New strata laws commenced on 30 November, 2016 and will impact on everyone who has an interest in strata living.
Some of the changes are superficial, and deal with the terminology used. For example, the Executive Committee is now called the Strata Committee, the Sinking Fund is called the Capital Works Fund, and the Caretaker is now called the Building Manager.
More substantively, new model by-laws for residential strata schemes have been developed which provide sample rules which may be adopted or modified by an Owners Corporation to suit the particular scheme.
The model by-laws include options for:
- permitting pets, including an unfettered right to keep assistance animals;
- dealing with nuisance or hazardous smoking
- helping owners’ corporations address noise and short-term letting
- measures to prevent overcrowding in a lot.
One matter deserving urgent attention is that Owners Corporations are required to review their by-laws within 12 months of commencement i.e. no later than 30 November, 2017. By-laws must not be harsh, unconscionable or oppressive and must not restrict children or the keeping of assistance animals within a lot.
Other changes to the legislation include:
- A clearer and simplified three-tier renovations process which distinguishes between the types of renovation and where the requirement for approval for cosmetic renovations within the strata lot is waived e.g. installing handrails, painting, filling minor holes and cracks in internal walls, laying carpet, wardrobes, internal blinds and curtains.
- Strengthening the accountability of strata managers;
- Allowing the use of modern technology to conduct meetings, vote, communicate and for administration;
- Limitation of the number of proxy votes given to one person;
- Simplified dispute resolution;
- Broadening the rights of tenants’ participation in meetings;
- Possible management of unauthorised parking through a commercial arrangement with the local Council
- A process for the collective sale and/or renewal of a strata scheme;
- Developer Protections which will commence from 1 July, 2017, with the introduction of a mandatory defect inspection report and maintenance schedule and the provision of a building defect bond to be paid by the developer as security for defective building work which is identified and not rectified. The amount of the bond will be 2% of the contract price of the building work.
- The ability to seek compensation from developers if levies set for the initial period and for the first year after the scheme begins are inadequate
In relation to current contracts, contracts for strata management agents will end up to 3 years after their term commenced or on 30 May 2017, whichever is the later, while contracts for building managers will remain in force for 10 years after 30 November, 2016 unless there is a shorter period in the contract.
Where 100% agreement cannot be reached by owners, the Act and Regulations now provide a process for owners to end a strata scheme so that the site can be sold or developed to assist with the renewal of aging housing, to boost housing supply and for owners to realise the full potential of their strata building. This may occur where 75% of owners in a Strata Scheme agree to the sale or development. The legislation sets out in detail the process to be followed and any sale or development must be reviewed and approved by the Land & Environment Court. One basis upon which the Court can reject a renewal is where dissenting owners are not paid the “compensation value of the lot” and terms of the settlement were not just and equitable.
We recommend that all Owners Corporations review their arrangements in light of these legislative changes. If you would like our help with this, please let us know, and we can walk you through the process.