New laws to make owners fix common property

Strata schemes that are dragging their feet on repairs may be forced to undertake them, embedded networks that cheat apartment owners could be killed off, pet application fees could be limited or scrubbed and owners’ email addresses could be kept from prying eyes, all under proposed changes to strata law tabled in the NSW parliament this week.

The NSW Strata Statutory Review report makes 139 recommendations to improve strata living, some of them signalling major changes to the way our lives are governed in strata.

The proposed changes, in a review that’s been almost a year in the making, include:

• New powers to order the rectification of serious defects by owners corporations.
• Owners corporations being required to undertake maintenance in a timely fashion so residents aren’t stung with costly repair bills after years of disrepair.
• The outlawing of unfair long term electricity supply and maintenance contracts taken out by developers, saving owners collectively tens of thousands of dollars a year.
• Digitising key strata records to save strata communities time, effort and money
• Detailed minimum requirements for 10-year capital works fund plans
• Providing enhanced training for strata committees, and streamlined mechanisms to resolve disputes
• Defining the roles and limiting the contracts for building facilities managers.

The statutory five-yearly strata law review coincides with an era of significant changes in strata living.  As a result, it is a densely detailed document of 112 pages, buried in which are proposals for some significant alterations to strata law.

In the five years since the 2015 Strata Schemes Management Act became law, we have seen pet laws challenged and changed, the emergence of embedded networks – where suppliers install infrastructure for free provided developers can persuade new buyers to sign up to long-term expensive contracts – the growth of the building facilities management industry, proxy farming curbed but not killed off, revelations of widespread building defects and the explosion on to the scene of Building Commissioner David Chandler.

Without doubt, it is Mr Chandler’s supercharged efforts to make developers, builders and other industry professionals accountable for their poor planning and workmanship that has inspired the proposal to compel strata schemes to fix defects in existing buildings, even after the warranty periods have expired.

Under the proposal, rather than depending on action by your strata committee, which may be dominated by owners who want to keep levies low at all costs, owners will be able to go to Fair Trading and ask it to seek orders at NCAT compelling the owners corp to act.

Committee members

Also among the changes proposed that will have a more direct impact on strata owners and, especially, committee members, there will be clearer definitions of committee members and office-bearers’ duties, making it easier for owners to remove committee members from the committee.

Specifically, the review proposes changes that will, the document says:

• Codify additional duties and obligations for strata committee members in the Management Act.
• Lower the threshold to remove a committee member from a special resolution to an ordinary resolution.
• Introduce provisions for strata committee members to be prohibited from serving on the committee for a specified period of time after being removed.
• Provide better information to the strata sector about decisions that can be delegated to the strata committee versus those that require a resolution by the owners corporation.
• Define the office bearer roles, especially the Chairperson, more clearly and comprehensively in the Management Act.

Among other planned changes, limits will be imposed on the use of powers of attorney and company nominees to circumvent anti-proxy farming legislation. Also The Management Act may be amended to include a prohibition on unfair terms in standard form contracts offered to owners corporations, “mirroring the principles set out in Part 2-3 of the ACL [Australian Consumer Law] and aligned with its monetary limits.”

One proposal that could and should strike fear into the hearts of dysfunctional committee members is a suggestion that, where a strata scheme is not being managed well or in accordance with the Act, Fair Trading should be given the power to seek the appointment of a compulsory managing agent at NCAT, especially where individual owners are too intimidated to take action themselves.

Pets and assistance animals

When it comes to pets, the review suggests further examination of schemes that impose, for instance, $300 admin fees, per pet, for processing applications when that may in fact just be a way of deterring people from having companion animals in previously pet-free schemes.

And it wants to look at assistance animal exemptions, detailing the kind of proof required to register an assistance animal, as well as amending by-laws that would effectively require vision-impaired residents to carry their guide dogs across common property.  

Email addresses and records

The question of access to strata records, including email addresses, is addressed without coming up with much in the way of concrete proposals.

The review says Fair Trading should provide clear guidance on the privacy obligations that can apply to owners corporations and how they apply in relation to access to records under the strata laws.

And that Parliament revise Part 10 of the Management Act, in consultation with the strata sector, to “potentially introduce limited exemptions to record access where there are significant privacy or legal concerns, accompanied by a mechanism to dispute the use of such exemptions.”

In short, expect the pressure from the strata management industry to limit your ability to see other owners’ contact details – including their email addresses – be challenged by pressure from owners to be able to contact each other, especially in times of strife with their committees and/or strata managers.

Defects and repairs

As mentioned previously, there are proposals to introduce compulsion to the strata defects and repairs area, whereby strata schemes that need repairs can be compelled to undertake them.

“Drawing on the success of the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (the RAB Act), the review proposes amendments to the Management Act that would give Fair Trading similar compliance powers to those under the RAB Act to bolster compliance with owners corporations’ statutory duties,” says the review.

“However, instead of issuing orders to developers, Fair Trading would have the power to compel owners corporations to act on their failure to prevent the building falling into a state of disrepair during the life of the building.”

The changes would include the creation of an offence where an owners corporation’s had breached its statutory duty to maintain and repair common property, “with an appropriate penalty to be set following further consultation.”

So, no longer would it be up to owners to take their schemes to NCAT to force them to fulfill their duties to repair and maintain common property, Fair Trading would be able to charge committees and owners corporation with an offence that could attract fines.

Building managers

Building facilities managers’ roles and responsibilities will be more clearly defined with contracts also being looked at.

Internal dispute procedures withing strata schemes will be enhanced while it will be made clearer that the Tribunal (NCAT) has the power to award damages in cases where owners corporations have failed to fulfill their statutory duties.

There is a lot of other stuff in this report – 139 proposals across 112 pages is too much to digest in one hit.  But as the numerous references to consultation with the strata sector suggest, the government is only halfway through the process, if that.

The next stage will be to work out what can be implemented immediately and what will require legislation, so expect a gradual roll-out of the “easy” elements, such as rewording Fair Trading advisories, then eventually amending legislation for all the other aspects that require a change in the laws.

Meanwhile, here at Flat Chat we plan to look at every area of the review, section by section, so that you Flatchatters (at least) will know what the future may hold for strata owners and residents.

Download it from the link above.  At least that’s your Christmas reading taken care of.