial buildings, townhouse as well as single home units but will have only one single association to manage the project. The amount of association fee paid would dependent on the type of the buildings.
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In Australia, the levy is higher for community than Strata. In Thailand, it is the other way around Community is less expensive than Condominium. The smallest condominium in Thailand with the area of 24 square meters pays an average levy of 600 bahts or 25 bahts per square meter. While a small single home with 200 sq. meters pay 750 bahts per month or less than 4 bahts per sq. meter. For a single home unit, Australia and Thailand are very much the same. The house is the responsibility of the property owners, which fence, street, and garden are the responsibility of the association. For Thailand, swimming pool, sport center, and clubhouse would depend upon the sale and purchasing agreement. Australia threat commercial properties and townhouse as strata but Thailand threat them as community scheme. Street and other convenience structures are common property while outside door, fence, and wall between houses are jointly responsible. Management of other type of properties Aside from strata and community scheme, Australia has legal ownership called Company title. It is similar to strata and managed by Building management committee. Company title Legal ownership by Company title is similar to strata but differs in the following area: Governing laws Strata is under two different laws: Strata Title (Freehold development) Act 1973 and Strata Schemes Management Act 1996. Company title is governed by Corporate law. Legal title For Strata, buyer is the legal owner of the property For Company, the owners are the stockholders of which maximum of 50 stockholders per company. A subsidiary must be created when more than 50 stockholders are involved Parking permit For Strata, parking permit come with the property when purchase. For Company, the condominium and the parking space can be sold separately. Levy 1. For those who did not pay the fee before the annual meeting date. For Strata, the member can attend the meeting but cannot vote. For Company, the member cannot attend the meeting. 2. Fee increase For Strata, it can be done only in the annual meeting. For Company, a special meeting can be called.
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Trading For Strata, the property owner has the freedom to buy and sell. For Company, the committee through interview process must approve it. Leasing and sublease For Strata, it can be done by owner or permission from owner. For Company, the committee must approve it. Governing law and regulation of the association Strata call By-laws. Company calls House rules. Dispute settlement Strata use Tribunal Court before going to Local Court. Company goes directly to Local Court. Currently, number of Company title is reducing because the law allow registration as Strata. Conversion to be Strata is possible but need unanimous votes from all residents. Old residents of the project and elderly still prefer company title because they can choose to accept or reject the new comers. The association fee is also heaper than Strata. Building Management Statement This type occurs when more than one strata projects sharing common facilities of parking lots, swimming pool etc. For example, one piece of land registers for apartment complex with two buildings and two strata plan but has one swimming pool to be share by both buildings. Therefore, both have to pay levy for maintenance and upkeep and need common rules that both have to follow. The administration of this type of operation requires Strata Management Statement. Additional committee is needed similar to community association. That is both owners corporations need to pay levy to the building management committee.
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information will be sent approximately one month before the Annual General Meeting. The meeting can be held either at the company of the property manager or in customer building. It is customary that the property manager is the chairperson of the meeting. In the meeting, it is unavoidable the customers will mention and request the property manager to solve and take corrective action for the problem they encounter during the year, may even request to add or drop a particular contractor from the list. Report of the meeting will be prepared and the procedure will be repeated again next year. Administer of levy and customer records There are many ways that customers can pay their fees, Internet banking, cheques, etc. Each day the accountant will transfer information from bank account into the companys computer program Strata 9-10. Customers database then updated for payment of levy, cash inflow, and outflow for each account. Finance manager is responsible for payment of all expenditure through e banking and audit the levy received from customers. There are three types of bank accounts the customers have. Trust Account. This is an operating account of which levy received will be deposited and all expenditures will be paid from this account. As this account earns no interest, excess fund would be transfer to Investment account. Investment Account. This account can be deposited and withdraw at will and earns interest. When Trust account need additional fund, transfer from this account will be made. Term Deposit. This medium and long-term deposit is from fund that will not be used for at least 1 - 3 months or more. Interest earned in this type of deposit is greater than Investment Account. Premature withdraw, however, will subject to penalty. Some customers will have more than one account of this type for different deposit periods.
