NSW: Q&A Is Parliament doing enough to protect strata owners from industry power imbalances?

This article discusses the need for stronger laws to protect strata owners from power imbalances with professionals.

Question: Do current legal principles need to change to ensure fair outcomes for strata owners when dealing with strata professionals?

Given the significant power and knowledge imbalance between strata owners and the professionals they engage, such as strata managers, building managers, and contractors, are existing legal principles sufficient to ensure fairness? Should the law be modified to better protect strata owners and help achieve more equitable outcomes?

Answer: While Parliament is making progress in addressing the power imbalance, more is needed.

The power and knowledge imbalance between individual strata owners and the professionals they contract with, such as strata managers, building managers, and contractors, is a real and ongoing concern in strata governance. Many owners lack legal or technical expertise, making it difficult to scrutinise contracts, challenge decisions, or identify conflicts of interest. This imbalance can lead to situations where strata owners are bound by long-term, inflexible, or opaque service agreements that may not serve their best interests.

Parliament has begun to address this issue. Notably, the proposed amendment to section 37 of the Strata Schemes Management Act 2015 (NSW) will introduce a mandatory training requirement for strata committee members. This is a positive step, as it aims to improve decision-making within the owners corporation by ensuring that committee members better understand their duties and the legal framework within which they operate. Educated committees are more likely to ask questions, seek quotes, monitor performance, and resist overreaching conduct by contracted professionals.

Additionally, the NCAT plays a key role in resolving strata disputes. It is designed to be an accessible, low-cost forum where individuals can represent themselves. NCAT also offers procedural guidance to unrepresented parties, which helps reduce the disadvantage that owners may face when dealing with professionals who are legally advised.

That said, there may still be scope for legal principles to evolve further. For example:

• Introducing a mandatory duty of disclosure for building and strata managers regarding commissions or referral fees (as flagged in the forthcoming Strata Schemes Legislation Amendment Act 2025;
• Expanding unfair contract protections to cover standard-form strata-related service agreements more explicitly;
• Giving owners corporations a statutory right to periodically review or terminate long-term service contracts without penalty;
• Requiring greater transparency in tendering and procurement processes.

In conclusion, while Parliament is making progress in addressing the power imbalance through training and future regulatory reforms, there is still a need to further modernise legal principles and contract standards to ensure that strata owners, who often have limited leverage, can participate in the system on fair and informed terms.

Julia Moroz
Bugden Allen
E: julia@bagl.com.au
P: 03 8582 8100

This post appears in the November 2025 edition of The NSW Strata Magazine.

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