Major changes to strata laws

New strata laws started on 30 November 2016 and the new Building Defect Bond Scheme started on 1 January 2018.

New strata laws started on 30 November 2016 and the new building defect bond scheme started on 1 January 2018. Some key changes include:

  • strengthening the accountability of strata managers
  • allowing owners to adopt modern technology to conduct meetings, vote, communicate and administer their scheme
  • the need for owners to review by-laws by 30 November 2017, which can be customised to suit their lifestyle - like whether to allow owners to keep a pet by giving notice to the owners' corporation
  • a process for the collective sale and renewal of a strata scheme
  • a simpler, clearer process for dealing with disputes
  • broadening tenant participation in meetings
  • a new option to manage unauthorised parking through a commercial arrangement between a local council and a strata scheme
  • a clearer and simpler three-tier renovations process, which waives approval for cosmetic renovations within the strata lot (for example, installing handrails for safety).

There are also measures to reduce red tape, such as simplifying financial statements for owners.

Owners

Review the new model by-laws and consider whether these may be suitable for your scheme. The model by-laws include options for rules on permitting pets, preventing nuisance smoke and other lifestyle issues.

By 30 November 2017, all schemes must have reviewed their by-laws. If your strata scheme decides that there should be changes, you can choose to adopt some or all of the model by-laws or adapt your current by-laws to better suit your scheme's particular circumstances.

Consider how you would like to participate in meetings, such as electronically, by phone and whether your scheme should adopt electronic voting.

Landlords

Landlords must notify the owners' corporation in writing of each tenancy and can provide the tenant's email address for the strata roll. This helps the strata committee to determine whether the strata scheme should have a tenant representative (where at least half of the properties are being rented).

Be part of the conversation when your by-laws are reviewed and consider which changes could make it easier for you to rent out your unit, for example. Become informed about the streamlined process for getting renovations approved. This should make it easier for you to add value to your investment. It should also make the process simpler if you decide to pursue a tenant's request for alterations

Tenants

Tenants should be aware that where at least half of the properties in the strata scheme are tenanted, they will be invited to elect a tenant representative to the strata committee (the committee responsible for the day-to-day running of the strata scheme). This is done before the next AGM.

Tenants should check noticeboards and keep informed in case their strata scheme makes changes to current by-laws. This may happen when the strata scheme reviews its rules (by-laws) by 30 November 2017. Remember, you still have to get your landlord’s approval first to do things such as keep a pet or make any alterations to the property.

Strata committees

Review any contract with your strata managing agent or caretaker or building manager entered before 30 November 2016 and be aware of these end dates on their term of appointment:

  • For a strata managing agent, all current contracts will end up to 3 years after their term commenced or on 30 May 2017 (that is, 6 months after the new laws start), whichever is the later.
  • For a caretaker or building manager, all current contracts will remain in force for up to 10 years after the laws commence, unless there is a shorter period in the terms of the contract.

Schemes were required to review their by-laws by 30 November, 2017 (if your scheme had not done so since 30 November 2016). If your review led to a decision to change by-laws, the scheme will need to lodge a full set of all by-laws with NSW Land Registry Services.

Be aware that where at least half of the properties in the strata scheme are tenanted, the owners corporation must call a tenants meeting to elect a tenant’s representative. This must be done before the AGM.

Also, make sure you understand how the new laws about proxies, renovations, and a collective sale will impact on the decision making of the scheme.

Your scheme may also want to consider:

  • adopting the Common Property Memorandum to clarify repair and maintenance responsibilities
  • developing an internal dispute resolution process.

Strata managing agent

Be aware of the date that your contract will be terminated. Under the new laws, all current contracts will end up to 3 years after the term commenced or on 30 May 2017 (that is, 6 months after the new laws start), whichever is the later.

Be an industry leader and support your strata scheme to explore and adopt electronic communications options that make it easier for them to take part in meetings and decision making. Examples include web or phone conference calls, or an electronic voting service.

Review your processes for seeking insurance for owners corporations. Strata managing agents must now seek at least three quotes from different providers when sourcing insurance as part of the strata scheme’s requirements to have certain types of insurance in place.

Need more information?

<Subscribe to our strata update enewsletter> to be kept up-to-date.

We’ve also produced our <frequently asked questions - strata reforms>.

Prev Charitable Fundraising Regulation 2015
Next Property reports and commercial exemption reforms