20 New NSW Strata Laws To Be Aware Of

There are more than 90 changes to the strata laws that come into force in NSW on November 30, 2016.

If you live or own property that is part of a strata scheme, here are the 20 new or updated rules that will affect you most.

Collective sales

The biggest change in the strata laws is what is called the “collective sales” rule. It means that 75 per cent of owners in a strata scheme can force their views on the other 25%.

1. Forced sales: 75% of owners can vote to sell the building to a developer for demolition and redevelopment. Currently all it takes is one dissenting owner to stop this process.

2. Forced upgrades: Alternatively, 75% of owners can vote to upgrade the whole building (but not sell), thus keeping their homes. New apartments are then added to the existing building, taking advantage of modern building techniques and more generous height limits. Owners are often required to move out temporarily and move back in after builders have updated and extended the building. Income from the sale of the new apartments is used to pay for all the upgrade work.

Parking and Sub-letting

3. Parking crackdown: Owners corporations will be able to have local council parking rangers to patrol their car parks and to issue parking infringement notices. This is aimed at those who park illegally in strata car parks near commuter hubs.

4. Move along: Owners corporations will be able to move cars parked illegally on common property. Cars will be moved where parking is allowed, like on the street, in a metered parking area where they can be fined. This is aimed at reducing the abuse of visitor parking by residents and outsiders.

5. Smoking deemed a nuisance: Smoke from smoking has been defined as a nuisance, making it easier for you to raise a complaint about smoke drifting from another apartment.

6. Sub-letting & overcrowding: Owners corporations will be able to pass by-laws setting maximum limits on the number of people living in a unit. There is a minimum of two per bedroom and no limits on family members. A $5,500 fine for a first overcrowding offence will be levied, and $11,000 for subsequent breaches. Anyone illegally subletting their units will soon find the practice costing them tens of thousands due to the fire and health & safety issues involved.

Fines and disputes

Under the new laws it will be easier to resolve disputes as well as to punish those who break strata rules. Here are the major changes.

7. Increased fines: The current maximum fine is $220. That goes up to $550 for a regular by-law breaches. In addition, there are the new overcrowding fines discussed in the previous point.

8. Fines go to owners corporations: Currently all the fines levied by strata schemes go to the government! Under the new laws, all fine revenue money will go to the owners corporations. This is good in giving previously passive committees an added incentive to take action. However, it can be used in more malicious ways.

9. Internal mediation: Strata schemes will be able to organise their own mediation systems for resolving disputes in-house. These in-house mediations will be accepted as mandatory precursors to any action at the tenancy tribunal (NSW Civil And Administrative Tribunal).

10. Paper adjudication scrapped: At present, the initial adjudication of strata disputes is done by examination of documents only, with the losing side often appealing at a hearing before the tenancy tribunal. Under the new laws, paper adjudication is no longer used and the process moves straight to a hearing at the tenancy tribunal (NSW Civil And Administrative Tribunal).

Strata managers

The new laws are aimed at giving strata committees more power when dealing with incumbent strata managers.

11. Committee limits: Strata managers, rental agents and anyone else who works for the strata scheme can’t be elected to the strata committees unless they are owners in the scheme. This takes away the ability of strata professionals to pool landlord votes and run the building for their benefit, sometime to the detriment of residents and owners.

12. Disclosure of commissions: Strata managers must declare commissions they receive from among other things compulsory insurance premiums. However, insurance companies will not reduce your premiums by the amount of the commission if you deal with them directly.

13. Term limits: Strata managers can only be appointed for the first year of a new scheme then for three years thereafter. The one-year limit on new schemes gives the owners a chance to assess service providers before making long-term decisions.

Strata committees

14. No more Executive Committees: Executive committees have been renamed strata committees. This removes any ambiguity with the old name implying that Executive Committee members enjoyed executive powers and privileges when they did not enjoy those powers.

15. Electronic voting: Voting electronically, via Skype calls, by email and even good old-fashioned snail mail will be introduced.

16. No more proxy farming: Proxy farming is about to suffer a major blow with votes from owners who can’t (or can’t be bothered to) attend strata committee meetings limited to one per owner for schemes under 20 lots and 5 per cent of schemes over 20 lots. No more proxy factions.

17. Tenant reps: Schemes with more than 50 per cent of the residents being registered tenants must arrange the election of a tenants’ rep to the strata committee. The tenant’s rep will have no voting power and can be excluded from sensitive discussions such as finances and by-law breach complaints. Having said this, the requirement to officially register tenants in your property is routinely ignored in NSW. And so very few schemes will actually ever see this come to pass.

Renovations, abandoned goods and debts

18. Abandoned goods: Bringing strata law into line with tenancy laws, owners corporations will be able to dump or sell goods left for too long on common property by former residents. If the owner comes back to claim them, the owners corporation has to pass on the proceeds of any sale minus the costs of storage, administration and advertising.

19. Renovations: Current laws could prevent you hammering a nail into a common property wall without getting a by-law approved. The new regulations separate renovations into cosmetic, minor and major. The first is simply a case of notifying the committee, the second only requires approval by a vote of the committee (not a general meeting) and the last – usually involving structural changes will still require a special resolution at a general meeting.

20. Debt collection: Debts for unpaid levies or Tenancy Tribunal (NSW Civil And Administrative Tribunal) imposed fines can be recovered directly through local courts. Under the old system you had to first go back to the tribunal to get an order to collect the fine that it previously imposed. It’s probably the clearest case of red tape removal to make life easier.

Conclusion

All up there are a number of welcome changes and additions, but the biggest gotcha is centered around the new “collective sale” rules. It will be interesting to see how this change comes to pass.

Please see the NSW Department of Fair Trading’s website for more information.