Stra­ta and Com­mu­ni­ty Title Reform in NSW

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 régime 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.