Strata reforms have started: what you must know
 
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A new era for strata professionals has started

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This special edition on the strata reforms equips strata professionals with key information and tools, so that they can help strata schemes adjust to the new laws.

Major changes to strata laws came into effect on 30 November 2016, delivering a new era for over 75,000 strata communities across NSW.

This edition also contains:

  • information for strata schemes that registered to test their property for loose-fill asbestos insulation
  • an overview of new laws affecting small business contracts.

Lastly, a reminder to comment on our real estate reforms paper by 5 December 2016.

 

Strengthening professionalism in strata

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To support you with your new obligations, we have listed key accountabilities for professionals in the strata sector.

The following accountability measures now apply:

  • Strata professionals have maximum appointment terms - up to 3 years for strata managers and 10 years for building managers. Agreements cannot automatically roll over. Additionally, strata managing agent agreements are limited to 1 year where the agent is appointed at the first annual general meeting (AGM). Any existing building manager appointment ends following the first AGM
  • A strata managing agent or building manager must declare any pecuniary interest or benefit linked to their appointment (not including the benefit of the prospective appointment itself)
  • Strata managers must give the owners corporation at least three quotes for insurance and provide written reasons why if they obtain less
  • Strata managers need to give an annual account of their activities, which the owners corporation can check against the contract they have signed with their strata manager
  • Strata managers cannot accept or request gifts over $60 - including gifts for third parties
  • Strata managers must report for each annual general meeting (AGM) the amount of commissions or benefits they have received in the past 12 months of work for the strata scheme. They must also estimate commissions they expect to receive in the 12 months ahead
  • A strata committee member must declare any conflict of interest in a matter being voted on and be excluded from that vote.

If acting on behalf of a landlord, real estate agents should remember to:

  • give a new tenant a copy of the strata scheme’s by-laws within 14 days
  • register the tenant on the strata roll within 14 days of a new tenancy, by completing a tenancy notice and lodging it with the secretary of the strata scheme. The tenant’s email address can be included as a contact method. A penalty applies if this is not done. 
 

Eight ways to help strata schemes benefit

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Some 60% of strata schemes in NSW are managed by a licensed strata managing agent. This means strata professionals will play a key role in supporting the majority of strata schemes with the new laws.

Strata professionals can win the confidence of their strata schemes in these ways.

1.  Information 

Help owners and tenants in strata become informed about the changes that are directly relevant to them by visiting stratalaws.nsw.gov.au

For industry-relevant details about the laws, strata professionals should explore the industry section of the website

Other sources of information include: 

2. Reviewing the by-laws

Make sure that owners know about the model by-laws to help them review their by-laws by 30 November 2017. Owners may consider amending their by-laws to take advantage of:

  • the renovations process
  • new ways to deal with problem parking.

We explore the benefits of these reforms below.

Read more about by-laws here.  

3. Renovations

Ensure that owners are aware of new options to streamline approvals for renovations.

The new process for renovations clarifies that:

  • cosmetic changes to the common property in a lot do not need approval
  • minor renovations require owners’ support through a majority vote
  • major or structural changes need a special resolution vote (75% of the owners agreeing at a meeting) to go ahead. 

To speed up approvals, owners may now delegate approval for minor renovations to the strata committee, and specify specific renovations as being cosmetic or minor ones.

Read more about approvals for renovations

4. Managing problem parking

A strata scheme may approach their local council to patrol unauthorised parking on their property, if the council agrees.  

There are further measures for strata schemes to deal with unauthorised parking and abandoned vehicles too.

Read our information about parking management options.

5. Technology enablers

Help your strata scheme to consider their options for electronic communication and administration, and adopt the ones that work best for them. The owners corporation can pass a general resolution to take up their preferred options. 

Find out more about adopting technology enablers in a strata scheme.

6. Collective sale and renewal

Strata schemes should be aware of the steps and requirements involved in a collective sale process. 

