Changes to strata title legislation

December 20 2016

What’s new

It’s a whole new era in strata for lot owners and tenants. It’s now simpler for you to:

> get renovations approved

> deal with parking issues

> Participate with new online meeting and voting options

> collectively sell or renew your strata block, if at least 75% of the owners agree and other conditions are met.

Meetings of the Owners Corporation

Annual General meetings can now be held anytime during the financial year.
The Owners Corporation is no longer required to provide detailed financial statements at an Annual General Meeting – a summary of Key Financial Information will be given.
The quorum for general meetings remains at 25% of the lots, however if a quorum is not reached after 30 minutes the Chairperson may declare that the persons present at the meeting constitute a valid quorum and the meeting may commence.

Limitation on Proxies

For strata schemes of 20 lots or less a proxy holder is restricted to a maximum of 1 proxy vote.
For strata schemes with more than 20 lots, they will be restricted to a maximum of 5% of the total number of lots.

Electronic voting & communications

Owners Corporations can now choose to adopt electronic communications, this includes online voting, emailing meeting papers, allowing lot owners to phone-in to meetings and more.

Strata Committee

The Executive Committee is now known as the ‘Strata Committee’.
Committee members must disclose any connection to the developer and any direct or indirect financial interest in matters being discussed by the strata committee.
Only one co-owner of the same lot can be a strata committee member at the same time (unless they own more than one lot)
An owner is not eligible for election to the Strata Committee if they have levies owing.
A building manager or rental agent is not eligible for election to the Strata Committee (unless they are a lot owner)
In large schemes (schemes over 100 lots) there must be a minimum of 3 Strata Committee members.

Tenant participation

A tenant representative can now be on the strata committee if at least half of the units in the strata scheme are rented. Tenants can also attend meetings of the owners corporation except when matters are being discussed such as financial, levies, or a strata renewal proposal (redevelopment of the strata scheme).
An agenda for any general meeting must be sent to tenants or placed on the notice board at the scheme.
The tenant representative is not counted for a quorum at a strata committee meeting
The tenant representative is not entitled to vote or propose a motion at a Strata Committee meeting.

Financial Matters

The sinking fund is now called the ‘capital works fund’.
Financial audits must be carried out for schemes that have a budget of over $250,000. Strata schemes over 100 lots must have an annual audit carried out.
A developer is now required to set realistic levies during the initial period and for the first year afterwards and NCAT can order compensation be paid to the owners corporation if the original levies were inadequate

By laws

For existing schemes, the bylaws that were in existence before the new Act & Regulations still apply.
All strata schemes must review their by-laws by 30 November 2017.
Owners should consider which updates would best suit their lifestyles and can use the model by-laws as a guide. New model by-laws include new model rules relating to keeping pets and dealing with cigarette smoke. A By-law may now restrict occupancy numbers in a strata lot.

Renovations

Getting renovations approved is now simpler. Cosmetic changes that affect common property no longer need approval. There is also a streamlined approval process that makes it clear what approval is needed for “Minor Works” (for example, kitchen renovations), and how to gain permission for major or structural changes (for example, renovations that require waterproofing).
Owners Corporations can change their bylaws to specify additional items as “Minor Works” or to delegate the approval process to the strata committee.

Parking

There are new options for dealing with unauthorised parking. The Owners Corporation can approach the local council about parking enforcement services. The council may then decide to enter into an agreement with the strata scheme to provide parking management on the premises for a fee. Council rangers will then be able to issue parking fines for parking on common property.

Repairs & Maintenance

There are complex changes in regards to the Owners Corporation’s duty to repair and maintain common property and resulting damages that may be claimed by an owner.
To assist with the responsibility to repair and maintain common property, an Owners Corporation may adopt a “common property memorandum” to provide clarification on whether a part of the building is common property or lot owners property.

NEW BUILDINGS

Initial Maintenance Schedule

An initial maintenance schedule must be provided to the Owners Corporation by the developer at its first annual general meeting. The maintenance schedule sets out obligations and costs associated to the future maintenance of common property, together with all warranties, manuals & maintenance requirements and the name and contact details of the manufacturer and installers.
There is no obligation for the Owners Corporation to comply with the maintenance schedule, but it may be considered when determining whether a building defect could have been prevented by adequate maintenance.

