Strata law reforms’ greatest hits

There were more than 90 proposed changes to strata laws in the Draft Bills announced this week – some are massive changes in the concept of property ownership, others are tweaks and finesses to existing laws, by-laws and rules.

Here are the top 10 changes, announced by Fair Trading Minister Victor Dominello, that we think will affect ordinary strata owners and tenants most.

OVER-CROWDING

The proposal: To allow owners corporations to create by-laws limiting the number of adults who can live in an apartment (although it can be no fewer than two per bedroom, with fines for over-crowding to be raised to $5500.

The intention: To curb the multi-occupancy of apartments in blocks near the city or universities because of health, safety and the detrimental effect these ‘battery cage’ apartments have on other residents of the buildings.

Mr Dominello is also looking to the Boarding House Act that he successfully steered through the last parliament which allowed council inspectors to use circumstantial evidence such as the number of people coming and going from houses to show there was probably over-crowding.

This allows counils to by-pass rules that meant they had to give landlords advance notice that they were coming to look round their properties, giving them a chance to remove any evidence of multi-occupancy.

The effect on residents: Owners will be able to limit the number of people in a flat then find it easier to gather evidence then take effective measures at the NSW Civil Administration Tribunal to get apartments cleared and fines imposed.

FINES TO BE PAID TO OWNERS CORPS

The proposal: To have fines for breaches of by-laws to be paid to the owners corporation, rather than State revenue.  The fines can range from up $1100 for first offences to double subsequent breaches. In cases of overcrowding, the fines can range from $5,500 for first offences to $11,000 for repeat offenders.

The intention: To make pursuit of by-law breaches cost-effective so that owners corps aren’t losing money by pursuing breaches and then seeing the “revenue” from their action disappear into the public purse. Many Owners Corps are shirking their duties of care because it costs too much – especially in the extra work that has to be done be their strata managers, before they even engage a lawyer – to pursue Notices To Comply.

The effect on residents: If you are breaching by-laws, you are much more likely to have your Owners Corp chasing you.  If you are having  trouble from a by-law breaching neighbour, you are more likely to get help from your strata committee.

DEFECTS BOND

The proposal: Developers will have to place a bond of 2% of the value of the building to cover potential defects after completion.

The Intention:  To protect new unit purchasers, especially first-time buyers, create more confidence in the industry and force the bad developers to have the same diligence as the good ones … or pay a price.

The effect on owners:  Owners of new apartments who discover defects will no longer face the choice of accepting them and paying for rectification themselves or rolling the dice by pursuing recalcitrant developers through the courts just to get what they paid for.  It will also clip the wings of fly-by-night one-off developers who disappear as soon as the last unit is sold.

PARKING

The proposal: To allow owners corporations and local councils to let council parking inspectors patrol strata car parks and issue fines to people who have parked where they shouldn’t.

The intention:  Parking is one of the most contentious areas of strata life, especially since the law seriously limits what owners corps can do about rogue parkers (especially non-residents). It’s an area that leads to arguments and even violence. Just last week a driver was convicted and fined $2000 for “keying” the car of a woman who blocked him in for stealing her parking space.

The effect: Once signs go up and the parking inspectors come in, EVERYBODY will have to be on their best behaviour.  Sure, the non-resident commuter who parks in a visitor spot will get a ticket, but so might you if you park briefly in the driveway or over the lines round your space.  Be careful what you wish for!

PETS

The proposal: To change the standard or default by-law to state that pets are allowed provided that the strata committee approves , although that approval can’t unreasonably be withheld.

The intention: To create a default situation where pet ownership, under reasonable conditions, is allowed.

The effect: This will make no difference to older building that have established by-laws, or new buildings where they have written their own by-laws.  But for the many building that just go with the basic by-laws recommended by Fair Trading, you can have a pet unless the owners corp has a very good reason for saying no.

SMOKING

The proposal: A small but significant note on the section on residents behavior identifies smoke drift as a potential “nuisance” under the legal meaning of the word.

The Intention:  Rather than placing a blanket ban on all smokers, this allows strata communities to police their own buildings where, for instance, people might be able to smoke like chimneys without bothering anyone.

The effect: It’s very much up to individual owners to decide what they want to do about neighbours’ smoke.  But at least they don’t have to prove that it’s a problem – just that they are affected by smoke from another lot.

COLLECTIVE SALES

The proposal: To allow 75 percent of residents of older buildings to agree to their sale to a developer for redevelopment, regardless of the wishes of the minority. Currently this requires a 100 percent vote.

The Intention:  To remove the opportunity for individual owners to prevent redevelopment of their aging and high maintenance unit block, or even hold their neighbours to ransom by holding out for an inflated price.

The effect: Simply put, about 8,000 apartment blocks in established communities in NSW will be viable redevelopment sites where newer, safer and healthier buildings can be built, accommodating two or three times as many residents. An advice hotline and advocacy services are to be provided for the vulnerable and elderly, and fair compensation mechanisms will be established but, inevitably, some people will be evicted from their homes.

PROXY HARVESTING

The proposal: Owners in building of fewer than 20 units will only be allowed to carry one proxy vote.  In larger buildings, the limit will be 20 percent of the vote or five votes, whichever is less.

The Intention:  To prevent committee chairs from hoovering up the votes of the absentee investors, the uninterested and the uncommitted so they can run a building as their “personal fiefdom”, to quote the minister.

The effect: The reality is that the Proxy Farmers have seen this coming for a while and will probably organise “proxy panels” of supporters who will share the votes and make sure nothing changes.  However, other measures including electronic meetings and voting will ensure those who want to take part but live elsewhere can participate if they want to, and don’t have to depend on the Dear Leaders of the strata world.

RENOVATIONS

The proposal: To create a three-tier permissions regime which allows certain minor work to be done without permission, some significant renovations to be carried out just with a simple majority vote of the owners corp and, for major renovations, especially anything affecting common property and water proofing, the full gamut of special resolutions, by-laws and restrictions.

The Intention:  To make it easier for strata owners to live in home that suit their needs and sense of style without requiring something just short of an Act of parliament to hammer a nail in  a wall.

The effect: More trips to Bunnings, fewer calls to your strata manager and lawyers.

TENANT REPRESENTATION

The proposal: To allow tenants in buildings where they represent more than half the population to elect a representative to the strata committee.

The Intention:  To make tenants feel like their opinions matter in the strata community.

The effect: Minimal. Tenants can’t vote on the committee, won’t be counted as part of the quorum and can be excluded from the meeting when financial matters such as budgets and questions of unpaid levies are discussed. Will any tenant even bother?

You can download and read the draft Bill HERE