nine.com.au.<\/a><\/p>\n\u201cThe date is burnt into my brain because I read this on my way to work.<\/p>\n
\u201cBy the time I got there, I was in shock and having a panic attack [after] seeing for how long and how much I was going to have to pay.\u201d<\/p>\n
Iannelli\u2019s apartment complex in North Strathfield has more than 120 units and required expensive waterproofing, a repair that is generally needed every 25 years.<\/p>\n
She isn\u2019t part of the strata committee but knew a bill for the work would soon come her way.<\/p>\n
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The construction work at Iannelli\u2019s complex has already begun and is expected to last until the end of the year.\u00a0Stefanie Iannelli<\/p>\n
The damage is far greater than she imagined. <\/p>\n
The massive project to waterproof the entire complex, which includes multiple three-story buildings, has come at a cost of nearly $7.5 million.<\/p>\n
Everyone\u2019s share of the cost is slightly different, depending on the size of their unit. Iannelli said she needed to pay $52,500.<\/p>\n
\u201cI knew this was going to cost a lot, but I really had no idea,\u201d Iannelli said.<\/p>\n
\u201cIt would have been $52,500 \u2013 if I had the option to pay up front, which I didn\u2019t.<\/p>\n
\u201cWe got a four-year strata loan, which made it $64,000. <\/p>\n
\u201cSo, $12,000 of that accounts for the interest payments.\u201d<\/p>\n
The bill without interest comes to $6.2 million. With four years of interest accrued, owners will pay a total of $7,583,685.<\/p>\n
In NSW, a resolution approving a strata loan can be passed at a general meeting of the owners corporation and a majority vote is needed for it to be approved.<\/p>\n
It is not possible for some owners to opt out of the loan and pay up front.<\/p>\n
\u201cNot everyone has a mortgage they can redraw on. So, of course, everyone panicked,\u201d Iannelli said.<\/p>\n
\u201cEveryone voted the other way, and not everyone can afford it. I understand that.<\/p>\n
\u201cBut you don\u2019t get a choice, you are stuck with whatever the majority vote for, even if it\u2019s not in your best financial interest.\u201d<\/p>\n
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<\/p>\n
The total bill, with interest, comes to $7.5 million.\u00a0Nine<\/p>\n
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<\/p>\n
Some balconies have been boarded off and blocked while construction takes place.\u00a0Stefanie Iannelli<\/p>\n
Iannelli believes it is unfair that she and other owners who could pay up front are forced to fork out another $12,000 in accrued interest.<\/p>\n
The\u00a0Australian College of Strata Lawyers spokesperson Amanda Farmer said Iannelli had no choice but to accept this payment plan.<\/p>\n
\u201cMajority rules in that respect,\u201d Farmer explained.<\/p>\n
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<\/p>\n
Strata lawyer Amanda Farmer said the majority rules when it comes to strata loans.\u00a0Amanda Farmer<\/p>\n
\u201cIf just over 50 per cent of those present and voting at a meeting decide to enter into a strata loan of that type, then yes, one in, all in.\u201d<\/p>\n
Some loan companies offer what is called a \u201chybrid loan\u201d, which allows individual owners to choose how they pay, either as a lump sum or borrowing.<\/p>\n
But few lenders offer this type of loan.<\/p>\n
\u201cStrata managers don\u2019t like them because it\u2019s a fair bit of admin,\u201d Farmer added.<\/p>\n
\u201cThen because you\u2019ve got to issue your levy notices in a certain way, it\u2019s quite complex from the accounting perspective.\u201d<\/p>\n
Iannelli lives alone and said the repayments have become an untenable financial strain.<\/p>\n
The owners are paying off the loan in 16 quarterly instalments.<\/p>\n
\u201cThe amount of money I have to put aside every fortnight, every payday, is more than my mortgage,\u201d she explained.<\/p>\n
\u00a0\u201cThe regular strata cost is $2150 (a 76 per cent increase) at the same time as the four-year strata loan started which is $4028 a quarter, so I\u2019m paying $6179 a quarter.<\/p>\n
\u201cI have nothing left.\u201d<\/p>\n
The repairs have already begun and Iannelli expects they will be completed by the end of the year.<\/p>\n
It has been an inconvenience for owners and renters in the building.<\/p>\n
Some balconies have been boarded off and blocked while construction takes place.<\/p>\n
Iannelli said dozens of other owners who have been saddled with the bill are also struggling to pay it off.<\/p>\n
\u201cThere are families, retirees, single people… two of my close neighbours are in transition to retirement,\u201d she added.<\/p>\n
\u201cThis really sucks for them too.\u201d<\/p>\n
Iannelli does not blame her strata manager or the owners\u2019 corporation.<\/p>\n
But she believes someone is to blame.<\/p>\n
She bought the unit in 2007 and wonders if previous owners and members of the owners\u2019 corporation potentially delayed repairs or failed to build up a sinking fund.<\/p>\n
\u201cWhy didn\u2019t we have the funds? If things like the waterproofing do deteriorate after 25 years, why wasn\u2019t it in the budget?\u201d Iannelli added.<\/p>\n
\u201cAnd here does that leave owners like me?\u201d<\/p>\n
Iannelli claims she is needing to pay\u00a0for other people\u2019s mistakes.<\/p>\n
\u201cI am also unable to sell as no one wants to buy in this building and I\u2019d lose even more money,\u201d she added.<\/p>\n
\u201cAs the housing situation worsens in Sydney and more and more people are forced into strata living as we will never afford a house in the area we want to live, this will be more common.\u00a0\u201d<\/p>\n
STRATA LAW IN NSW
\nUnder the state\u2019s Section 100 of the Strata Schemes Management Act 2015, an owners\u2019 corporation in can borrow money with an ordinary majority vote.<\/p>\n
If there is a majority vote to take out a loan, every owner must pay their proportional share of the resulting levies.<\/p>\n
You ordinarily cannot simply \u201copt out\u201d of a scheme\u2019s collective financial structure.<\/p>\n
The loan contract sits with the owners\u2019 corporation as a collective entity, not as individual owner debt.<\/p>\n
The corporation pays back the loan by raising regular or \u201cspecial levies\u201d on owners.<\/p>\n
Owners\u2019 corporations must offer a payment plan before taking any debt recovery action and must give 30 days notice before any recovery action for unpaid fees or levies.
\nGovernment support for mounting strata debt<\/p>\n
The NSW government states that anyone dealing with strata debt can seek advice through the National Debt Hotline on 1800 007 007.<\/p>\n
Owners can also apply for free mediation with NSW Fair Trading to help resolve any payment plan disputes.<\/p>\n
In some rare cases, the NSW government can offer interest-free loans for urgent strata apartment works.<\/p>\n
The information provided on this website is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information on this website you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.<\/p>\n","protected":false},"excerpt":{"rendered":"The Strata Squeeze.\u00a0Nine Exclusive: Stefanie Iannelli was on her way to work when she glanced at an email…\n","protected":false},"author":2,"featured_media":840603,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[43,44,41,39,42,40],"class_list":["post-840602","post","type-post","status-publish","format-standard","has-post-thumbnail","category-headlines","tag-headlines","tag-news","tag-top-news","tag-top-stories","tag-topnews","tag-topstories"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/840602","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=840602"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/840602\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/840603"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=840602"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=840602"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=840602"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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