What are my obligations?

Since July of 2009, all Australian strata schemes are required by law to have a 10-year sinking fund plan in place. In Queensland, this is provided for under Section 146 (1) of the Body Corporate and Community Management (Standard Module) Regulation 2008, which states that ‘The body corporate must establish and keep an administrative fund and a sinking fund.’

A sinking fund is designed to help owners’ corporations of strata schemes grow their financial reserves in order to cover future capital expenditure. By regularly putting aside money, a sinking fund ensures that property owners in a strata scheme don’t have to pay large, one-off levies whenever an expensive emergency cost arises.

Sinking fund forecasts need to be carefully considered in order for the financial burden of funding capital works projects to be shared equitably among all owners in a strata scheme. Having a financially stable scheme is vital for older buildings and for ensuring the value of lots in the property for owners who wish to grow their equity or eventually sell the asset.

Chapter 7 of the Body Corporate and Community Management (Standard Module) Regulation 2008 regulates financial management and under Part 5 prescribes the duties and parameters of Body Corporate responsibility for Administrative and Sinking Fund collection, investment and use.

SIE are also able to adhere to the obligations for long-term asset management for properties registered under the Building Units and Group Titles Act 1980 and complex layered schemes within Queensland.

Why do I need an Insurance Valuation?

An Insurance Replacement Valuation (IRV) ensures coverage for the building replacement if it is destroyed or damaged beyond repair. The insurance value must cover the amount it would cost to rebuild the entire building, or where damaged; replace elements. IRV also take into consideration expenses for removing debris and costs for professional contractors/services that may be needed to rebuild, replace or repair. This valuation is taken to insurers to be used for negotiation of premiums and coverage amounts.

The insurance required by a body corporate is determined by the specific regulation module the scheme is formed under; either standard format or building format plans.  Sections 176 to 190 of the Body Corporate and Community Management (Standard Module) Regulation 2008 outline the types and extent of insurance requirements for different assets. Section 181 outlines the duty to seek an independent valuation every 5 years and obligation of owners to contribute to the administration of these premiums.

There are many factors affecting the replacement costs of a strata scheme, these include:

  • Inflation

  • Availability of labour

  • Building costs

  • Quality of Finish

  • Shared Facilities

Poor estimation of these costs could result in schemes being under‐insured and subsequently, owners being unable to afford to replace their building. The small savings made by seeking lower premiums on an under‐insured scheme are heavily outweighed when it comes time to replace a building.

An Insurance Valuation, completed by a Solutions in Engineering Pty Ltd APIV valuer, is limited in its liability by a scheme approved under the Professional Standards Legislation.

What does duty of care mean for bodies corporate?

There are two principal considerations when considering duty of care in relation to strata;

  1. Under common law; a Body Corporate has a duty of care and must take reasonable action to ensure that anyone, including owners, service providers, tenants, visitors and even trespassers who come onto the common property, are not injured.This is a non-delegable duty that applies to all owners and managers of property. Strata properties are particularly vulnerable to being legally pursued in relation to breach of these duties in cases of personal injury due to the lack of control over people entering the common property and statutory requirements to have large insurance protections and indemnities over common property for injury. Keeping the property in good repair, well-serviced, regularly inspected and financially managed are the first steps to mitigating the risks of injury on the common property.
  2. Under the Work Health and Safety Act 2011, a Body Corporate must consider their duties in regard to the health and safety of any workers engaged on their common property.Duties under the WHSA are prescriptive, requiring a person conducting a business or undertaking, so far as is reasonably practicable, to ensure that the health and safety of other persons is not put at risk from work carried out as part of the conduct of the business or undertaking. Additionally, the Act requires that persons conducting a business or undertaking and persons in control of workplace premises identify and assess hazards and implement control measures to minimise or eliminate risks to the health and safety of workers. Control measures must be monitored for effectiveness on a regular basis.

What is asbestos?

