Recognising that more than a quarter of people in NSW now live in town houses or apartments, the NSW State Government introduced a number of laws (almost 100 changes) that came into effect on 30 November, 2016 in order to modernise Strata Schemes –
Strata Building Bond Scheme –
Commencing on 1 July 2017 new building defect bond scheme will commence to increase builder and developer accountability, enable defects to be identified and fixed early, and prolong the life of the building:
- The building bond will be for the construction of strata buildings over three stories high;
- Developers will be required to lodge a 2% bond for the final contract price of the building, as a form of security to fix any defective work;
- Developers will need to pay to engage an independent building inspector to provide defect inspection reports;
- A first report is due between 15 and 18 months after the completion of the building;
- The final report must be provided between 21 months and no later than 2 years after the building work is completed;
- The owners corporation must agree to the appointment;
- If there is no agreement or the developer ceases to trade after the building work is complete, Fair Trading will arrange for an inspector to be appointed;
- If the defects are not rectified, the building bond will be used to carry out the repairs;
- If there are no defects or they are rectified, the bond will be returned to the developer.
Appointment of Strata Managers, Caretakers & Building Managers –
- Strata managing agent agreements will be time limited to 1 year (in the first year of the strata scheme);
- If a strata managing agent or building manager/caretaker is not performing, owners will be able to apply to the Tribunal to vary or terminate the contract, or to be compensated;
- If a strata managing agent is appointed before 30 November 2016, their term of appointment ends whichever is the later of -.
- up to 3 years after their term commenced (on the day the term is due to end); or
- 6 months from the start of the new laws.
- Contracts with caretakers and building managers in force before 30 November 2016 will remain in force after that date, until 10 years after the laws have commenced (unless the terms of the contract are for a shorter period, then that period will apply).
- Smoke drift has been identified as a potential “nuisance” under the law of nuisance;
- The new law is designed to allow strata communities to police their own buildings where people can smoke without bothering anyone rather than impose a blanket bank on all smokers.
Collective Sales –
This is one of the most controversial of the changes being introduced by the Government because it –
- Reduces the need to have a unanimous or 100% agreement amongst owners of older buildings, to just 75% of owners, to agree to the sale of the building to a developer for redevelopment, regardless of the wishes of the minority;
- The Government has stated that the intention is to remove the opportunity for individual owners to prevent redevelopment of their aging and high-mainenance buildings or to hold the majority of owners to ransom by holding out for an inflated price.
Other changes include –
- Allowing owners to adopt modern technology to conduct meetings, vote, communicate and administer their scheme;
- The need for owners to review by-laws (strata community rules) within 12 months, which can be customised to suit their lifestyle – such as whether to allow owners to keep a pet by giving notice to the owners corporation;
- A simpler, clearer process for dealing with disputes;
- Broadening tenant participation in meetings;
- A new option to manage unauthorised parking through a commercial agreement between a local council and a strata scheme;
- A clearer and simpler three-tier renovations process, which waives approval for cosmetic renovations within the strata lot (for example, installing handrails for safety).
If you are buying and selling strata property or just want to know more about your legal rights, call Brazel Moore Lawyers on (02) 4324 7699 to speak to an experienced solicitor today.