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18 October 2012 Strata and Community Title Reform in NSW

By Mary Digiglio, Partner


The NSW Government has released a discussion paper and has sought feedback and comments regarding proposed reform to the strata and community scheme laws.


A summary of some of the key discussions points is below:

We have more than 70,000 strata and community title schemes worth an estimate of $350 billion in total assets, so it will come as no surprise that there has been an increasing level of concern that our laws have not kept pace with change, which has prompted the release of a discussion paper proposing new law reform.

Some of the key concepts raised in the discussion paper include:

  • Whether the laws should further distinguish between schemes based on the number of lots in a scheme, the size of a scheme's budget or the type of construction that forms the scheme, for e.g.: vertical block of units as opposed to horizontal town house developments.
  • Creating an appropriate test to balance the personal freedoms of individual lot owners and the duty of co-operation required of a successful, harmonious owners corporation.
  • Dealing with competing interests within a scheme.  This issue is certainly not a new one and currently arises as an issue in schemes. Competing issues can exist between the original developer, the owners corporation or community association established upon registration of the scheme, the caretaker or building manager, the executive committee, owners occupiers and tenants.
  • Re-writing the legislation into a plain English form and clarifying some of the terminology.
  • Changing the existing laws to deal with technological developments in communications, for e.g.; recognizing email communication as an accepted form of issuing notices and holding meetings using webcams, Skype, etc.
  • Formalising a time period for the issue of minutes of a meeting, after the meeting has been held.
  • Increasing the transparency by having a regime to deal with:
    • conflicts of interest of members of the owners corporation, managers and agents;
    • restricting members of the committee to lot owners (and not nominees of lot owners);
    • identifying individuals who move motions;
    • reducing the 10 year maximum on the length of contracts entered into in the initial period.
    • Decision making thresholds, ie: ordinary resolution, special resolution or unanimous resolution.
  • Changing the requirement for a unanimous resolution to terminate a scheme and the sale process of lots that flow from a termination event.  This is an issue that has been on the horizon for many years, many of the NSW strata schemes are now run down and do not comply with fire regulations or Australian Standards.
  • Clarifying the definition of common property to assist in lot owners understanding where there responsibilities start and stop.
  • Changing the laws and procedure with respect to renovations to lots.
  • Managing the increasing concern in some strata schemes of over crowding and short term rentals.
  • Reviewing the way in which unit entitlements are determined and whether the unit entitlement is not necessarily the same as the unit liability with respect to levies.
  • Managing the 10 year plan and the sinking fund.
  • Managing disputes within the scheme including:
    • the CTTT and the increase in legal representation at the CTTT, which adds significant cost to the process; and
    • enforcing by-laws.

There is no doubt this discussion paper is long over-due and is a positive initiative for stakeholders in strata and community title schemes in NSW.

Public submissions are open until 15 November 2012.  The discussion paper may be downloaded from the website for the NSW Fair Trading.

Mary Digiglio, Managing Partner  |  Phone: +61 2 9233 5544  |  Email: med@swaab.com.au

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This article is not legal advice and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.

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