Understand the collective sale process in more detail.

7. Tenants

Where at least half of the lots in a strata scheme are tenanted, strata schemes can now have a tenant representative elected to sit on the strata committee.

Owners corporations need to be aware of this development. They should also recognise the benefits of tenants having clearer avenues to raise concerns. This includes tenants being able to help identify maintenance or security issues that could, left unattended, lead to problems or unnecessary expense for the owners.

To attend meetings, tenants must be on the strata roll. 

You can read more about tenant participation here.

8. Internal dispute resolution

The laws recognise that strata schemes may have their own dispute resolution process to proactively manage disagreements. People who are involved in a dispute do not have to take part in an internal dispute resolution process if they do not want to.   

Fair Trading now provides mediation for free, which may be required before a matter can go before the NSW Civil and Administrative Tribunal.

Read more about the process for resolving disputes.  

 

Upcoming strata reforms information seminars 

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Owners and tenants may have more questions now the strata reforms are in effect. What better way to address them than to attend a free information seminar!

Don’t miss our final strata reforms information seminars for 2016, for owners, tenants and strata professionals. They run from 5.30-7.30pm at the following locations:

  • Wollongong – 6 December
  • Liverpool – 8 December
  • Newcastle – 13 December.

Visit our events register for details. 

 

Strata schemes testing for loose-fill asbestos insulation

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Under the NSW Government’s loose-fill asbestos insulation Voluntary Purchase and Demolition Program (the Program), home owners in 28 local government areas were eligible to register for free sample testing for loose-fill asbestos insulation. Registrations for sample testing have now closed and eligible strata schemes were required to lodge with Fair Trading their intent to register by 1 August 2016. 

As any loose-fill asbestos insulation is likely to be located within common property, the owners corporation must:

  • formally resolve to go ahead with the registration by voting at a general meeting
  • include in their resolution who has been delegated the responsibility of registering the scheme.

Before exercising their votes, lot owners should be aware of what is involved if the strata scheme contains loose-fill asbestos insulation. They should be informed about financial assistance available and new laws impacting affected properties. Further information can be found at loosefillasbestos.nsw.gov.au

Eligible strata schemes that lodged their intent to register with Fair Trading before 1 August 2016 should return the approved special resolution to Fair Trading before 31 March 2017.

Please use this template resolution (in Word format) and email it to AsbestosEnquiry@finance.nsw.gov.au  

If the strata scheme did not lodge their intent to register before the registration deadline and there is concern that the property contains loose-fill asbestos insulation, the scheme should arrange for a licensed asbestos assessor to conduct a sample test at their own expense. 

SafeWork NSW provides a search page for asbestos and demolition licence holders, including licensed asbestos assessors. Enter your search requirements by selecting "licensed asbestos assessor" and the relevant region in NSW.

 

New laws for small business contracts

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If you are a small business or work with one, be aware that new protections for small businesses against unfair contract terms started on 12 November 2016.

To help small business owners understand the impact that this may have on their business, the Australian Competition and Consumer Commission (ACCC) has published a report to help owners understand how the laws around unfair contract terms will apply to them.

In the report, the ACCC reviewed more than 45 standard-form contracts that are commonly offered to small businesses, covering areas such as advertising and telecommunications services, retail leases and waste management services.

During the review, they found three types of problematic terms across all industries:

  • terms allowing one party to unilaterally vary key aspects of the contract in an unconstrained manner
  • terms imposing broad indemnities or excessive limitations of liabilities
  • unreasonable termination clauses.

Under the new protections, the courts can strike out unfair terms in standard form small business contracts. Any unfair terms will be void and treated as if they never existed, however the rest of the contract will remain.

This law only applies to standard form agreements between businesses where one of the firms employs less than 20 people and the contract is worth up to $300,000 in a 12-month period.  

You can find more information on unfair contract terms at www.accc.gov.au/uct 

 
fairtrading.nsw.gov.au