Question: Is there a time limit on how long a developer has before the community association’s initial period ends, or can they take unlimited time?
Is there a time limit on how long a developer has to sell at least one-third of a development, which would take the community association out of the initial period? Or do they have unlimited time to proceed with the development?
Answer: The initial period ends once a third of unit entitlements have been sold or subdivided, not once 33% of construction is complete.
The purpose of the initial period, during which is imposed restrictions on what an owners corporation or association can do, was to protect subsequent owners from a developer (who is the initial owner of all unit entitlements of the scheme) from: making undisclosed changes during the early stages of a scheme when the developer has control (second reading speech to the Community Land Development Act 2021 and Community Land Management Act 2021 [the 2021 Acts]).
Stating it generally, the initial period in respect of strata schemes and community schemes (including subsidiary schemes like neighbourhood schemes) is the period after the registration of the scheme and until when a third of the unit entitlements have been sold by the developer to new owners. When the initial period concludes in a community scheme is complicated due to the possibility of stage developments and subsidiary schemes. As explained by the second reading speech:
The current law [the 1989 Act] provides that the initial period of those schemes ends when at least one-third of the total unit entitlements are subdivided by neighbourhood or strata schemes whose own initial periods have already expired. But since not all lots are necessarily subdivided into a subsidiary scheme many community and precinct schemes may remain stuck in their initial period indefinitely, unless they apply to the NSW Civil and Administrative Tribunal for an order to end the initial period.
This was addressed in the updated definition for initial period in the 2021 Acts, which, as the second reading speech explains:
provides that if there is no subsidiary scheme in a community or precinct scheme, the initial period expires on the issue of an occupation certificate under the Environmental Planning and Assessment Act 1979, which is issued when development is completed on land as required by a development consent. This reform brings an effective and automatic trigger into the laws to expire the initial period for community and precinct schemes, without the delay, uncertainty and burden associated with requiring a tribunal order to resolve the situation for owners.
Thus, the initial period of a community scheme does not end when a developer has developed at least 33% of a development. Rather, pursuant to the 2021 Acts, the initial period:
ends on the day that at least one third of the sum of the total unit entitlement under the scheme consists of one or both of the following—
- former development lots in the scheme that are the subject of subsidiary schemes for which the initial period has expired,
- development lots in the scheme that are not owned by the original owner and for which occupation certificates (within the meaning of the Environmental Planning and Assessment Act 1979) have been issued for development on the lots.
I encourage the enquirer to seek legal advice.
This post appears in the September 2026 edition of The NSW Strata Magazine.
Matthew Lo
Kerin Strata Lawyers
E: matthew@kerinstratalawyers.com.au
Leave a Reply