Strata Reforms are the New Black: Reform on the agenda around the country

Strata Reform Papers

Maybe I have been watching too much Orange is the New Black, but it really does seem that all around Australia strata reform is on the policy agenda. In NSW, it looks like the process that began in late 2012 may soon come to fruition with both the draft Strata Schemes Development Bill & the draft Strata Schemes Management Bill released today for a (gasp) final round of consultation which is due to end on 12 August.

What does this mean? 

Property and Strata lawyers, strata managers and developers (or potential developers) will be poring over the text of the draft bills. At first glance it appears that many of the proposed reforms have been included with:

  • Many proposed name changes including strata committee to executive committee, capital works fund to sinking fund, building manager to caretaker,
  • Proposed governance changes such as removal of the artificial timing for annual general meetings, changes to those eligible for the strata committee (executive committee) and a leaf being taken out of the ACT book with strata committees proposed to have duties to the owners corporation,
  • Proposed stricter requirements on gifts and commissions to strata managers, NCAT has power to make orders in relation to strata management agreements and caretakers no longer required to have exclusive possession of part of a lot or common property,
  • Proposed changes to financial management of a plan including how monies are to be paid, where they are to be paid and how, the ability to enter into payment plans for overdue levies,
  • Increased responsibility on developers with initial maintenance schedules to be provided to the owners corporation, an ability of owners to obtain NCAT orders to have the developer (original owner) compensate the owners corporation if the estimates and levies determined during the initial period were inadequate;
  • Proposed changes to repair and maintenance duties in that an owners corporation could defer repair if another party was liable for the repair (think building defects) and the owners corporation had taken action in respect of the damage, with lot owners potentially having a statutory claim for damages in certain circumstances where property not maintained or repaired, minor cosmetic works will not require a by-law but “minor” renovations such as a bathroom or kitchen renovation still requires approval which may be delegated to the strata committee.
  • A proposed new regime to deal with building defects including the requirement of developer’s bonds and requirement for early inspections.

This just highlights some of the proposed changes. It looks like strata in NSW may be entering new territory.

The State of Play for Strata Reforms Across Australia

Western Australia: In WA reforms have been highlighted for the Strata Titles Act 1985 (WA). In January 2015, the consultation period closed and the strata reform group is busy compiling feedback, discussing their findings with stakeholders and putting together ideas for a proposed reform package. Topical issues include introducing a form of community title (think community associations and part building strata schemes), dispute resolution, streamlining management of strata schemes, increasing vendor disclosure obligations and the termination of schemes.

Queensland: The first of three options papers on proposed reforms to the Body Corporate and Community Management Act 1997 (QLD) was open for submissions until the end of January this year.  It dealt with by-laws, debt recovery and termination and redevelopment of community titles schemes. The property law gurus at QUT have been tasked with managing the review process and another two options papers are yet to be released.

Northern Territory: The NT reform agenda has been focused on the termination and redevelopment of strata plans and on 8 December 2014 the Termination of Units Plans and Unit Titles Schemes Act 2014 was assented to.

Victoria: Given the action in other states Victoria is relatively calm with the last round of reforms in October 2014.

South Australia: South Australia’s parliament should be given points for keenness being ahead of the curve with its strata reform occurring in 2013.

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