This article listing the top 7 New Strata Laws for NSW was provided by the Paula Byrnes, LookUpStrata Team and is Part 1 of a 3 part series.
NSW has modernised its strata laws to mirror the reality of apartment living in the state. At the end of this month, NSW lot owners and tenants will be affected by the reform.
In 2015, the Urban Taskforce Australia commissioned a poll which underlines the popularity of apartment living in the state’s capital: 56 per cent of Sydneysiders are involved in apartment living in some way: 18 per cent are owner-occupiers, 17 per cent are renting, 15 per cent are investors, who rent out their unit, and 6 per cent plan to buy an apartment in the near future.
And NSW Fair Trading reports that almost two million people or more than a quarter of the state’s population (7.5 million in 2014) are already living in strata titles. And the number is growing.
But not only the owners of apartments are affected; if you are renting, you might be interested in the new rules for tenant participation at committee meetings.
What’s new? New Strata Laws For NSW. Here are some of the main changes:
Length of contract for strata managers
The New Strata Laws for NSW will limit strata management contracts to one year in the first year. Afterwards, strata managers can be appointed for up to three years.
Furthermore, the committee will have the option to elongate the timeframe to make a decision about the reappointment of their current manager for up to three months after the expiration date of the contract. This will also allow time to find a new manager if necessary. However, this period must not extend beyond the date for an upcoming annual general meeting (AGM).
All contracts, which came into effect before the 30th of November 2016, will either end three years after their start or six months from the beginning of the new law – whichever is the later.
On top, “if a strata managing agent or building manager or caretaker is not performing, owners will be able to apply to the Tribunal to vary or terminate the contract, or to be compensated,” emphasises NSW Fair Trading.
Disclosure of third-party commissions
In the future, strata managing agents will be required to disclose at each AGM whether they received any third party commissions in the previous 12 months. The agent’s statement will be recorded in the minutes.
During the AGM, the owner corporation will have to vote on the approval of the payment of commissions for the next year or whether to change to a fee-based system to remunerate the strata manager for his services.
Agents, who fail to disclose commissions, will risk an order from the Tribunal that any commissions accepted in the previous 12 months must be paid to the owners’ corporation. “Strata managers will not be allowed to receive any nominal gifts or benefits over a certain dollar amount in connection with their role as a strata managing agent,” states NSW Fair Trading.
Not only that, but strata managers will also have to reveal any connections to the developer of the building at the time they are appointed to their role. Any breach of these disclosure requirements will occur fees up to AUD$2,200 per offence.
New model by-laws
Under the New Strata Laws for NSW, owners will have the opportunity to customise their by-laws to their lifestyle needs. For example, the Body Corporate could decide to change their existing pet rule and allowing owners to keep a pet after giving notice to the Body Corporate. Tenants, however, will still need the permission of their landlord if they want to keep a pet in their apartment.
To change a by-law, the Body Corporate has to pass a special resolution with a 75 per cent majority, for example.
All by-laws that have passed the Body Corporate and are registered will remain valid until they are amended or removed by the owners’ corporation, who will have to review their current rules by the 1 December 2017.
Common sense approvals for owner renovations
NSW unit owners will have it easier to do cosmetic changes and minor renovations in their apartment. The new law will waive restrictions for adding picture hooks, for example.
Bigger renovations, such as changing flooring will need a 50 per cent majority from the committee; structural or external changes will still require a special resolution with a 75 per cent majority.
Tenant participation in meetings
The reform provides for tenants to be notified of upcoming meetings and to attend them as well. The owners can even agree to hear the tenant’s opinion on a particular topic. However, tenants can only vote if they hold a proxy from their landlord.
If more than half of the apartments in a scheme are rented out, the Body Corporate can nominate a non-voting tenant representative to the committee to bring forward any issues that the tenants have identified. However, the tenant representative can be excluded from a committee meeting if specific topics, such as financial statements or levying of contributions, are to be discussed.
Modern technology to increase flexibility
Apart from the fact that the Body Corporate will be more flexible when to hold the AGM, video, teleconferencing and social media channels will make it easier for the owners’ corporation to conduct meetings and for members to attend them. The New Strata Laws for NSW allow the committee to distribute papers via email, and owners can vote electronically and through secret ballots.
NSW: Top 5 Ways the New Strata Reforms will Impact Your Life.
Adrian Mueller, JS Mueller & Co Lawyers
- NSW: Predicting the Unpredictable: Strata Renewal in the Courts
- NSW: Q&A Changing Unit Entitlements to a More Equitable Allocation
This post appears in Strata News #119.
After a free PDF of this article on New Strata Laws for NSW as a reference? Log into your existing LookUpStrata Account to download the printable file. Not a member? Simple – join for free on our Registration page.