Insurances: We have posted articles about the state of Queensland floods, and the concerns raised by clients with regards to the price of insurance – but most hard hit being Northern and Central Queensland coast communities. Coming into February, and following “Ex” Cyclone Oswald – we fear the blow to Queensland body corporate owners will be a harsh one from yet another premium rise. If all goes well (and we are concerned that it will), the insurers will maintain premiums at 2012 levels, with only CPI increases. We all keenly remember the justifications offered by the insurers from the 2012 rate hike – in that Queensland bodies corporate were not charged enough to cover the risk of global change. Well, here we are in 2013, with yet another global weather event – and we ask – will the decide Queensland body corporate owners are still underpaying? We are hoping not, but expecting the worst.
Our best advice to bodies corporate for February 2013 – speak to your manager about the potential for insurance premium hikes. If you can “shop around”, consider it early. Also, consider whether there are property improvements you can make on the grounds to make them more resistant to damage resulting from storm damage. For example, if you suffer flooding, has the body corporate considered building retaining walls or upgrading the storm water drainage system. Preventative measures can assist in insurance premium reviews, by demonstrating a lower – or nil claim rate.
Levy Litigation: There appears to be stabilising of body corporate levy litigation referrals, meaning (at least in our understanding from the bodies corporate we represent) that owners are beginning to catch up with their levy arrears. Unfortunately, the most notable files are those which have lingered for one+ years as a result of owners which cannot be found, or insolvent owners for whom enforcement sales (if no mortgagee is secured against title) and/or mortgagee dealings offer the only option. We have been employing lateral solutions for recoveries in these instances.
Our dealings with mortgagees continues to be positive and beneficial to the bodies corporate where owners are either unwilling, or unable to service ongoing arrears. As sad as the circumstances may be at the stage a mortgagee is forced to intervene, the fact remains that the innocent “financial” owners should not be required to bear the burden of the few who are “non-financial.”
The advice to many of our bodies corporate remains the same – if you can reach a payment plan with the owner, and you have properly resolved penalty interest, then seriously consider agreeing to a plan. This is not to say that any payment plan should be considered. Definitely not. If we report to an owner has proposed a payment plan, we require the owner to acknowledge the liability to indemnify the body corporate for its legal fees and costs, as well as stipulate to remaining current with all future levies – whilst spreading the arrears over a reasonable term (we generally recommend a term greater than one year is unreasonable, unless extenuating circumstances present themselves).
Our second advice for February 2013 is to ensure your body corporate has properly documented resolutions supporting the maximum penalty interest available under the legislation, which is 2.5% per month (30% per annum). In the absence of a body corporate regulation, the body corporate is prevented from claiming interest other than that which is available under the Civil Proceedings Act, which is currently 10% per annum.
Submitted by Katrina Brown BA JD ATIA TEP SSA, Senior Property and Commercial Lawyer, Nautilus Law Group
