The Strata Schemes Legislation Amendment Bill 2024 has been introduced into the NSW Parliament, bringing forward a series of reforms designed to enhance the governance and oversight of strata and community schemes. These revisions incorporate a wide range of recommendations from the statutory review of the Strata Schemes Management Act 2015 (SSMA), which was presented to Parliament on 29 November 2021, and will also influence the Community Land Management Act 2021 (CLMA) and associated regulations. Below is a summary of the principal proposed amendments and their expected impact:
Amendments to the strata Schemes Management Act 2015 (SSMA)
Accessibility Infrastructure (Schedule 1[2], [35], [42]):
The Bill lowers the threshold for passing special resolutions for installing accessibility-related infrastructure in a strata scheme.
Owners Corporations must consider specific factors, including financing options, before approving accessibility infrastructure resolutions.
Initial Meetings and Documentation (Schedule 1[3], [4], [5], [6], [7]):
Stricter penalties apply if the first annual general meeting (FAGM) is not convened within the required timeframe (i.e. 2 months of the initial period) or if key documents are not delivered at least 14 days prior.
For schemes with 3 or more storeys, original owners must provide evidence to the Owners Corporation at least 14 days before the FAGM that the initial maintenance schedule has been prepared in the prescribed form and estimates of levies have been certified by an independent surveyor or another prescribed person.
Strata Committee Duties and Conduct (Schedule 1[8]):
The duties and obligations of Strata Committee members will be expanded. Strata Committee members must act with “honesty and fairness, with due care and diligence and for the benefit of the Owners Corporation, comply with the SSMA and regulations under the SSMA, protect the privacy of lot owners and not behave in a way that unreasonably affects a person’s lawful use or enjoyment of a lot in the scheme or the common property.
Strata Committee members must complete training, and failure to do so will result in loss of Strata Committee membership.
Chairperson’s Role (Schedule 1[9], [10], [11]):
The Chairperson of the Owners Corporation must ensure meetings follow the set agenda, maintain order, and encourage open, fair and constructive discussion of matters at meetings.
Office Holders and Management (Schedule 1[12], [13], [14]):
The office of an officer in an Owners Corporation can now be declared vacant by a simple resolution, rather than a special resolution.
Strata managing agents exercising the functions of the Owners Corporation or officers of the Owners Corporation must provide a copy of the records they make about the exercise of those functions every 6 months, ensuring transparency and accountability.
A defence is introduced for strata managing agents when a breach occurs due to the Owners Corporation’s breach of duty, provided the strata managing agent took all reasonable steps to prevent the breach of duty.
Building Managers (Schedule 1[17], [18], [19]):
Persons acting as building managers solely as Strata Committee members are not “building managers” for regulatory purposes.
Building managers must act in the Owners Corporation’s best interests.
The NSW Civil and Administrative Tribunal (NCAT) may order the termination or variation of an agreement for the appointment of a building manager or strata managing agent if the business is operating unlawfully.
Financial and Levy-Related Changes (Schedule 1[20]–[30]):
Owners Corporations must consider sustainability infrastructure expenditure in annual estimates.
The first 10-year capital works fund plan must consider the original owner’s initial maintenance schedule and be in the prescribed form.
Additional information must be provided with levy notices.
Owners Corporations may agree (or refuse reasonably) to payment plans for overdue levies. NCAT orders may compel an Owners Corporation to enter a payment plan if refusal is deemed unreasonable.
The period before recovery action can begin is extended from 21 to 30 days. Owners Corporations cannot pursue recovery actions while a payment plan is being complied with. The Bill also prescribes the order in which arrears are applied to interest, charges, and principal debt.
Legal Services and Maintenance Obligations (Schedule 1[31]–[34]):
Owners Corporations must specify either an unlimited or a maximum cost limit when approving legal services. Certain non-urgent legal services may be obtained without a general meeting resolution, subject to new regulations.
Owners Corporations may defer compliance with its duty of maintenance and repair under section 106 of the SSMA until after action is taken by the Owners Corporation against an owner or another person in relation to the damage, provided safety, access and use of buildings, structures, etc will not be affected.
The amendment proposes to extend the limit on the bringing of an action by an owner against an Owners Corporation for breach of the statutory duty under section 106 the SSMA, from 2 years to 6 years.
