16 Dec 2013

The New South Wales Minister for Fair Trading has released a position paper detailing amendments proposed to be made to the Strata Schemes Management Act 1996. We have picked out a few of the major proposals that might be of interest to our customers. Should you wish to discuss the implications of the proposals, please contact your strata manager.

  • Enhanced opportunities for tenant participation. Tenants within a scheme would be invited to attend a general meeting of an owners corporation, however tenants would not be able to vote.  
  • Limit on the number of proxies able to be held by any person. A limit the number of proxies able to be held by an individual would be introduced in order to avoid the abuse of proxy power and ensure multiple voices and viewpoints are heard on any one motion.
  • Allow chairperson to declare quorum, if after 30 minutes quorum has not been achieved. With the proposed limits on the number of proxies that can be held by an individual, if a quorum is not present at a general meeting, the chair can call the meeting with the present parties and avoid the need for an adjourned meeting. 
  • Developer of a high rise to pay 2% bond, to be held in trust until independent inspector agrees identified defects have been rectified. It is intended to provide a level of protection for an Owners Corporation whereby a developer would pay 2% of the construction costs for a high rise development to ensure any defects identified within the scheme are rectified and signed off by an independent party before the bond is refunded.  
  • Developer / builder prepare maintenance schedule to assist owner’s corporation with the likely maintenance costs for common property. This schedule would be required to assist an owners corporation in preparing a realistic budget (levy schedule) for the ongoing maintenance of the common property within the strata scheme.
  • New requirements with regard to owner renovations. Owners would be able to complete minor or cosmetic changes to common property inside the lot without the need to seek Owners Corporation approval, ie inserting picture hook, painting internal wall etc.
  • Establish process, similar to those that exist under residential tenancies law, dealing with abandoned goods. If an Owners Corporation has difficultly with removing abandoned goods such as cars, the reform would allow an Owners Corporation the ability to deal with and remove such items.  
  • When registering a scheme, unit entitlements must be determined an based on an independent valuation. For a new scheme, a developer would be required to appoint an independent valuer in order to determine the unit entitlements schedule and set them accordingly.   
  • Require schemes to review their By-Laws and consider whether any changes are needed within 12 months of the legislation coming into force, An Owners Corporation would be required to review their by-laws and determine whether they should introduce, amend or repeal the by-law for the scheme so they are in line with the new by-laws.
  • Penalty payments are to be payable to an owners corporation rather than to the Commissioner. An Owners Corporation will receive the penalties imposed by the Commissioner against parties associated with the strata scheme.     
  • Establish a regulatory frame work that allows schemes to better manage disputes about parking, including establishing conditions of use and arranging for penalties to be issued for non-compliance. That an Owners Corporation will have the ability to more effectively manage parking disputes and impose conditions and penalties within a strata scheme.

It is anticipated that draft legislation will be released in early 2014, with a view to the new laws being effective as of 1 July 2014. This seems to be a fairly ambitious timeframe. We will be reviewing the legislation when it is released and providing further updates.

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