Levies + Interest
Less
Shortness
Surplus
Surplus
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Company J This company takes care of approximately 540 schemes. Most of the customers are high-rise buildings, Community Malls, Company title buildings, factories, mix-use property, and retirement village. Organization structure. Horizontally design, building manager will handles annual meetings and responsible only for matters regarding common property. Administration, finance, and accounting prepare documents and take care of companys customers, contractors, and reports for the meetings. The company uses SPInfo which is easy but not as flexible and useful as Company A. Operating procedure. Technique in obtaining customers. New customers are obtained normally through recommendation of old and current customers, management companies that close down and recommend their customers to come, from the information in the telephone book and some from old customers that come back. Management procedure The procedure is very much the same compare to Company A but the property manager also handle complain and help customers, get quotation of repairs and maintenance for them. He also check the accuracy of invoices before payment, prepare documents for the annual meetings including prepare form records, transcribing the recording tape for printing section to prepare report and notice. Various types of documents received from customers such as invoices and receipts will be scanned and kept for future references. After one year, these documents will be moved for storage (normal time for legal storage period would be 5 years but 7 for community scheme). An archive file in the system is helpful when old documents are needed. Profit and loss statement, balance sheet, cash flow, and budget for next year including delay payment from customers are the responsibility of the accounting and finance. Responsibility of quarterly report and yearly report and clearly defined. Insurance and claim also have specialist to handle. Administer of levy and customer records In this regard, Company J is totally differing from Company A. A use it own account of which all customers have subsidiary account SP no X Account and A pays all expenses on behalf of customers. Company J, however, has customers account separately identified and all payment by cheques need authorized signature of customers before it can send out. Company As procedure is fast and more convenience.
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Company S Company S take care of approximately 400 schemes, mostly residential and commercial buildings, service apartments, factories, resorts, community scheme and Building management statement. Organization structure Administration is vertical in nature. The organization is divided into two main teams, responsible for inside and out side the organization. Inside team, take care of all mater within the company and outside team handles matter outside the organization. The outside team further subdivided into three teams to interact with customers. Each team will have one senior manager, one manager, two support administrators, and two persons to responsible for finance and accounting. Scanning documents, transcribing tapes and insurance matters are the responsibility of the inside team. Company S utilizes computer for administration and record keeping also. It is not as complete as Company A is but it is more flexible than Company J. Company J has the best system of scanning documents but S has the best method of data availability for customers. Customers with their ID code can see, verify their data in the web site and can communicate to have problem solve and have private chat room. Company A have channel to complain through the web-site but unable to have data verification. Operating procedure. Technique in obtaining customers. Not only has the company J relied on the current customers recommendation. S is also aggressive in getting new customers through business development scheme in salesforce.com proposal to new buildings, Electronic Notice Board for customers, display customers location inside the buildings as indirect advertisement for customers. It has planned to create billboard at Sydney Airport. Management procedure As the company divides workload vertically, all responsibilities are clearly identify Administer of levy and customer records Customers of S have detail account similar to J but Executive Chairman of Company S is the authorize signer of cheque up to 2,000 Australian dollars. Amount in excess need approval of owners corporation first.
