Beware extra Strata fees due to Termite damage
Termites can be a horribly expensive pest at the best of times but there are circumstances where they can be financially crippling. Following is an account of the fallout from a body corporate failing to have a proper termite management plan which certainly caused Extra Strata fees due to Termite Damage.
A unit complex was built in a Sydney suburb in the early 2000’s, it was a typical type of complex built with car parking underneath the 4 double storey “townhouse style units and the four two bedroom units. The building was constructed of blockwork in the parking area up to the ground level and then brick veneer from there up. It had a timber framed truss roof.
The dwellings were sold as strata titled with each of the individual properties being purchased by investors or owner occupiers. Each of the properties contributed to the upkeep of the building through the “strata levies”.
During the first three years of occupation some flooding occurred of the basement carpark and the levies had to be increased to cover the costs of repairs and rectification until the funds could be reclaimed from the builders. After a series of legal proceedings and negotiations with the builder which appeared promising the builder finally went into administration so recovery of the funds was not possible.
The body corporate was now in a poor financial state even with the special levies that had been collected as other issues had also arisen.
One of the tenants of unit 1 a townhouse style unit, notified their Real Estate Agent that there was some damage appearing to skirting boards in their lounge room. The Real Estate Agent responded by sending a Pest Control Company to investigate. The pest control Company reported back that there was no activity present and recommended that arrangements be made to replace affected skirtings. This was carried out some 6 months later.
No recommendations for treatment or further termite management measures were recommended.
The tenants of unit 1 again reported damage to skirtings in February. The Real Estate sent a different Pest Control Company to investigate. The Pest Control Company provided a quote for $6500 to treat termites in the affected unit. The body corporate held a meeting to discuss the costs and it was decided to take management of the issue from the Real Estate to the Strata agent. The strata agent sent a different Pest Control Company to survey the situation and prepare a quotation. This quotation came back at $63,000 to carry out inspection and treatment of the entire complex. The body corporate once again met and decided to get further quotes and opinions.
Many Pest Control Companies visited with some providing quotations which ranged between $4,000 and $92,000. This is where I became involved.
October, my proposal ($8500 + cost of access by a builder) that we carry out investigative works including gaining access to areas that were obviously inaccessible and inspecting the entire premises before attempting to carry out treatment was accepted. At that time a proposal by a building company to investigate the damage to unit 1 and repair up to a maximum of $50,000 was accepted and works began.
Inspection and works to gain access were undertaken in October and November with the findings opening several cans of worms. During the building process formwork timbers had been left in situ in many of the voids that were accessed, drainage was poor in these areas exacerbating the drainage issues above and creating mould issues in many units and of course termites were using these areas to access the units above. Unit 2 was found to have significant damage and unit 8 was affected to a milder extent.
The inspection allowed us to formulate a treatment plan in concert with builders improving drainage and removing formwork, a fan ventilation system was also installed. The quotation for treatment ($18,500) was approved mid-December and work immediately started.
Builders assessed damage to units 2 and 8.
Builders work to unit 1 ceased as funds were exhausted.
Baiting of termites continued with colony elimination of several nests occurring in April. A quote for the installation of a termite monitoring system around the entire property and carrying out regular station inspection and full inspections was accepted ($23,000) and the system was installed.
May, builders’ quotation for $365,000 was received and body corporate requested quotes from further builders.
August, quotes had been received and the original quote ($365,000) was approved.
November, building works started.
Building works completed mid-year
Termite monitoring continued with two incursions of termites detected and colonies eliminated. Termite monitoring contract renewed for 12 months in June ($3950)
At this point costs that I know of (not including builders costs to gain access during the initial inspections or costs of ventilation) $445,950.
The Body corporate had no choice but to raise the money to pay for the bill through several rounds of “special Levies” which were shared equally by the individual owners.
At the time the first round of special levies were due I was aware of a young lady who had scraped to save to buy one of the smaller units only six months before, but the bank would not lend her further funds and she was forced to sell, the sale was difficult as buyers were hesitant due to the special levies that had occurred. She eventually sold and still owed significant funds to the bank.
At the same time an investor was forced to sell at a significant loss and a couple who had retired to the complex also sold fearing further levies.
The termite monitoring contract was up for renewal again and the body corporate (by now different people) decided to let the monitoring lapse. I was not involved for the next two years.
March, I received a call asking me to review the termite monitoring contract and carry out inspection. On inspection termite damage was located in unit 2 and unit 8. A quotation for the treatment of these termites was provided but it is understood that the body corporate decided to use a company that provided a “cheaper” solution.
Many years of heartache, financial pain and constant works of various sorts could have been avoided by initially having a termite management plan in place. The management of termites is simply part of the ongoing maintenance of a building and like painting for example needs to be regularly carried out or significant costs will be incurred.