The NSW government has recently released its Position Paper outlining the reforms it proposes to make in relation to community scheme laws in NSW.
According to the Position Paper, there are approximately 700 community schemes, 40 precinct schemes and 1,460 neighbourhood schemes in NSW.
During the extensive consultation process, the NSW government has sought feedback on reforming community schemes from peak industry bodies to owners volunteering on their own management committee.
While these reforms have not yet been enacted as legislation, they provide an indication on the proposed changes.
We have listed below some of the key changes proposed by the Position Paper:
1. Greater owner participation
During the consultation process, there were many submissions received which supported the use of alternative methods of attendance at meetings including social media, video and teleconferencing or other methods which may become available in the future including the acceptance of postal or electronic votes.
2. Electronic Storage and Distribution of Documents
It is proposed that the laws be amended to permit documents to be given to owners electronically if owners have agreed to this form of communication.
3. Secret Ballots
The current law does not provide for anonymous voting through secret ballots. It is proposed the new laws will recognise voting on a motion by secret ballot. At least 25 percent of the members of an association attending a meeting would need to support a secret ballot being held. Associations could also choose to adopt a by-law outlining the matters or class of matters that are to be subject to a secret ballot.
4. Committee Members Functions
The Position Paper proposes changes so that committee members are to carry out their functions without favour, for the benefit of owners of the scheme they represent, and to act with due care and diligence.
5. Exclusion of Personal Liability for Committee Members
It is proposed that the law be changed to give committee members which make decisions while acting in good faith appropriate protection.
6. Proxy Farming
Many submissions were received to address the issue of ‘proxy farming’, where an individual, owner or small group of owners gather large numbers of proxy votes in order to gain control of the decision making process and to subvert the proper operation and management of a scheme. The Position Paper states “However, due to the representative nature of voting at precinct and community associations this reform may only be practical for strata and neighbourhood schemes to implement.”
7. Term of Management Contracts
It has been proposed that the term of a management contract cannot be longer than 3 years. Under the proposed laws, automatic rollovers will not be allowed.
8. Improve Defect Repairs and Maintenance.
It is proposed to restrict the right of the developer and people connected to the developer from voting on matters relating to building defects and require the builder/developer to prepare a maintenance schedule at registration and supply it to the association.
9. By-Laws and Enforcement
The Position Paper proposes that “Community schemes will be able to enter into arrangements with their local council for the issuing of penalty notices to owners of offending vehicles. Authorised council officers will be allowed to enter private property to issue penalty notices. These arrangements would be voluntary both for schemes and councils and would need to be developed on commercial terms. Signage and access arrangements to the property will need to form part of any agreement and associations may need to pass by-laws to allow enforcement of parking restrictions.”
This article only details a some of the key proposed reforms. Further information can be obtained from the NSW Fair Trading website here:
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