Draft Strata Schemes Management Bill 2015 – What You Need To Know

The NSW Government has released the draft Strata Schemes Management Bill 2015 (“the draft Bill”) and the draft Strata Schemes Development Bill 2015. 

The following is a summary of some, but not all, of the important changes to be introduced by the draft Bill:

Executive Committees

• the executive committee will be known as the strata committee;

• a strata managing agent or building manager for a strata scheme, a person who acts as an agent for the leasing of lots in a strata scheme or a person who has an undisclosed connection with the original owner of a strata scheme is not eligible to be appointed or elected to the strata committee unless the person is an owner;

• a tenant representative on the strata committee may be nominated by the tenants of lots in the strata scheme but will not be able to vote on committee decisions and may be excluded from discussion about certain financial matters;

• a duty is imposed on members of a strata committee to carry out their functions for the benefit, so far as practicable, of the owners corporation and with due care and diligence;

Strata Managing Agents and Building Managers

• a strata managing agent’s term of appointment is to be limited to a maximum of 12 months for an agent appointed at the first annual general meeting or 3 years for any other appointment, with any reappointment also limited to maximum terms of 3 years;

• a strata managing agent may transfer his or her functions as an agent if the transfer is approved by a resolution of the owners corporation at a general meeting;

• it will be an offence for a strata managing agent to request or accept a gift or other benefit for himself or herself or another person in connection with the provision of services as an agent, other than a monetary commission included in the agent’s terms of appointment or otherwise approved by the owners corporation;

• a strata managing agent must report at an annual general meeting monetary commissions received from third parties in the previous 12 months as well as commissions and an estimate of commissions expected in the following 12 months;

• a strata managing agent must also disclose to the strata committee of the owners corporation variations from the commissions disclosed, as soon as practicable after becoming aware of the variation;

• caretakers for strata schemes are now to be referred to as building managers and a building manager is not required to be a person entitled to exclusive possession of a lot or common property;

The Financial Management of the Owners Corporation

• monetary penalties payable to the owners corporation must be paid into the administrative fund and monetary penalties payable by the owners corporation may be paid from the fund;

• the sinking fund will change its name to the capital works fund;

• an owners corporation may levy a contribution on owners to recover amounts to cover money transferred from the administrative fund or the capital works fund to the other fund to meet a shortfall;

• the 10-year capital works fund plan (formerly known as sinking fund plan) for a strata scheme must be reviewed at least once every 5 years and may be revised or reviewed at any time;

• an owners corporation may provide for payment plans for unpaid contributions;

• an owners corporation may obtain an NCAT order ordering the original owner under the owners corporation to compensate the owners corporation if NCAT determines that the estimates and levies determined during the initial period were inadequate;

• requirements for approval to obtain legal services have been clarified;

Lot Owner May Claim Damages for Breach of Statutory Duty to Maintain and Repair Common Property Re-Introduced – Thoo’s Case Does A Backflip!

• an owners corporation’s statutory obligation to maintain and keep in a state of good and serviceable repair common property may be deferred for a particular item of property if the lot owner or another person is liable for damage to the property and the owners corporation has taken action in respect of the damage; and

• a lot owner may recover from the owners corporation, as damages for breach of statutory duty to maintain and repair common property, any loss suffered by the lot owner as a result of a contravention by the owners corporation of its duty.

Prepared by Michael Pobi, Pobi Lawyers.

Please note that the information contained in this article is not legal advice and should not be relied upon. You should obtain legal advice before you take any action or otherwise rely upon the contents of this article.