Community Land Development Act 2021 Overhaul

The Community Land Development Act 2021 and the Community Land Management Act 2021, and their corresponding regulations, will commence on 1 December 2021.

The new suite of legislation will replace the 1989 versions. The reforms align the community schemes legislation with the Strata Schemes Management Act 2015 and the Strata Schemes Development Act 2015 for much-needed consistency while accounting for important differences between strata and community title.

The new laws will modernise and simplify the development process of community schemes within NSW, revising many provisions that have continuously caused frustrations for developers of community schemes and owners within them over the years.

The legislative reforms will provide more flexibility in dealing with association property, improve dispute resolution, enhance accountability and transparency, modernises communications and procedures, and will provide a more effective trigger to end the ‘initial period’.

The new laws are published on the NSW Legislation website:

Community Land Development Act 2021

Community Land Development Regulation 2021

Community Land Management Act 2021

Community Land Management Regulation 2021

Key changes to the Community Land Development Act include:

Align the staged development provisions with the Strata Schemes Development Act 2015
The new Development Act will make development contracts more transparent and flexible by remodeling the staged development provision so they align with the strata legislation. Changes include allow for schedules of contributions to be included in a development contract which will itemise expenses and identify who is responsible for payment, allow for additional association property to be created provided it has been disclosed in the development contract, and require meetings to authorize items identified in a development contract as development concerns.

Ability to add land to a community scheme.
Removes restrictions on associations and owners from purchasing adjoining land outside of the community, precinct or neighbourhood scheme, and allows land to be added to the community parcel. This will provide developers with the flexibility to incorporate neighbouring properties into the community parcel when and if this becomes desirable as the development progresses.

Termination of a community scheme or precinct scheme
Allows for termination of community schemes or precinct schemes through the Registrar General’s office.

A change to the definition of the initial period
The definition of the initial period will change so if there is no subsidiary scheme in a community or precinct scheme, the initial period will expire on the issue of an occupation certificate under the Environmental Planning and Assessment Act 1979, which is issued when development is completed on land as required by a development consent. The amendment will allow a more effective trigger to expire the initial period for community and precinct schemes where there is no subsidiary scheme. For a neighbourhood scheme the initial period ends when one-third of the total unit entitlement under the scheme.

Changes to unanimous resolutions
Reduces the level of resolution required for certain matters. Currently, under the current Act, you need a unanimous resolution to undertake such matters as; creating an easement, converting a development lot to association property, and removing a development lot from the community scheme. These matters will now only require a special resolution that prevents one owner from holding up development within a scheme.

Unit entitlement schedules
Extend the ability to lodge revised schedules of unit entitlement on the conclusion of a development to subsidiary schemes.

Remove the red tape for neighbourhood schemes
Removes the requirement for compulsory registration of a neighbourhood development contract and replace it with new provisions allowing for an optional neighbourhood development contract.

Removes restrictions for a waiver of certain responsibilities
Removes the restriction on when developers and owners can apply to the Tribunal for a waiver of certain responsibilities during the ‘initial period’ of a scheme. This provides flexibility to developers and the association to request variations as required by the circumstances of the development.

Key changes to the Community Land Management Act include:

Levy estimates
Where levy estimates by a developer prove to be inadequate and the developer is required to pay compensation. The developer may be absolved of a breach if they are able to prove that they applied due diligence in preparing their initial levy estimates.

Initial maintenance schedule and other documentation
The original owner must prepare an initial maintenance schedule of the association property and the schedule is to be one of the documents provided to the association before the end of the initial period. The documents required to be provided for that meeting by the original owner will include planning approvals, compliance certificates and fire safety certificates.

Proxies
Limits the number of proxies able to be held by any person and limits the matters for which a priority vote can be used.

Financial interest
Prohibits non-owners with a financial interest in the scheme (for example, managing agents and letting agents) from being a member of the strata, neighbourhood, precinct or community committee.

Restriction on voting on building defects
Restricts the developer of an association scheme from voting or exercising a proxy vote on a matter concerning building defects or rectification of building work.

Strata managing agent terms
The term of appointment of a managing agent will be 12 months if appointed at the first annual general meeting, or 3 years in any other case, including reappointment.

Adoption of the “harsh” by-law test
Includes a provision that a by-law cannot be “harsh, unconscionable or oppressive” to be in line with the Strata Schemes Management Act 2015 (NSW).

Meetings, voting, committees, and documentation
Provides for better flexibility on meetings, voting and documentation, allowing for alternative methods of attendance at meetings including social media, video and teleconferencing, postal or electronic voting and secret ballots, more flexibility regarding AGMs and quorums, and postal or electronic voting and secret ballots and allows a chairperson with a power to declare a quorum at a meeting after 30 minutes.

Long-term contracts for the supply of utilities
Agreements for the supply of utilities to neighbourhood schemes will automatically expire at either the first annual general meeting (AGM) of the association if the agreement was executed before the meeting, or in any other case three years after the date on which it commenced. Utility agreements are to be included as an agenda item at AGMs. This does not extend to electrical embedded network agreements that apply to residents.

Notice of a financial interest
It will be mandatory, rather than discretionary, for a person who has an interest in a community development lot, precinct development lot or neighbourhood lot that confers a right to vote at an association meeting to give the association notice of the interest.

An increase in the time to register a change in by-laws
The time within which a notification of a change to by-laws must be lodged with the Registrar General has been increased from two months to six months.

Committee representatives
Managing agents, facilities managers for associations and agents who lease lots in a scheme will not be eligible for appointment, nomination or election as members of association committees. If there are tenants for more than half the lots in a neighbourhood scheme, a tenant representative may be nominated for the neighbourhood committee and may attend, but not vote on issues at, the committee.

Unpaid levy contribution and interest recovery
Allows for associations to pursue unpaid levies and interest through NCAT.

Mandatory postal address or email for tenants
Includes a provision that makes it necessary for tenants to provide the association with an address (physical or email) to enable sending of notices and agendas, etc.

Change to terminology

There are several changes in terminology over the two Acts:

• ‘Sinking fund’ to ‘Capital works fund’ to be in line with the Strata Schemes Management Act and the Retirement Villages Act 1999.
• Committees are now to be known as ‘association committees’ rather than the ‘executive committee’
• ‘Caretaker’ is to be known as a ‘building manager’ to be in line with the Strata Schemes Management Act 2015.

If you’d like to discuss your community association requirements, please don’t hesitate to contact us.