Top 5 Ways the NSW New Strata Laws Will Impact your Life. Plus, what about the fines? – with Adrian Mueller, J S Mueller & Co Lawyers
We have received a number of very informative articles from you, Adrian, over the past few months regarding the upcoming NSW New Strata Laws.
Question: For most lot owners in NSW, which laws do you feel will have the most important impact on their life?
Adrian Mueller: I think there are 5 of the new laws that are going to have a considerable impact on apartment owners.
1. New strata laws in relation to the way in which owners will be able to vote at strata meetings
That is all part of the NSW Governments plan to introduce more flexible meeting arrangements. Once the new strata laws start, owners will have the opportunity to vote by post, by the internet or by video link. So that is going to allow owners to participate in meetings from the comfort of their own home, which people will find more convenient.
Unintentional Consequences – News Ways of Voting
That may well have some unintended consequences. It may well stymie discussions at meetings when people are voting by postal votes. It may eliminate scope to amend motions at a meeting. Never the less, I feel that is a change for the better by giving owners an opportunity to vote in more flexible ways.
2. Prohibition on proxy farming
At the moment, a lot of buildings suffer from the problem of owners gathering proxy votes and holding the majority of votes and essentially, deciding how their owners corporations will be run. Now that is going to change and a person won’t be able to hold more than 5% of the proxies by reference to the total number of lots. That will avoid the circumstance of one person being able to control the strata building by holding the majority voting right by proxies.
Unintentional Consequences – Proxy Farming
That may also have some unintended consequences as well, as all new laws tend to do. There is going to be some uncertainty as to which proxies will be discarded if a person receives more than the maximum number of 5%. Also, that may result in some owners, who have given their proxies to somebody who is very popular, not being represented at the meetings.
The NSW Government wants to streamline the renovations process and cut red tape. They are going to do that, essentially, in two ways. Once the new laws start, there won’t be a need for owners to obtain owners corporation approval to carry out cosmetic work to their units, even if that effects the common property – so painting and laying new carpets will be able to be done without getting strata approval. Also, minor renovations will be able to be approved by an ordinary resolution without the need for a bylaw. Things such as kitchen renovations, installing hard floor covering or reconfiguring nonstructural walls will be able to be approved a lot quicker, with much less red tape. That’s going to speed up the renovations process.
4. Undesirable Habits
I think some of the new laws are going to make it clear that owners corporations can put an end to undesirable habits of certain residents in buildings. And by that, I mean that owners corporations will be allowed to make bylaws that ban smoking, that prohibit overcrowding, and also enter into arrangements with local councils to police parking areas in strata buildings. Now, at the moment, those sorts of things can already be done, but it is not entirely clear the extent to which they can be done, and how effectively they can be done. I think the new laws will clarify that and that is certainly a step in the right direction.
5. Removing Abandoned Goods
The new laws will clarify the rights of strata bodies to remove abandoned goods that have been left in common areas. An old bugbear that seems to attract attention from time to time and there should now be a clear power for owners corporations to remove and dispose of abandoned goods that have been left in common areas, provided they follow the appropriate procedure.
Not Included: Termination of Strata Schemes
One thing I haven’t mentioned in my top 5, the new laws regarding the termination of strata schemes and the collective sale of strata buildings – something which has attracted a lot of media attention. I didn’t include that in my top 5 for a simple reason, and that is because I think the impact of those new laws has been overstated by the media. Those new laws may well prove extremely time consuming and expensive to follow and I don’t think they are going to be as attractive to developers and others as they seem. That is not to say they won’t be used, but I don’t think they are going to be in my top 5 in relation to the impact the new laws will have on owners.
Question: In your latest article, you mention changes to body corporate fines. Can you tell us a little more about how that will work?
Adrian: The NSW Government is making three main changes in this area.
- Firstly, at the moment, an owners corporation can issue an owner or a resident who is breaching a bylaw with a notice to comply and if that person continues to breach the bylaw, the owners corporation can apply to NCAT for a penalty of up to $550. That penalty is going to increase under the new laws and the maximum penalty will now be $1100 and in the case of a repeat offender that will increase to $2200. In the case of a bylaw that prohibits overcrowding, that maximum penalty will be much higher – $5500 for a first offence and $11,000 for a repeat offender.
- Secondly, if NCAT makes an order to require a person to comply with a bylaw, and that order is breached, at the moment, the maximum penalty that NCAT can impose is $5500. That is also going to increase. That will increase to $11000 dollars to an individual or $22000 for a company.
- Probably the most significant change, apart from the penalties increasing, is the fact that the penalties under the new laws will be payable to the owners corporations, rather than into the Government’s coffers. And that will provide more of an incentive for owners corporations to apply for culprits in their buildings who breach the bylaws to be penalised because they are going to get the money.
Unintentional Consequences – NSW New Strata Laws: Fines
But, as I mentioned earlier, there are always unintentional consequences with new laws and one of the unintended consequences of this area of law reform is, in the past, or at least currently, owners corporations who get penalties imposed by NCAT also get costs orders in their favour. Under the new laws that might change and it may not be as easy for owners corporations who are successful to get their costs paid by the culprits who are fined.
Never the less, overall, it is a move in the right direction, it is an increase in the fines payable by offenders who breach bylaws, and that can only be a good thing to help stimulate compliance with the bylaws in a strata building.
A little bit about J S Mueller & Co Lawyers?
Our firm was started in 1979 by my father and he was joined by his partner Bruce Bentley in the 1980s. At about that time there was a local Real Estate Agent called Peter Clisdell who set up a strata management business. Peter, my father & Bruce knew each other quite well, and he needed a lawyer to do his strata work for him. Ever since then, in the mid-1980s, our firm has dabbled in strata law and about 15 years ago when I started working here, we focused the direction of the firm on strata law and ever since I’ve been here that is all I’ve been doing.
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This article is not intended to be personal advice and you should not rely on it as a substitute for any form of advice.
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