The NSW Parliament passed new laws last night to increase the rights of owners in new strata schemes in their dealings with developers, Fair Trading Minister Linda Burney announced today.

Ms Burney said the main amendment to the Strata Schemes Management Act will prevent developers from forcing new owners in strata schemes to hand over their right to vote at owners’ meetings.

“I have been increasingly concerned about reports of developers adding non-negotiable terms to their sale contracts that require unit buyers to sign over their proxy voting rights or give the developer power of attorney,” Ms Burney said.

“Strata owners who have signed such contracts in the past could have faced legal action by the developer if they tried to play an active role in the management of their scheme.

“This practice undermines the very purpose of the strata management law – to provide a legal framework for strata owners to manage building repairs and maintenance and other important matters.”

The new amendments will make these kinds of contract terms unenforceable by the developer.

“Another important reform in the Bill will make it easier for strata owners to resolve building work disputes with the developer and builder, who are quite often the same entity,” Ms Burney said.

“Currently, the owners’ corporation has to vote on whether to lodge a building dispute and invite a Fair Trading inspector onto the common property to assess defective building work. 

“In a new strata scheme the developer may still own many units and have significant voting rights which they can use to vote down the other owners on these issues.

“These changes will enable any individual strata owner to lodge a building dispute and arrange for an inspection to assess whether repairs to the building are the responsibility of the builder. 

“This means strata caretakers and managers and anyone else who has control over access to common property will be required to cooperate with Fair Trading inspectors to enable an inspection to be carried out. This amendment also applies to community schemes.”

The Strata Bill was part of a package of cognate Bills to reform the planning and certification systems in NSW.

“The fact that the Opposition voted against the changes to the legislation indicates their tacit support for property developers using contractual standover tactics over the rights of the individuals who own strata properties, forcing them to give up their votes to the developer.

“Also, I was interested to note the absence of Catherine Cusack, Opposition Spokesperson on Fair Trading, in the debate. I would have thought she might take her job more seriously and have had her say in the Upper House on legislation relevant to her portfolio.”

Other reforms in the Bill include:

• making it clear that all caretakers are subject to the same rules, even if they call themselves something else like an onsite building manager 
• stopping developers from selling off rights to park in visitor parking spaces
• requiring members of an owners’ corporation executive committee, or someone standing for election to the committee, to disclose any personal or business connections they have with the developer, builder or caretaker/manager.

The amendments are expected to come into effect by August this year. 

Back to Media releases