Asbestos is a fibrous mineral that was commonly used in residential and commercial constructions as it was cheap, abundant and desirable as a building material. For a long time the danger of asbestos use was not widely understood because asbestos related diseases take many years and even decades to develop after exposure. Asbestos use is now viewed as a serious health risk as inhalation of asbestos fibres can cause asbestosis, lung cancer and mesothelioma.

With the health risk of asbestos now understood, a ban on new uses of asbestos occurred in 2003. Despite this ban, occupiers of buildings are still at risk, as pre-2003 structures may contain asbestos or asbestos containing material (ACM). It is important that you take every step possible to identify and indicate the location of asbestos on a property. It is also important to do everything to you can to prevent the release of any airborne asbestos fibres on your property if asbestos or ACM is present.

Asbestos fibres are often found in:

  • Asbestos Cement Sheets
  • Tilux/ Duraflex Sheets (bathrooms and kitchens)
  • Asbestos cement corrugated roof sheeting (Often called “Super Six” sheeting)
  • Asbestos cement guttering, drains & pipes
  • Asbestos insulation – pipes and electrical wires

Do you need to identify where asbestos is?

The Work Health and Safety Act 2011 (Qld) is drafted in a way that it is sometimes not apparent that the legislation applies to Bodies Corporate, because it refers to action being required by businesses or workplaces. Some may argue that a Body Corporate is not a business exempting the Body Corporate from having to take action. This approach is unlikely to provide legal exemption from the obligations in the Work Health and Safety Act 2011 (Qld). Additionally, Bodies Corporate have a general duty of care to ensure the safety of all people on the property, so taking action to ensure that asbestos is properly managed is compulsory.

Where a Body Corporate does not meet these obligations there can be serious health risks for people that are exposed to asbestos or ACM, and major fines for each breach.

Regulation 420 of the Workplace Health and Safety Regulation 2011 (Qld) provides that a person conducting a business or undertaking (PCBU) must ensure that exposure to airborne asbestos is eliminated. If this is not reasonably practicable, the exposure must be minimised.

Regulation 422 provides that a PCBU must ensure that all asbestos or ACM is identified by a competent person. Regulation 422 also provides that material must be assumed as ACM where it cannot be identified but a competent person believes it is ACM or where it is inaccessible but is likely to contain ACM. Regulation 424 provides that the presence and location of asbestos or ACM must be clearly indicated by a label.

What is an Asbestos Register?

The Asbestos Register is a record of all asbestos, the location, type, condition and the date when it was identified. The register must be prepared and readily accessible on the premises (Regulation 425). The register must be reviewed every 5 years or earlier if the plan is reviewed, where further ACM is found or if ACM is removed, disturbed, sealed or enclosed.

What is an Asbestos Management Plan?

The Asbestos Management Plan is a plan that details the identification of ACM, how it is managed, procedures for incidents and workers carrying out asbestos work. The plan must be prepared and maintained (Regulation 429). The plan must be reviewed every 5 years or earlier if the register or a control measure is reviewed, where ACM is removed, disturbed, sealed or enclosed, where the plan is not adequate or where a review is required.

How can Asbestos or ACM be indicated by labels?

Asbestos or ACM must be indicated by warning signs and labels to warn people of the presence of ACM and to ensure the ACM is not unknowingly disturbed without the correct precautions being taken (How to manage and control asbestos in the workplace – Code of Practice 2011 (QLD), Australian Standard 1319 Safety Signs for the Occupational Environment).

  • Warning Signs: Any area that contains ACM should be signposted with warning signs. These signs should be placed at all of the main entrances to the areas where asbestos or ACM is present.
  • Labels: All identified or presumed ACM should be clearly labelled. The location of labels should be consistent with the location of the ACM in the Asbestos Register.

What are the compliance obligations?

All pool owners in Queensland have a duty to do as much as reasonably practicable to create a safe environment for occupiers and guests on their property. Over 2.7 Million homes in Australia have swimming pools and many of these are in Queensland.

