modernising-strata

MODERNISING STRATA

NSW Office of Fair Trading Proposes Strata Living Reform

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 AND 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.

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