New laws: compulsory training for committees

Compulsory training of strata committee members, properly estimated levies for new blocks and off-the plan purchasers being allowed to rescind their sales contracts if they have been duped into accepting embedded network contracts; these are just three of the most prominent of the many and profound changes to NSW Strata law proposed in a Bill tabled in Parliament this week

Fair Trading Minister Anoulak Chanthivong introduced the Strata Schemes Legislation Amendment Bill 2024 to the NSW Parliament on Tuesday with little fuss or  fanfare – and that could be because it contains some of the most profound changes to strata culture in the state since the current laws were passed in 2015.

For instance, the proposal to have compulsory training for strata committee members and strict guidelines for how chairs should conduct of committee meetings didn’t even merit a passing mention. And neither did the plan to bring strata contracts under Australian consumer law.

However, if the Bill gets through parliament relatively unscathed, critics say the amendments could see strata committee members quit in droves rather than undergo training and committee chairs and secretaries step down rather than comply with the detailed responsibilities outlined in the amended Act.

That said, those changes will be welcomed by many in strata who have suffered at the hands of ill-informed and wilfully ignorant strata committees, and bullied and excluded by chairs who play fast and loose with the rules.

Schedule 1[8] of the proposed Act “expands the duties and obligations of strata committee members … to require members of strata committees to complete training, and to make clear that a member who fails to complete the required training will cease to be a member of the committee.”

Not only that, strata committee chairs will be required by law to ensure “that the agenda is followed at meetings, that order is maintained at meetings, to encourage discussion at meetings and to facilitate the fair, constructive and open discussion of matters at meetings.”

The amended legislation turns the focus from strata managers – who have been the subject of much criticism lately – squarely on to their clients, specifically the strata committees and their officers, as well as developers.

It means ordinary members will be obliged to:  

• exercise [their] functions with honesty and fairness, with due care and diligence and for the benefit, as far as practicable, of the owners corporation
• to comply with the Strata Schemes Management Act and regulations under the SSMA,
• to only use or disclose information obtained as a member, including information about an owner of a lot, as required to carry out strata committee functions, or as authorised or required by law,
• to not behave in a way that unreasonably affects a person’s lawful use or enjoyment of a lot in the strata scheme or the common property.

Strata officers – chair, secretaries and treasurers – will be able to be removed from those roles by a simple majority vote of owners at a general meeting. Previously that required a special resolution.

Owners will now have six rather than two years to take action against owners corps that have failed in their statutory duty to maintain and repair common property.

Underquoted levies

Another significant change will be that developers will not be allowed to deliberately underquote the levies for a new block sold off the plan, which will have to independently assessed.

Penalties on developers will be increased for failure to hold the first AGM within two months of the end of the initial period of a new block (when one-third of properties have been sold), and for failure to provide owners with all relevant documents before that meeting.

There are other provisions regarding levies debts which would allow the Owners Corps to arrange payment plans for overdue levies or, indeed, refuse to do so.  Also the window for the recovery of unpaid levies, interest charges and debt recovery costs would be increased from 21 days to 30 days.

When it comes to renovations, the required by-laws must include a reference to who will be responsible for the maintenance of affected common property (at the moment it defaults to the owners corp if the renovator is not specifically given that responsibility).

Also, OCs that reject a renovation proposal will have to explain why the plan was rejected.  Failure to do so within three months of making the decision will result in the proposal being deemed to have been approved.

The threshold for approving accessibility related infrastructure changes  (such as wheelchair ramps) will be lowered to a simple majority instead of a special resolution, and changing the appearance of the building will no longer be a valid reason for refusal unless the building is heritage listed.

The Bill also includes amendments to the Community Land Management Act and the Conveyancing Act 1919, among other related legislation.

In the latter case, the proposed amendments “ensure that for lots sold by off the plan contracts, if there is an inaccuracy in the disclosure statement … relating to the association scheme or strata scheme including, or being likely to include, an exclusive supply network, the vendor must notify the purchaser and the purchaser may have an option to rescind the contract.”

The proposed amendment also sets out the description of exclusive supply (or embedded) networks that must be included in the disclosure statement for off-the-plan contracts.

And, for the first time, strata contracts with suppliers and service providers will come under consumer law, with all the implications that will have for one-sided contracts, including the strata management agreements, that strata owners have foisted on them.

You can read the Bill in its entirety HERE, but bear in mind it still has to pass a second reading in Parliament and then undergo a process of working out how the changes will be implemented before it all comes into effect.

Softly, softly: How the changes were announced

This, below, was the press release issued by Fair Trading earlier this week – short on details and no mention of compulsory training for committee members at all.

The Minns Labor Government has introduced its third wave of strata reforms to the NSW Parliament today, continuing its work to confront the state’s housing challenges and address cost of living pressures.

More than 1.2 million people are already living in strata communities in NSW, and that number is set to grow under the Government’s comprehensive plan to build a better NSW.

The latest round of reforms builds on our commitment to working across all levels of Government and industry to encourage people to live and invest in strata.

The latest changes will:

• Strengthen developer accountability by requiring initial levies to be independently certified;
• Ensure a robust initial maintenance schedule is in place for new builds;
• Protect owners corporations from unfair contract terms;
• Help owners corporations in repairing and maintaining common property;
• Support the uptake of sustainability infrastructure in strata schemes such as solar panels, electric vehicle charging, and efficient water fixtures; and
• Give property owners more options to pay levies when facing financial stress.

With cost of living pressures biting many households, the sensible changes being proposed will require owners corporations to estimate how much money will be needed for the capital works fund each year, alongside their annual energy and water consumption and expenditure in common areas.

Owners corporations will also be better supported through increased professional standards and accountability for managing agents and building managers, improvements to strata management agreements, and improved committee governance. 

The new laws also clamp down on developers who offer prospective buyers initially low strata levies that increase significantly in the second and successive years. By strengthening the accountability of developers we can avoid “bill shock” for residents.

This legislation follows the recent launch of the Strata Living Guide which provides strata property owners and prospective buyers clear advice in plain English on a range of topics aimed at improving decision-making in strata communities.

The new Guide has practical ‘how to’ information for those living in strata properties, such as how to run strata meetings and other key strata processes, how to manage strata finances, and how to raise issues.

The Guide also helpfully suggests ways to go about getting things done such as regular or emergency repairs and approvals for renovations, resolving disputes, and managing relationships with the owners corporation and strata manager.

These reforms build on the Government’s ongoing work to make it easier for people living in strata properties to keep pets and assistance animals, and greater transparency requirements and higher penalties for strata managing agents who do the wrong thing.

“The Minns Labor Government is continuing to improve the regulatory framework we need to build better homes and communities for the people of NSW,” said Fair Trading Minister Anoulack Chanthivong.

“These reforms will ensure strata laws are modern, fit for purpose, and hold those involved accountable for their actions.

“Through the significant changes we have made to strata laws, we are getting the settings right to ensure people have the confidence to invest and live in strata properties. 

“These new laws follow the recent launch of the Strata Living Guide which provides clear advice to people living in the 86,000 strata schemes in NSW, which will help them govern their strata schemes constructively and effectively.”

For more information visit: https://www.nsw.gov.au/housing-and-construction/strata