Strata Bills introduced to NSW parliament – with a few surprises

The long-awaited Bills for Strata Schemes Management and Strata Schemes Development were finally introduced to parliament two days ago. Many of the proposed reforms are no surprise to those who reviewed the exposure drafts, including limiting Proxy ‘farming’;  new processes for classifying and approving renovations; permitting electronic service of notices; flexible meeting practices allowing for remote participation as well as for secret ballots; permitting a by-law to limit the maximum number of occupants; special requirements for new Schemes intended to help identify defects; and more.

Observations discussed below are based on the Bills as introduced, and relevant sections may be amended as a result of parliamentary debate.

Strata Renewal (forced sales)

There is no joy (yet) for those who were hoping for a higher hurdle to Strata Renewal (forced sales), with the required level of support remaining at 75% – one of the most contentious elements of strata reform. The timeline for strata renewal proposals to become plans and be accepted or rejected by an Owners Corporation is tighter than proposed in the Draft Bill, but otherwise the process is similar to that exhibited for consultation earlier in 2015.

Developer not to become managing agent of Scheme

One welcome surprise was proposed section 49 now including a restriction preventing the appointment of the developer or a person connected with the developer from being appointed as managing agent until 10 years after the registration of the Strata Plan. Any measure to help Owners to access statutory protections for buildings with defects is welcome, but the effectiveness will depend in part upon the details contained in the Regulations – yet to be seen. Many ambitious measures fail to actually deliver the intended level of protection to consumers, and this is particularly a risk in the area of building defects .

Training sessions – permission required to accept

The exhibited Draft and the Bill as introduced both seek to prevent managing agents from accepting gifts or benefits received from third parties, except in certain circumstances.  Some of those circumstances would require not only disclosure to the Owners Corporation, but also the Owners Corporation’s permission to accept the gift or benefit. Training services are now listed as such a benefit, allowing a managing agent to accept them with disclosure of receiptand permission of the Owners Corporation (in practice we may expect such permission to become a standard clause in Agency Agreements).

Update seminars provided by specialist Strata solicitors are a useful mechanism to improve the technical knowledge of managing agents, increasing the standard of service in the industry, so this is a curious situation. It may come to pass that a requirement to disclose attendance at such training sessions becomes something of a bragging point for agents wishing to demonstrate a commitment to technical proficiency!

Disclaimer

Above is not legal advice. It is commentary on proposed legislation issued by the Licensee of Young Strata, for information only. Any reader intending to rely on advice is encouraged to seek legal advice from a suitably qualified and experienced Solicitor.