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References Books Bugden, Gary F. Strata title management practice in New South Wales. 6thed. New South Wales: CCH Australia Limited, 1993. Butt, Peter J., Land Law. 2nd ed. New South Wales: The law book company limited 1988, 1992. Ilkin, Alex. NSW strata and community schemes management and the law. 4thed. New South Wales: Thomson Legal & Regulatory Australia, 2007. Lang, Andrew G., Estate agency law and practice in NSW. 3rd ed. New South Wales: The law book company limited 1988, 1989. Lang, Andrew G., New South Wales Conveyancing law and practice. 4 Vols. New South Wales: CCH Conveyancing Law Editors, 1989. Williams, Sue., and Thomson, Jimmy., Apartment living. Adelaide: Griffin Press, 2004. Interviews Alastair, Smith J and John, Strata Associates Pty Ltd, Sydney NSW Le Page, David, David Le Page, Solicitor, Sydney NSW Mimilic John, Campbell Town Council, Campbell Town NSW Neate, Michael, Trehy Ingold Neate, Tuggerah NSW ODell, Garry, Andrew.Neil, Gosford NSW Schmidt, Rex J and Schmidt, Joy, All Strata Services Pty Ltd, Tuggerah NSW Vumbaca George and Davis, Lindsay, Jamesons Strata Mangement, Mosman NSW
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Crime Prevention Through Environmental Design (CPTED) Crime Prevention through Environmental Design (CPTED) is a theory that when development is appropriately designed it can reduce the likelihood of crimes being committed. By introducing such measures it is anticipated that this will assist in minimising the incidence of crime and contribute to perceptions of increased public safety. There are four principles that need to be used in the assessment of development applications to minimise the opportunity for crime: surveillance access control territorial reinforcement space management. Surveillance The attractiveness of crime targets can be reduced by providing opportunities for effective surveillance, both natural and technical. Good surveillance means that people can see what others are doing. People feel safe in public areas when they can easily see and interact with others. Would be offenders are often deterred from committing crime in areas with high levels of surveillance. From a design perspective, deterrence can be achieved by: clear sightlines between public and private places effective lighting of public places landscaping that makes places attractive, but does not provide offenders with a place to hide or entrap victims. Access Control Physical and symbolic barriers can be used to attract, channel or restrict the movement of people. They minimise opportunities for crime and increase the effort required to commit crime. By making it clear where people are permitted to go or not go, it becomes difficult for potential offenders to reach and victimise people and their property. Illegible boundary markers and confusing spatial definition make it easy for criminals to make excuses for being in restricted areas. However, care needs to be taken to ensure that the barriers are not tall or hostile as to create the effect of a compound. Effective access control can be achieved by creating: landscapes and physical locations that channel and group pedestrians into target areas public spaces which attract, rather than discourage people from gathering restricted access to internal areas or high-risk areas (like carparks or other rarely visited areas). This is often achieved through the use of physical barriers. Territorial Reinforcement
Community ownership of public space sends positive signals. People often feel comfortable in, and are more likely to visit, places which feel owned and cared for. Well-used places also reduce opportunities for crime and increase risk to criminals. If people feel that they have some ownership of public space, they are more likely to gather and to enjoy that space. Community ownership also increases the likelihood that people who witness crime will respond by quickly reporting it or by attempting to prevent it. Territorial reinforcement can be achieved through: design that encourages people to gather in public space and to feel some responsibility for its use and condition design with clear transitions and boundaries between public and private space clear design cues on who is to use space and what it is to be used for. Care is needed to ensure that territorial reinforcement is not achieved by making public spaces private spaces, through gates and enclosures. Space Management Popular public space is often attractive, well maintained and well used space. Linked to the principle of territorial reinforcement, space management ensures that space is appropriately utilised and well cared for. Space management strategies include activity coordination, site cleanliness, rapid repair of vandalism and graffiti, the replacement of burned out pedestrian and car park lighting and the removal or refurbishment of decayed physical elements. Contract Documents Most small businesses (whether you are a sole trader, partnership or proprietary limited company) enter into various types of contract throughout their normal course of carrying on the business. In this summary we will confine our discussion to that of entering into and administering a contract to carry out domestic and/or commercial building work. This summary clarifies various building contracts used within the building and construction industry, their terms and conditions, and the statutory bodies and Acts that as a building contractor you are likely to encounter in your day-to-day business dealings. We will discuss the provisions of specific legislations, for example, Domestic Building Contracts Act 2000 and the Queensland Building Services Authority Act and understand their relevance to and influence on the contents of a domestic and/or commercial building contract. http://www.masterbuilders.asn.au/overview_1_1_1_1_1_1_1_2.cfm
INSTRUCTIONS Tenderer Insert the full name of the tenderer. Include trading name if applicable.
