The 19 April Stratagize conference marked a Cayman first, bringing together representatives from the legal, real estate and government sectors to for a full day of insight into all things strata at the Marriott Beachfront.
The rapt audience was good indication of strong interest in rights, conflicts, insurance, board responsibilities and legal issues that beset the owners, managers, renters and other stakeholders of the 4,000-plus strata units in Cayman.
It was organized by Appleby and co-sponsors Butterfield Bank, BCQS Property Management and Island Heritage Insurance.
Right now, the law of strata title is comprised of the Strata Law (2006 revision) and its associated Strata Regulations and some Cayman case law. At the same time, a strata lot is dealt with under the Registered Land Law (2004 revision).
Recognition of this legal hodgepodge in conjunction with the rising numbers of stratas in Cayman has incited the Government to take action.
‘It’s clear to me that we need to take a holistic approach to the law’s revision. With over 500 stratas operating in Cayman and more to come in the future, it is a perfect time to address the need for robust legislation that suits our unique situation,’ said Leader of Government Business Kurt Tibbetts in his opening address.
He also announced the formation of a new Strata Titles Registration Law review committee.
The review committee will seek input from a variety of sectors that have vested interest in strata reform including government, the legal profession, insurance and banking industries, strata corporations, developers and property managers.
‘Their aim will be not only to improve the law but to modernize it so it is in step with what obtains in the Cayman Islands, now and in the future,’ said Mr. Tibbetts.
For stakeholders including owners and real estate specialists, the conference provided a rare opportunity to learn about Cayman’s strata law and to ask questions about specific issues.
And for the array of panellists, it was an occasion to take a closer look at the law and highlight some possible changes that might be made.
Adopting a storyline approach, conference panel members steered attendees through the strata process by taking a retrospective look at the strata system in Cayman.
Appleby property associate Adam Geldard provided a historical overview of the law, while colleague and litigation associate Ward Sykes took the audience through the law’s implications for strata members in their day-to day considerations and obligations.
‘A well run strata requires consistent and organised management,’ said Mr. Sykes.
‘An executive committee must be well-versed with the by-laws and strata plan and the obligations set out in the Strata Law. Most importantly, a committee must exercise its authority in a fair and even-handed manner ensuring that all owners are treated consistently in addressing the obligations and duties of both the corporation and owners.’
Chris Johnson of Appleby and Tim Hepburn of BCQS then got to the nitty gritty of property management issues and the finer points of rental pools.
Mr. Johnson reflected on the strata’s duty to collecting money from its members.
‘Sadly, not all proprietors pay their share of the strata obligations and leave the burden to fall on their neighbours,’ he said.
He said the issue is especially relevant when assessments for insurance raise a bone of contention between strata members, but neither the Strata Law nor the Regulations allow for negotiated payment.
‘In that case, the strata has a duty to chase those delinquent proprietors and ensure that they do their fair share and to ensure that the strata is able to continue to provide services, repairs and to meet the obligations to the proprietors.’
Whether the issue is payment or compliance, he stressed that good bylaws are the most critical practical tool in relation to enforcement.
Mr. Hepburn took attendees one step further by offering a strata manager’s view of the day-to-day considerations strata members and committee members should be aware of.
Guest speaker Michael Allen then provided a detailed examination of the evolution of New South Wales’ strata legislation over the last 27 years, on which Cayman’s legislation is based.
‘Hopefully, by analyzing our many amendments and false starts, Cayman may be able to leapfrog us in designing new legislation that fits the needs of today by keeping what’s good and making some wise changes,’ he said.
The afternoon also featured a look at lending from the banker’s perspective by Adrian Watkin of Butterfield Bank.
‘Specific issues have come more sharply into focus for all after Hurricane Ivan and there is widespread acceptance that there are improvements that could be made and now is the right time to look at making them,’ he said.
Stressing that because a bank’s interest in a property is only noted as to the proprietor’s registered title, banks are unable to have any interest noted against the insurance policy covering the physical buildings in the strata except in the event that the bank has a security interest in the whole of the strata – meaning banks can neither monitor nor regulate repair contracts.
Further, because strata reserves are held by the strata corporation, banks only have charge over owners’ registered title in their lots. Mr. Watkin remarked that by-law amendments remove the need to make the books of account available for inspection on application of any proprietor or charge.
‘This makes the opportunity for prudent loan monitoring more difficult and the risk of loss or omission in bank paperwork higher such as to be a potential inhibitor to lending against strata units,’ he said.
He also mentioned the need to recognize the future benefit a new owner will gain from money placed in general reserve by a previous owner, and the need for equity assurances in a strata’s decision-making procedures.
Following this came an engaging presentation by Nigel Twohey of Island Heritage Insurance, who hammered home the need for strata owners to demand a full replacement, and not indemnity, policy that is actually needed under the law.
He also took attendees through a discussion of what constitutes common property covered under the strata’s insurance and what is generally considered to be private property.
‘This differentiation was the cause of many disputes and confused discussions after (2004 Hurricane) Ivan. Strata committees should be clear as to what they insure and what the owners insure,’ he said.
Jeremy Superfine also took attendees through the required steps to ensure strata members get back in their homes quicker after a catastrophic event like a hurricane.
‘Basically, the four key steps are making sure you have funds in place, selecting a suitable contractor, progressing with the works and finishing the job.’
He stressed the vital role a strata chair plays in ensuring clear lines of communication and responsibility with a reinstatement project manager.
‘While open communication may be an obvious statement when dealing with a business or corporation, this cannot be expected with a voluntary strata executive,’ he said.
It was also stressed that the strata executive committee should not try to manage the reinstatement on their own; rather, they should hire a general contractor or professional construction management company.
Norman Klein of Appleby gave attendees a look at strata development and conveyancing.
He underscored the importance of some frequently overlooked and vital actions that must be taken, including dating the transfer of land, informing the strata of the transfer of ownership, and changing the locks.
With a vast trove of newfound knowledge under their belts, participants rounded off the day with a lively reception.
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