As everyone is well aware, premium funding for building insurance is no longer available from 1 July 2010. Changes to national credit laws have influenced insurers’ decisions to withdraw their premium funding products.
The obvious outcome of this change is that insurance premiums will have to be paid up front. What does this mean for strata schemes that do not have the funds to pay the insurance? Moreover, what does this mean for strata schemes that refuse to strike a special levy to raise the money?
Section 162 of the Strata Schemes Management Act 1996 empowers the Consumer, Trader and Tenancy Tribunal (“CTTT”) to appoint a manager to a strata scheme. Two general circumstances for this appointment are:
• The strata scheme is insolvent; or
• Something’s occurring that is adversely affecting the lot owners.
In 2004, NSW Strata Managers were appointed to manage Strata Plan 56443. The CTTT determined that because insurance was not able to be obtained, lot owners were going to be adversely affected.
Obviously, to take this action, some lot owners will have to initiate proceedings in the CTTT. We have been advised of one already in such a predicament.
This is just one of the effects that flow from this legislative change. Government probably did not intend for this outcome to occur, however these amendments have negatively impacted the strata schemes industry.
Until Next Time Bailey Compton ACP/Leverage