BUILDING DEFECTS – this part of the Act will commence 01/07/2017 and will apply to new residential or mixed use strata buildings of 4 or more storeys.

At each annual general meeting, a motion must be placed on the agenda to consider building defects and rectification. (Current building warranty is 2 years for all defects and up to 6 years for major defects)
The Developer is not entitled to vote on a motion regarding building defects.

Building Defects

Appointment of Building Inspector

The developer has an obligation to appoint a qualified person as a building inspector to carry out an inspection and report on building work within 12 months of the
building works being completed, and the initial period has expired.

Approval of Building Inspector

Developer & Owners Corporation must agree on who to appoint.
Developer pays all costs associated with the report.
Must use Building Inspectors who will be listed on a public register.

Interim Report

Building Inspector must carry out the inspection within 15 – 18 months of completion of building work. Contents of the report to be as specified in the Regulations.
Completion means first occupation certificate as per the Home Building Act 1989.

Final Report

A Building Inspector must carry out an inspection no earlier than 21 months and no later than 2 years after the completion date.
if no defects noted in the Interim Report, a Final Report is not required. The Final Report cannot note new items not contained in the Interim Report.

Bond

Amount is 2% of the building contract price relating to the applicable part of the building.
Must be paid by the developer prior to receiving an occupation certificate for building work (cash/security).
Purpose and use of the Bond is for rectification of building defects.
Administered by NSW Government.

When is the Bond used?

Paid to the Owners Corporation for rectifying defective building work (if any).
Paid to the developer if no defective building works are contained in Interim Report.
Under any direction from the Tribunal or Supreme Court.
The Bond must be either used for building works or paid back to the developer within 2 years from completion of the building works.

Collective sale of a strata scheme

Owners can collectively sell and redevelop their block if 75% of the lot owners agree and if certain requirements are met.
Each owner must have at least 60 days to consider the ‘strata renewal plan’ and the NSW Land and Environment Court must check and approve all plans and approvals.
All owners must receive at least market value for their property.

Strata managing agents

The developer of a new strata scheme is not eligible to be appointed as the strata manager until a period of 10 years has expired.
Strata managers must disclose any connection to the developer and any pecuniary interest, and any third party commissions paid to them during the previous 12 months.
There are also new limits on the gifts or benefits that agents are allowed to receive in connection with their role as strata managing agent.

Agency agreements

Appointment of a strata managing agent is limited to one year if appointed at the first Annual General Meeting. After this date, any future appointment of them (or another strata managing agent) is for a maximum term of 3 years. The NSW Civil and Administrative Tribunal now has greater powers to make orders and remove strata managing agents where they are failing to perform their duties.

LINKS

STRATA LIVING BOOKLET http://www.fairtrading.nsw.gov.au/biz_res/ftweb/pdfs/About_us/Publications/ft045.pdf

ARABIC http://stratalaws.nsw.gov.au/content/language.html#arabic

CHINESE http://stratalaws.nsw.gov.au/content/language.html#chinesesimplified

KOREAN http://stratalaws.nsw.gov.au/content/language.html#korean

VIETNAMESE http://stratalaws.nsw.gov.au/content/language.html#vietamese

ABANDONED GOOD AND VEHICLES

http://www.fairtrading.nsw.gov.au/mobile0c9a66/Factsheet_print/Tenants_and_home_owners/Strata_schemes/_Abandoned_goods_and_vehicles.pdf

BUYING INTO A STRATA SCHEME

http://www.fairtrading.nsw.gov.au/mobile0c9a66/Factsheet_print/Tenants_and_home_owners/Buying_property/_Buying_into_a_strata_scheme.pdf

BYLAWS IN YOUR STRATA SCHEME http://www.fairtrading.nsw.gov.au/mobile0c9a66/Factsheet_print/Tenants_and_home_owners/Strata_schemes/_By-laws_in_your_strata_scheme.pdf

COMMON PROPERTY AND THE LOT http://www.fairtrading.nsw.gov.au/mobile0c9a66/Factsheet_print/Tenants_and_home_owners/Strata_schemes/_Common_property_and_the_lot.pdf