Why are we talking about 10 Year Plans?

Following the amendments to the Act, it is now a mandatory requirement for all designated strata companies. Some strata companies had already been commissioning these on a voluntary basis

What is included in a report, and how often do we do it?

Strata schemes fit into one of 4 categories – 3(2)(a), 3(2)(b), 3AB, survey strata. 

The common property, and therefore the extent of the reporting, is going to differ significantly depending on what category the complex falls into.  

The report will identify and report on condition of all common property and personal property items, identify any items requiring repair or replacement, date of installation or when last serviced, timeline for when repairs or replacement required as well as approximate cost, funding requirements etc.

The report is often split into 2 sections:

1. The 1st section includes consultant/inspectors report on all items identified, together with corresponding photographic evidence and recommendations for rectification. This report will also usually have a traffic light system or way of prioritizing when the items identified need to be attended to.  
2. The 2nd section of the report is an expenditure forecast that can be used for budgeting purposes.  The Strata Titles Act requires that this report is completed every 5 years and must cover the 10 year period that follows. The first report needs to be tabled at any AGM that takes place after 1 May 2021.

What is the purpose of the report?

Its purpose is to ensure that owners are aware of the potential liabilities and maintenance requirements associated with their property.  It also provides them with a guide not just to what work needs to be considered but also a timeline for when funds will need to be available to cover these costs.  This will assist the council of the strata company, and all owners, in ensuring that available funds are being spent where they are most urgently required and provide the basis for a realistic reserve levy to be adopted that will ensure that the future maintenance needs of the complex can be met.

Isn't this just like a Defect Report? Can't it simply be combined?

In principle, they are two separate documents with two different purposes. However, there are companies which will undertake to prepare both documents at the same time which may result in cost savings to the strata company. 

If your building is still within it's Builder Warranty, then it is important to separate potential Building Defects - that may need to be rectified by your builder - and items of maintenance that the Strata Company will be liable for, and should plan for.

How to go about getting a Report Commissioned?

Some Strata Companies may already have an approved expenditure item in their budget under Professional Fees. Alternatively, an amount will need to be included in your budget at next general meeting. Another option is to propose a motion to increase your budget for voting on outside of a general meeting (this is provided you have sufficient funds available to pay for this).  

The report does not have to be undertaken by a 3rd party qualified builder or consultant.  There may be an Owner or Council member who has the necessary experience and is willing to take on the responsibility and potential liability of undertaking this work themselves.  However, we would recommend against this in most instances.  The Strata Manager has a pool of contractors that we have either worked with previously or have been recommended to us by other Council members and would be can obtain quotes and example copies of their reports.  

The Strata Manager/Council would need to ensure that the scope of works and items to be reported on are clearly communicated to the consultant before they prepare the quote (i.e. Owner v Strata Responsibility).  Would strongly recommend that consultant meet/liaise directly with one of the Council members so that they can be given an overview of the complex and any issues that the council may already be aware of.  

Some reports may meet the requirements of the Act more fully than others and this will be reflected in their costs. The Strata Company may wish to address these missing elements themselves.  The Owners may also want to consider whether they want a completely independent consultant to produce the report or whether they would prefer a contractor who is able to work with the Council on an ongoing basis as project manager for any works that have been identified.

How much do they cost?

This will be loosely based on the number of units and/or amount of common property but will still need to take into account age, style, size and current condition of the property. 

As before, not all reports are equal, and the cost of the report will reflect this.  It may also be that the Owners require additional reporting – for example on any structural, asbestos, plumbing or electrical issues

Initial Inspection

The inspection would not usually take more than a day, depending on the size of the complex and whether access is required to any of the units.  

A suitable date would be agreed with the Council and it is usually recommended/required that a Council member meet the consultant on site.  If access is required to units or to courtyards then a notice would be sent out to all Owners, Property Managers and Residents, in advance, advising that access needs to be provided on a given day or that gates need to be left open.  

It is also an ideal opportunity to ask if there are any concerns within their unit that need to be brought to the contractors attention – i.e. roof or water leaks, significant cracking, sagging ceilings etc (this is dependent on the type of strata scheme and the classification of common property).

What to do once we Receive the Report?

The report will usually need to be paid for before it is released.  It will then be sent electronically to the Council of the Strata Company. 

The Council will need to review the report and meet to discuss.  It may have been agreed that the Consultant will meet with the Council to talk them through the report.  

