NSW Office of Fair Trading Proposes Strata Living Reforms
In November 2013, the Office of Fair Trading released a position paper designed to improve strata living. The paper encourages the modernisation of communication methods, increased transparency, easier dispute resolution, and a reduction in red tape. It is anticipated these changes will come into effect in mid-2015. Below is a summary of key proposed reforms for those living in strata:
KEY REFORMS TO GOVERNANCE
- The name of the “executive committee” will be changed to “strata committee”.
- Flexibility in the way meetings may be attended or held i.e. via social media, video and teleconferencing.
- Votes can be accepted electronically and there will be options for conducting secret ballots
- Strata documents can be held and distributed electronically.
- Exclusion of personal liability for committee members who act in good faith for the purpose of executing their functions under the Act.
- Tenants may attend meetings but will not have any voting rights.
- Office bearers are to be directly elected by the owners corporation at each annual general meeting.
- Schemes can appoint as many people as they wish to the committee provided that at least three people on a committee in a large scheme.
- Limits on the number of proxies that members can hold will be imposed. If more than 20 lots a member to only hold proxy votes totalling 5% of lots in the scheme, and in schemes of 20 lots or less, a member will be limited to one proxy vote.
BY-LAWS
- Increase penalties for by-law breaches to give the tribunal scope to escalate penalties for repeat offences.
- Changes to the model by-laws to address common issues including parking, pets, smoking, and hardwood floors: smoking, pet ownership with permission, and the installation of hardwood floors.
- Schemes will be able to place a limit on the number of people who can occupy dwellings, and owners corporations may enter into arrangements with the local council for the issuing of penalty notices for parking non-compliance.
BUDGETS & LEVIES
- Owners corporations can seek compensation against a developer if unrealistic levies were set.
- When registering a scheme, unit entitlements will be determined by an independent valuation.
- The 10-year capital works fund plan will be required to identify how it will be funded in the long term.
- Disclosure of cost allocation for shared facilities and the method used on new strata and Building Management Statements.
- Strata committees to prepare and distribute key financial information ahead of each AGM.
BUILT ENVIRONMENT
- 75% threshold for collective sale or renewal of a strata scheme.
- Developer to commission an independent defects report after completion.
- Developers of high-rise strata buildings to pay a defects bond until defects have been rectified.
- Developers or anyone connected to the developer will not have the right to vote on defect matters.
- Developer to prepare a maintenance schedule to assist the owners corporation understands the maintenance and costs associated.
- Defect rectification will be a compulsory AGM agenda item.
DISCLOSURE & TRANSPARENCY
- Strata agents to disclose potential conflicts of interest, including any relationship they have with the developer.
- Strata management agencies to disclose commissions gained from third parties.
- Large schemes in excess of more than $250,000 to have their accounts audited each year.
- Management agreements will be limited to a period of no more than three years.
- Committee members to disclose any conflict of interest in a matter to be considered by the committee.
- Non-owners with a financial interest in the scheme (i.e. managing agents, letting agents and building managers) are prohibited from being a member of a committee.
The final new strata regulations can be read here.
August 2014
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