Pool safety is a significant issue which requires all residential pools to be registered and meet a number of minimum thresholds for safety compliance. In Queensland, the pool safety standards are imposed under the umbrella of the Building Act 1975 (Qld), which regulates pool safety and imposes penalties for non‐compliance. The Queensland Development Code (QDC) MP 3.4 and AS 1926-2007 as modified by the QDC, as well as any other standard prescribed under a regulation also impose obligations on owners for the safety of persons using a regulated pool.

Common law duty of care around pools has a significant focus on children, supervision and effective barriers. A body corporate should be especially aware of their duties to users and occupiers of pools on common property and Engage an experienced and qualified pool safety inspector, ensure the certificate of compliance is updated and kept on the premises and that any other safety recommendations are implemented to the greatest extent possible.

Bodies Corporate have numerous obligations to meet fire safety. Here’s a four-point summary you should follow to help meet your minimum requirements.

  1. Fire Safety Installations

Per section 104D of the Fire and Emergency Services Act 1990 it is a requirement to maintain the prescribed Fire Safety Installations (FSIs) for the Body Corporate property.

Maintenance regimes for FSIs are covered by the QDC and Australian Standard 1851-2012 (Maintenance of Fire Protection Systems and Equipment).

Prescribed FSIs include:

  • Fire extinguishers, hydrants and fire hoses;
  • Fire sprinkler systems;
  • Smoke alarms and fire alarms;
  • Exit and other signs;
  • Automatic fire pressurisation systems;
  • Fire control rooms and panels;
  • Automatic smoke exhaust and ventilation systems;
  • Occupant warning systems (public address and alarm systems).
  1. Fire and Evacuation Diagrams and Plans

A Body Corporate must maintain a Fire and Evacuation Plan per section 104E of the Fire and Emergency Services Act 1990. Your Fire and Evacuation Plan must be updated at least once a year (section 28 of the Building Fire Safety Regulation 2008).

A Fire and Evacuation plan contains:

  • The evacuation diagrams displayed on walls in buildings;
  • Evacuation Coordination Procedures;
  • Instructions for operating fire-fighting equipment and alarms in the building;
  • Procedures for giving instructions and training to people working in the building;
  • Contact details for the Responsible Persons and other people responsible for evacuating the building, the Fire safety Advisor (if your building is a High
  • Occupancy Building), as well as for the people responsible for giving instructions and for developing and reviewing the Fire and Evacuation Plan.
  • The Plan must also take into account anybody in the building with special needs
  • Must be kept on site
  • Fire Evacuation diagram signs must be installed in prominent and conspicuous locations and must include or be:
  • A3 size in common areas, A4 in ‘accommodation units’
  • Correctly oriented to the direction of exits;
  • Icons for fire-fighting equipment
  • Evacuation route details and assembly area locations
  • Emergency contact details
  • Exits
  1. Evacuation Practice

Per section 44 of the Building Fire Safety Regulation 2008 an occupier must ensure that an evacuation of the building is carried out:

  • By an appropriate number of persons; and
  • In an appropriate way; and
  • At intervals of not more than one year.

Not everyone on the property need to be at the practice, but reasonable efforts must be made to organise a practice evacuation when most of the residents are present.

The more people who know how to evacuate, the better the safety of everyone on the property and the better it can be shown that the body corporate did everything that it could, within reason, to ensure fire safety on the premises.

  1. Occupiers’ Statement

According to regulation 55a of the Building Fire Safety Regulations 2008 an occupier of a building must complete an annual occupier’s statement in accordance QDC part MP6.1 and/or AS 1851. The statement declares that all FSIs are properly installed and maintained by suitably qualified people.

The occupier must keep a copy of each occupier statement with the record of maintenance for 2 years after the statement is prepared. Furthermore, the occupier must, within 10 business days after the occupier is required to prepare an occupier statement, give the commissioner a copy of the statement.

The standard form of the occupier’s statement can be found in Schedule 2 of the Queensland Development Code MP 6.1.