Strata Schemes Management Regulation 2016

On 29 April 2016, the NSW government released the draft of the Strata Schemes Management Regulation 2016 for public consultation.  The Regulation supports the new Strata Schemes Management Act which was passed in 2015.  The new laws are due to commence by the end of 2016.

The new legislation modernises the way strata schemes operate and facilitates continued growth of strata title in NSW. The Act seeks to:

• helps strata schemes be future-orientated with emphasis given to modern technology and contemporary methods of communication
• makes it easier for owners corporations to manage issues like parking, pets, overcrowding and smoke drift
• establishes a process for ensuring building defects are rectified early in the life of a new strata building
• improves the accountability of strata managers
• provides simple and effective means for resolving disputes and compliance with strata laws
• improves the management of scheme finances including record keeping establish flexible administrative and management arrangements.

The Regulation provides the necessary administrative and procedural detail to ensure these objectives can be achieved. The Regulation:

• provides a mechanism for nomination and appointment of strata committee members
• provides for modern forms of communication to be used for voting on motions and elections
• provides the operational detail for the new defect bond scheme
• provides model by-laws that can be adopted or adapted by strata schemes prescribing the necessary forms and fees.

We have summarised some of the key changes in the Regulation below. Please note this is not an exhaustive list. If you wish to read the Regulation, we have provided links below.

• The list of documents that must be handed over to the owners corporation by the original owner at the first AGM has been updated and includes any valuation of the building, maintenance and service manuals.
• The original owner is required to provide these documents no later than 48 hours before the first AGM commences. A maximum penalty of $11,000 may be imposed on the original owner if they do not adhere to the requirement.
• A tenant representative can be a member of on a strata committee (formerly the Executive Committee) but can only be nominated if the scheme has tenants in at least half of the number of lots.
• The tenant representative is entitled to attend meetings of the committee, however they cannot make up a quorum and do not have any formal voting rights.
• For election of a strata committee, a ballot must be held if there are more nominees than positions.
• Owners corporations can vote to adopt various forms of electronic voting such as web platforms, Skype, or email.
• Candidates can be nominated for election prior to a meeting or at the meeting. As nominations can be accepted at the meeting, pre-meeting voting cannot be used for the election of the strata committee. 
• Additional accounting records must be kept by the owners corporation. These are: consecutively numbered receipts, a statement of deposits and withdrawals for the owners corporation accounts, a cash record, and a levy register. 
• An owners corporation may adopt The Common Property Memorandum (published by Fair Trading) which specifies whether an owner of a lot or the owners corporation is responsible for the maintenance, repair or replacement of any part of the common property.
• Under the Act, an owner may carry out minor works provided they have approval of the owners corporation given by a resolution (50% of owners agreeing) at a general meeting. The definition of minor renovations has been extended to include; removing carpet, installing a rainwater tank clothesline, heat pump, ceiling insulation, solar system, and a reverse cycle split system air conditioner. 
• The original owner is required to provide an initial maintenance schedule to the owners corporation.
• An owners corporation may dispose of goods left on common property provided they give sufficient notice. 
• An owners corporation may move a vehicle left on common property provided they given sufficient notice. 
• A by-law may limit the number of adults who can reside in a lot. The limit cannot be less than 2 adults per bedroom and does not apply to direct family members, carer, de facto relationships or extended family for Aboriginal or Torres Strait Islanders. 
• Records of voting papers, including electronic voting records must only be kept for 13 months.
• For defect inspections, a building inspector must be from a strata inspector panel from a list of approved organisations listed in the regulations.
• The developer must provide a building bond of 2 per cent of the contract price for the building works on a new apartment. The bond must be used towards defect rectification and both parties are given 14 days notice before any money is released.
• A strata managing agent cannot accept any benefit in connection with the provision of their services over the value of $60.
• The term of a strata managing agent appointment following the first AGM is 12 months, and in any other case, the term is 3 years. 
• Schedule 2 and 3 sets out a new set of model by-laws which an owners corporation can choose to adopt. The amendments; makes it easier to keep pets in a scheme, provides further protection for children playing in common property, addresses the behaviour and language of residents, smoke penetration, hanging of washing, disposal of waste, and changes in use of a lot. 
• Schedule 5 lists the offences for which a penalty notice may be issued and the amounts for each offence. Notices can be issued for offences such as strata managing agents not reporting commissions or other benefits at an AGM and owners corporations not providing access to the scheme for a fire safety inspection.

May 2016