New Strata Legislation

After five years of consultation with the community and stake holders the new strata laws are to take effect from 30 November 2016. Fair Trading advises that the Acts commencing on 30 November will be the Strata Schemes (Management) Act 2015 and Strata Schemes (Development) Act 2015. While the final regulations are yet to be released Strata Sense is already working to ensure your strata scheme will be ready to ease into the new strata laws.

Amendments include (and are certainly not limited to) the introduction of online meetings, paper voting for general meetings, limitations of how many proxies can be held by any one person, new classifications and processes for lot renovations and an obligation for owners corporations to obtain three quotations when enacting a new insurance policy. A new dispute process will be implemented, making it simpler for both individual owners and the Owners Corporation to resolve issues. Strata managing agents have increased obligations of disclosure both in relation to the work they undertake and any commissions received.

You’ll note almost immediately a couple of language changers– the executive committee is to be called the strata committee, the sinking fund will be renamed the capital works funds. There are provisions for a tenant representative to be appointed to the strata committee as a non-voting member to provide input and views on behalf of the tenants. Other changers allow for an increase in penalties for by-law breaches and the ability for the owners corporations to retain the funds which become payable by way of a fine from the Tribunal for a by-law breach.

Perhaps the most controversial of the amendments is the inclusion of new provisions to terminate a strata scheme, including the vote requirements being adjusted down from a unanimous resolution to a special resolution (being 75% in favour). The Acts set out a detailed process for the termination of a strata scheme, specifically requiring the termination to be fair and equitable with final ‘sign off’ required by the Land and Environment Court. The common media story of ‘what about the little old lady on the ground floor’ is more myth than reality, given the extensive requirements which need to be satisfied for a strata scheme to be terminated.

One part of the legislation that will not take effect until 1 July 2017 is the building defects bond scheme. This section of the new Act will require developers to pay a bond of 2% of construction cost in accordance with the contract to be applied to repair building defects. In addition developers will be required to pay for a building inspection report to be undertaken and served within 12 months of construction work being completed. The owners corporation will have the ability to choose the expert who is appointed as the building inspector.

The government is waiting for an Australian Standard for building inspections to be applied and implemented, which is due to occur in March 2017. A necessity to ensure both adequate qualifications of appointed building inspectors and a quality standard in the reports produced.

While the practicalities of all the amendments will become more apparent with time, the new legislation is a much needed update, recognising the complexities and differences in strata schemes across New South Wales. Strata Sense has been providing brief presentations at annual general meetings on the changers while also preparing behind the scenes. We’re very happy to answer any questions you may have on how these new laws will impact you and your scheme and welcome your phone calls and emails.

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