The Consultant will have provided a list of the items they recommend should be prioritized – these are usually areas relating to health and safety and where non-rectification may result in damage to the common property.  

The Council and Owners are under no obligation to complete any rectification work in the order detailed in the report but should give the consultant’s recommendations due consideration.

What do the Council do next?

At the last AGM the Owners may have approved a ‘budgeted cost’ for any items that have been identified by the 10 Year Plan.  

If they have, then the Council will need to agree which items within the report that they wish to address and are authorised to spend up to the budgeted amount without the need for another meeting (see additional requirements re improvements to common property). The report will include estimated costs for each item that requires attention and extracts of the report, including any recommendations on the remedial work required, can then be forwarded to the nominated contractors to enable them to quote on the works. 

If no expenditure has been pre-approved in anticipation of this report, then the Council will be unable to get started without further approvals being sought from Owners.  The Council can still obtain quotes, but these are best obtained immediately prior to a general meeting or a vote so that they are still valid. 

Can the Council amend the Report before presenting it to Owners?

Of course you can. The report presented to the Strata Company is just that - a report.  The Council of the Strata Company need to decide what will be presented to the Owners at the AGM as the proposed 10 Year Plan.

If you disagree, want to get a second opinion or wish to add additional works, then that is up to the Council.  

The proposed 10 Year Plan will then be sent with the Notice & Agenda (or made available to owners electronically perhaps) to all owners for their consideration and comment at the General Meeting.

Who is responsible for deciding what works gets completed?

The Council are the representatives of the Strata Company and are authorised to spend within the budget that is agreed at the preceding AGM.  Of course, specific instructions can be given to them by the Owners at that AGM or subsequent General Meetings.

If no expenditure has been pre-approved in anticipation of this report then the Council will be unable to action any works but can still make a recommendation at the next general meeting on the works to be prioritized and/or an amount to be allocated in the budget for the next year.

This may be proposed at the general meeting as a specific $ amount, and the Council are then authorised to spend up to this amount provided the expenditure is in accordance with the report, or there may be specific items/areas that the Council are recommending for attention over the coming year.  

Either of these options would be included in the budget and proposed, and voted on by all Owners, at the next general meeting.  

Who decides which contractors will be used?

The obtaining of quotes and supervision of works will operate no differently than when any non-routine maintenance is undertaken at the complex.  

In this case you have the benefit of having a consultant's report that establishes what the issues are and provides recommendations and options regarding the remedial work to be undertaken.  The Council would have 2 options with how to proceed:

1. The specifics within the report is forwarded to the selected contractors for quoting.  We would ask them to quote in a format that can be referenced back to the report.  When the quotes are received, they will be forwarded to the Council who will review the quotes in detail and decide which contractor they wish to proceed with.  A council member will be expected to be the contact for the contractors and the Council will be required to inspect the completed works and approve the invoice for payment.
2. The specifics within the report is forwarded to a Project Manager who will draft a detailed scope of works and send out tender/quote requests to selected contractors.  When the quotes are received the Project Manager will review the quotes for completeness and consistency and forward to the Council with their recommendations.  They will also be the contact and oversee the works during their completion.  The Project Manager will inspect the completed works and, if satisfied, will send a certificate of completion to the Council so that they can approve the invoice for payment.  The engagement of a Project Manager can be hugely beneficial if there are significant works or costs involved but of course this service comes at a cost.

How will the works be Funded?

This will be determined by the current condition of your property, how much work needs to be completed, and the current financial position of your Strata Company.  

If you have a sufficient Reserve Fund, then you will be in the fortunate position of having already considered the future costs of the complex and contributed accordingly.  If sufficient Reserve funds are not available, then Owners may need to consider alternative options.  

This may include staged works, special levies, payment plans with contractors, or even a Strata loan.

Who is responsible for the managing the 10 Year Plan?

The responsibility rests with the Strata Company and its representatives, i.e. the Council of the Strata Company.  

The Strata Manager is not a Project Manager and has no authority to make decisions on behalf of the Council and the Owners.  It is also outside the scope of the profession of Strata Management. 

It is recommended that the Council provide a report for tabling at the AGM on the progress undertaken during the year, as well as recommendations for the coming years.

This should be reported in a cumulative format so that any subsequent Council appointed is able to pick up with the items that remain outstanding.