The Strata Legislation Amendment Act 2023 (SLAA) was assented on 11 December 2023.
The SLAA is the beginning of the reform process of the Strata Schemes Management Act 2015 (SSMA) and the Strata Schemes Development Act 2015 (SSDA). This is an Act to amend the Strata Schemes Development Act 2015 and the Strata Schemes Management Act 2015 to implement various recommendations arising from the statutory review of the Acts;
To put things in context the last big amendment of the SSMA came into effect on 30 November 2016. The SLAA is the first trench of amendments and supposed improvements.
The SLAA has incorporated about 30 of the 139 proposed changes. The Real Estate Institute of NSW has given us their permission to provide our readers with the following link that summarises the changes in both the Strata Schemes Development Act 2015 and the Strata Schemes Management Act 2015.
Strata Legislation Amendment Bill 2023
Rather than repeat what is in the REI summary and the SLAA, I pick a few major changes that may interest you.
Amanda Farmer lawyer recently commented that the government’s approach is “they have gone for the popular ones,” “they have gone for the easy ones, for example dealing with pets.”
Pets
The government has refined previous amendments about pets. In short, it is easier to keep a pet in your apartment.
An owners corporation can no longer charge a bond or a fee to pet owners and they cannot be required to get pet insurance. The bond and fee were regarded as an indirect way strata schemes could dissuade people applying to keep a pet. That financial barrier has been taken down by the amendments.
A building cannot unreasonably prohibit the keeping of an animal.
Tenants still need to get permission from the owner/landlord if they want to keep a pet.
Emergency Repairs
Another change is that a special levy for the payment of emergency repair work may be struck making payment due within 14 days. This changes the old law where 30 days’ notice was given.
The scary bit is that there is no limit on the amount that can be raised.
What is the situation if an owner cannot raise the levy within 14 days?
The legislation provides an opportunity if an owner is having difficulty raising the special levy to ask the strata committee for a payment plan. The committee has a discretion whether they agree to the request and if so, what the terms will be. There is an opportunity for interest to be waived which is a form of payment plan. Currently in strata the statutory rate of interest is 10%.
Maintenance and Repairs
Buildings are getting older, some were built in the 60s and 70s and maintenance and repair is well overdue and hence emergencies are more likely to arise, and this is where the new provision to strike a special levy payable could come into play.
Recently some media have suggested this could force some owners to sell who are asset rich but income and savings poor.
The new legislation ups the requirement to repair and maintain common property. For example, if a lift breaks down in an old building the associated costs of replacement are very high.
Also, the standard of remedial works is now high and can run into the millions. In such a situation where an emergency levy or even a regular special levy of this magnitude is to be raised, some owners won’t be able to afford it leading the unenviable choice of having to raise a loan or sell.
We have found some owners can’t pay the levies but are against raising strata finance to meet these levies and which could lead them to having to sell or face recovery litigation and subsequent bankruptcy.
General Meetings
Keep in mind too that funds/levies may be raised in a general meeting. In other words, a majority decision is all that is required.
Insurance
A lot of older buildings have put off doing work and that can have negative affect on insurers. Insurance premiums have gone through the roof due to many factors which are outside the control of a strata scheme, as strata is subject to the general insurance climate, however schemes that don’t undertake repairs and maintenance will be subject to higher premium and limited insurance companies willing to take on the risk.
There is a mandatory duty to disclose when renewing insurance and some insurance companies will only provide short term cover and insist on the satisfactory completion of all necessary remedial works. If a building does not insure it is in breach of the law.
Annual General Meeting Notices
Another aspect of the new legislation to be born in mind is the changes to the service time of notices of meeting. The rational for the change assumes that owners need more time to read the notices, which sometimes are voluminous, and give more time for owners to plan so they can attend meetings.
Before the current provisions, the notice provided for an annual general meeting was 7 days. Now it will be at least 14 days before the meeting. Owners and strata managers will need to plan these meetings 6 weeks in advance. This is because each owner needs to have the notice for 14 days and an allowance will need to be made for posting taking into consideration mail delivery times are now every couple of days.
General Meetings will still remain on the current notice period being 7 days.
Digital Records
The new laws provide owners corporation’s must keep their records in digital form. This, as far as we are concerned, is long overdue for those old-fashioned owners corporations who maintain paper records. We have been keeping digital records from the time our office opened.
Keeping Plans
For all new buildings, in separate legislation, all plans, diagrams and construction drawings and as built plans etc must be in electronic form and lodged on a portal. This will help the owners if something goes wrong in the building, and they need to refer to the plans when the building was constructed.
Strata Hub
The Strata Hub is also a recent legislative improvement which requires the reporting of certain information. This includes the names of the committee members including their contact details and details of the strata manager and building manager.
Removal of a Member of the Strata Committee
The new legislation also deals with removal of strata committee members which until now has proven difficult with the passage of a special resolution at a general meeting . That can now occur with a simple majority at a general meeting. Once suspended, that person cannot serve on the committee for a period of 12 months.
Community Associations
There are proposals for the community associations legislation to allow up to 15 members on a community associations committee which, though giving more people voices, will increase administrative work. Some communities have more than 15 entities/Schemes/ so some of those may miss out on having a representative on the committee. One can speculate that could lead to acrimony and disputes. Time will tell.
Thank you to our committee members, owners and stakeholders
Our team is privileged to manage a diverse number of Schemes, BMCs, and Company Title properties. When we reflect over the past very busy year, what stands out is the privilege to work with a wonderful group of unsung selfless and devoted volunteers who sit on your committees and boards and all of whom are volunteers who lend their free time for the benefit owners, residents, and shareholders. Their invaluable contribution is often taken for granted but should be appreciated.