(1) I/We ........................................................................................................................................................................................................ of (address) ................................................................................................................................................................................ ................................................................................................................................................................................ PQC Registration No .................................................................. Q.B.S.A. License No .......................................................................... ACN No ...................................................................................... ABN No .............................................................................................. Telephone: (.) .......................................................................... Facsimile: (.) ...................................................................................
hereby tender to execute and complete all work and perform all of the obligations in accordance with the Tender Documents:
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........................................................................................................ ............................................................................................................................................................... ................................................................................................................................ (inclusive of GST)
(3) The Lump Sum Tender Price includes allowance for the provision of addenda
Addenda If no addenda have been allowed for indicate in the box provided.
designated
inclusive or;
........................................................................................................................................................................................................................
7.9.6
Execution Where the Tenderer is a sole trader, individuals in a partnership or persons trading under a business name, then (i) must be completed. Witness to sign and print name. Where the Tenderer is a company, including companies tendering under a business name, then (ii) must be completed. Company to sign in accordance with its Constitution. Where signature is that of an agent, written authority from tenderer is to be included with the Tender.
Signed by .................................................................................................... ) Name of person ) on the ................................... day of ................................................... 200 ........... ) ) In the presence of ........................................................................................................ ) Name of Witness ) OR (5) (i) (ii) Signed by .......................................................................................................... ) Name of Company ) ) ...................................................................................................................................... ) in accordance with its Constitution ) ) on the ................................... day of ................................................... 200 ........... ) )
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Signature of Person
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Signature of Witness
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Signature of Director
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Name of Director
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Signature of Director/Secretary
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Name of Director/Secretary
7.9.6
Tender Form
Schedule of Agreed Damages for Delay by the Principal
The Tenderers attention is drawn to clause 36 of the Conditions of Contract. This provides for the Contractor to be paid agreed damages in respect of delays caused by a breach of the provisions of the contract by the Principal or any other act or omission by the Principal, the Superintendent or any of the Principals employees, consultants, other contractors or agents, where the conditions precedent set out in paragraphs (a) (c) of clause 36.1 have been satisfied. The agreed damages shall be calculated by reference to a daily rate. The Tenderer shall price this schedule and the total of the provisional number of delay days stated multiplied by the tendered rate per day shall be a provisional delay allowance. The Tendered rate per day in this schedule shall be the daily rate exclusive of GST. Notwithstanding, the Tenderer acknowledges that the Tender Sum at Item 2 of the Tender Form includes both the provisional delay allowance plus the GST component in relation to the provisional delay allowance. The provisional delay allowance may be taken into account in the assessment of tenders. Description of Portion of Contract to which rate applies Whole of Contract Provisional no. of Delay Days Working Days x Tendered Rate/Day (exclusive of GST) $ .............. /Day = Provisional Delay Allowance (exclusive of GST) $ .................................
The inclusion of provisional delays in the Contract shall not be taken as an anticipatory breach and shall not prevent the Principal from exercising its rights under the contract or at law. Where the Tenderer fails to submit a tendered rate per day in the Schedule for any reason whatsoever, the rate per day shall be calculated by reference to the formula given at clause 36.1 of the Conditions of Contract. The rate so calculated shall be multiplied by the number of provisional delay days stated herein and the resulting sum will be deemed included in the tendered sum as the provisional delay allowance. This provisional delay allowance may be taken into account in the assessment of tenders.
Where the tenderer fails to submit an amount against a quantity, for any reason whatsoever, the Tenderer shall be deemed to have included in the tendered sum an allowance for the Provisional Quantity(ies) of the item(s) as stated in this schedule. Any adjustment to the Provisional Quantity(ies) shall be valued pursuant to clause 40.5 of the Conditions of Contract.
Where the tenderer fails to submit a rate against an item, for any reason whatsoever, any adjustment shall be valued pursuant to clause 40.5 of the Conditions of Contract.
7.9.6
7.9.6