After a three-year interval, marked by numerous deliberative processes, the government of New South Wales has unveiled details and preliminary legislative proposals pertaining to forthcoming strata law reforms.
These reforms, derived from the November 2021 Report on the statutory review of the Strata Schemes Development Act 2015 and Strata Schemes Management Act 2015, comprise 31 out of the recommended 139, with some alterations being applicable to community title laws rather than strata title laws. Having received approval from both the Legislative Assembly and the Legislative Council, the reforms await Ministerial approval and publication to achieve legal recognition.
The Stage 1 reforms are subject to potential modifications as they have not yet been officialised by the Ministerial.
With the focus on the relevant reforms for Strata Title Laws, we’ve provided brief points below:
Meetings:
- Extension of existing limits on proxy votes to company nominees and powers of attorneys.
- 14 days’ notice to be required for AGM’s however, not for General Meetings.
The public has questioned the concept of limiting how many proxy-votes a person can hold however, others welcome the restriction to reduce the perception of conflicted individuals persuading owners to give them their voting rights.
Originally an AGM notice only requires 7 days; this change aligns with the ACT legislation of 14 days. We don’t anticipate much negativity on this change; considering the importance of an AGM and the already lack of attendance, more notice may lead to increased attendance.
Money and Expenditure Controls:
- Requirement for at least 2 quotations for spending over $30,000 for all strata buildings.
- Strata buildings empowered to decide not to reimburse money transferred between funds.
- Levies for emergency works payable within 14 days, reduced from 30 days.
It is not uncommon for complexes to transfer monies from administrative fund to a sinking fund. Most often, this occurs when there is surplus in the admin. It is sensible to keep monies where it was budgeted and intended to be either spent however, in the event of surplus or ineffective financial management, where the transfer may be welcomed will become restricted.
The requirement for two quotations for over $30,000 initially feels sensible however, this would also extend to Insurance Premiums which then becomes questionable if a second quote cannot be sourced due to defects, open claims, or undesired risk profile.
Strata Committees:
- Committees to be elected at any General Meeting, not solely Annual General Meetings (AGM).
- AGM agendas to include announcements or requests for nominations of the Strata Committee.
- Committee members with conflicts of interest excluded from discussions and voting.
- Removal of committee members by majority vote, reduced from a three-quarter majority.
- A 12-month exclusion for reappointment of removed committee members.
While some of these adjustments address procedural concerns; many are assumed to be in place but not specific enough in the current legislations, and others pose potential issues. There is still ambiguity in identifying conflicts, and with the removal of committee members may decrease in committee stability. Alternatively, there are opinions that removing committee members could enhance stability, given that the aim is to eliminate members who are not effectively contributing.
Strata Managers:
- Strata managers to be required to provide 3 to 6 months’ notice for expiring agreements.
- New South Wales Civil and Administrative Tribunal (NACT) empowered to appoint an administrator strata manager at any time.
Although the notice requirement is seen as a procedural matter, it is anticipated that the public will welcome this change as it allows for more convenient discussions regarding pricing, negotiations, terms and conditions, and potential changes in strata managers.
For those who are not aware, NCAT provides specialist turbinal services to help the public resolve an issue or dispute fairly and according to the law. It is a common practice that those attending NCAT do not have legal representation and are simply there to present their issues with the intention to mediate with the convicted party. An NCAT member is present and will assist in referring to interpretations of the law or other precedents set in attempt to support meditation and reach a conclusion.
Consequently, there is a concern that a dispute between two parties leading to the appointment of an administrator could be detrimental to other owners. The reason is that appointing an administrator strata manager has the potential to affect various existing contracts and arrangements.
Pets:
- Prohibition of pet bonds or insurance requirements.
- By-laws cannot impose unreasonable burdens on keeping assistance animals.
Aligning with recent pro-pet stances, these changes may be deemed acceptable however, some feel an added level of protection of a bond or insurance would be sensible.
Tenants:
- Tenants required to be provided with the by-laws or Strata Management Statements within 14 days of their lease commencing.
Tenants represent half of the residents in strata buildings in Australia, it only makes sense to apply requirements for them to receive important documents for the building they live in. It is a practice we try to implement however, have always been at the restriction of not receiving updated leases and tenant details to assist in providing these documents.
Strata Records:
- Developers required to provide handover records 14 days before the first AGM, instead of 2 days.
- Mandate for electronic storage of strata records.
- Consolidation of by-laws without requiring changes.
Long-overdue modernisation of record-keeping practices.