Common Property Resolutions and Renovations (Schedule 1[36], [37], [38]):
Special resolutions authorising additions, alterations or erections of new structures on common property must specify who is responsible for the ongoing maintenance—either the Owners Corporation or the lot owner.
If a Strata Committee refuses minor renovation requests, they must provide written reasons. Failure to do so within 3 months results in deemed approval.
For schemes with 3 storeys or more, the IMS and levy estimates must be certified by independent professionals, ensuring impartiality and accuracy.
Sustainability Infrastructure and By-laws (Schedule 1[40]–[46]):
Clarifications cover utility, communication, and domestic service agreements, providing greater certainty in embedded network arrangements.
By-laws cannot prohibit installing sustainability infrastructure solely to preserve external appearance of a lot or the common property (unless the subject property is heritage-listed).
The written consent of owners who hold rights or special privileges under common property rights by-laws is required before such a by-law can be amended or repealed.
An owner who holds rights or special privileges under common property rights by-laws must not unreasonably withhold consent if the by-law is to be amended or repealed.
Access to Documents and Information (Schedule 1[47]–[50]):
Clarifications ensure owners can inspect records easily and that associated fees may be prescribed by regulations.
Strata information certificates must include details on exclusive supply networks (embedded networks).
Compliance and Enforcement (Schedule 1[51]–[53]):
The Secretary gains powers to investigate, monitor, and enforce compliance with the SSMA’s maintenance obligations, including information-gathering orders, powers in relation to premises, seizure and destruction, remedial actions and compliance notices.
Environmental Sustainability (Schedule 1[54]):
Environmental sustainability, including energy and water management, must be considered at each annual general meeting.
Voting Limits (Schedule 1[55]–[57]):
Certain voting limits no longer apply to company nominees, updating previous requirements due to recent legislative changes.
Definitions and Minor Amendments (Schedule 1[1], [58]):
Various definitions are updated, and transitional and savings provisions are included to ensure a smooth implementation of these reforms.
Amendments to the Community Land Management Act 2021 (CLMA) and Regulations
The Bill mirrors many of the SSMA amendments in the CLMA to ensure consistency across both types of community management arrangements. Key corresponding changes include:
• Reduced thresholds for special resolutions for installation of accessibility infrastructure.
• Similar increases in penalties and requirements for delivering documents before the first AGM.
• Expansion of duties, training requirements, and loss of membership for non-compliance also apply to community scheme committees.
• Aligns building manager and managing agent obligations and introduces defences and duties mirroring the SSMA amendments.
• Incorporates the same payment plan, levy notices, and overdue contribution recovery standards as set out for strata schemes.
• Enhances clarity, certification, and independent review of maintenance schedules, levy estimates, and capital works planning.
• Prohibits unreasonable by-laws hindering sustainable improvements, barring heritage considerations.
• Introduces corresponding compliance and enforcement powers and obligations.
• Requires environmental sustainability considerations at annual meetings.
Consequential Amendments to Other Legislation
In addition to changes in the SSMA and CLMA, the Bill amends other Acts and regulations to ensure consistency and improve consumer protections, including:
• Enhanced disclosure obligations for off-the-plan contracts, particularly regarding exclusive supply (embedded) networks.
• Application of consumer law principles (Australian Consumer Law) to contracts made with Owners Corporations and associations.
• Warrants issued under the SSMA and CLMA are brought into alignment with existing enforcement frameworks.
• Restrictions on certain contractual terms in agency agreements, including professional indemnity liabilities and liability caps, unless covered by a professional standards scheme.
• Inclusion of goods abandoned in strata lots as “uncollected goods”, enabling their lawful removal under appropriate conditions.
Conclusion
The Strata Schemes Legislation Amendment Bill 2024 stands as a watershed moment in the evolution of NSW’s strata and community title landscape. By enacting the insights gathered from a comprehensive statutory review, the reforms challenge outdated norms, champion enhanced accountability, and pave the way for more inclusive and well-governed communities.
As these changes move toward implementation, it is essential for owners, occupiers, Strata Committee members and strata managing agents alike to stay informed and prepared.
Disclaimer
The information contained in this article, published by Pobi Lawyers, is provided solely for general informational purposes. It does not constitute legal advice, nor does it create a solicitor client relationship. Before taking any action or otherwise relying on the contents of this article, you should seek independent legal advice tailored to your particular circumstances. Pobi Lawyers accepts no liability for any reliance placed on this information, and the content of this article may be subject to change without notice.
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