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Articles and legal news from the Atkinson Vinden Team.

Strata Law Reforms: How do the changes affect you?

Commercial Law, Property Law

Major changes to the management of strata schemes will, after lengthy consultation, commence on 30 November 2016. Strata lot owners, tenants, potential purchasers, building managers and developers alike need to prepare for these changes. There are more than 90 changes to the NSW Strata Management Act 2015 (the Act), however this article will focus on key changes, namely in relation to how an owners corporation (OC) is to be managed.

1.  Tenant Representatives

In a strata scheme where at least 50 percent of the lots are leased, the OC must convene a tenants meeting to allow eligible tenants to attend meetings of the OC. Tenants will not be able to vote, cannot put a motion on the agenda, and can be asked to leave when financial or levy contribution discussions arise.

2.  Recognition of the electronic age

Owners Corporations may now specifically elect (by way of ordinary resolution) to permit email or postal voting. It will also be possible to attend meetings via telephone or internet.

3.  Limitations on those involved in the strata scheme

Restricting the use of proxies was a goal of the reforms and the number of proxy votes of any one owner is now limited. Developers will generally be restricted from using a proxy if it was granted under the contract for sale of land or an ancillary contract, and a developer or anyone connected with the developer cannot be appointed as strata managing agent for the scheme until 10 years after the registration of the strata plan for the scheme. A term of appointment of a strata managing agent will now be limited to 3 years with any reappointment also limited to a maximum term of 3 years.

4.  Financial and property management

The Act will require developers to set realistic levies during the establishment of the strata scheme and the year following the expiration of the initial period. This will help avoid seemingly low levies and then exponential increases once all the lots are sold by the developer. Books and records of the OC will now be required to be kept for 7 years.

5.  Disposal of abandoned goods

Owners Corporations will now, by following the Act’s guidelines, have the power to dispose of goods left on common property (including cars).

6.  Model by-laws

The Act provides for broader sets of model by-laws in relation to areas such as smoking, pets, bedroom occupancy etc. The new model by-laws will only apply to new strata schemes unless adopted by the OC by way of a special resolution. By-laws must now not be harsh, unconscionable or oppressive.

A notable exception to the 30 November 2016 start date is Part 11 of the Act, which provides for a new building defect regime. Part 11 commences on 1 July 2017 and will afford greater protection to strata owners through enforcing mandatory defect inspection reports, requiring the developer to provide a building bond and to prepare initial maintenance schedules. We will report more on Part 11 of the Act closer to its commencement date.

The reforms brought in by the Act are widespread and will require changes to the management of every OC. For more information on the NSW Strata Law Reforms, please do not hesitate to contact our Property Team.