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The huge overhaul in strata schemes

Property Law News | October 2016

It is estimated that more than 2 million people in New South Wales currently live in strata title properties, which can include not only home units but townhouses and terraces in certain cases.

The laws governing strata schemes in NSW have recently been subjected to their largest overhaul in the last four decades. It is important to stay abreast of these changes even if you are not the property owner, as even tenants are now allowed a limited role in the management of the Owners Corporation (“OC”).

Major changes on the horizon

The scope of the reforms includes the following:

  • Governance changes will enable tenants in a strata scheme to take on a limited role in the management of the OC. In strata schemes where at least 50% of the scheme is rented out to tenants and the OC has been notified of the tenancy the OC must convene a tenants' meeting to allow eligible tenants (i.e. those tenants about which the OC has been notified) to elect a representative to the strata/executive committee. However the tenant representative will have no voting rights, be unable to put a motion on the agenda and cannot hold an executive role (Treasurer, Secretary or Chairperson) and is not counted when considering quorum. The tenant representative may also be asked to leave when financial matters such as levy contributions are being discussed by the committee.
  • Voting will be allowed via phone and video conferencing, email or other electronic means or even allow for pre-meeting voting where the technology and the means are available to strata managers.
  • The use of proxies has also been made more restrictive and the new legislation now provides that for schemes with 1-20 lots a person can hold 1 proxy. For schemes with 21 or more lots a person can hold no proxies for no more than 5% of the total number of lots (e.g. a scheme with 100 lots would enable a person to hold proxies for 5 of the lots).
  • Reduced voting rights for owners with over half of the units: Voting rights have been changed by reducing the power of owners who own lots with over 50% of the unit entitlements in the scheme. In these cases the voting rights of these owners are reduced by two-thirds.
  • Removal of unwanted items: Property management changes now require the original owner to prepare an initial maintenance and inspection schedule for any item on the Common Property (“CP”). The new regulations also enable OCs to dispose of any unwanted items which have been left on the CP (such as cars, furniture etc.) with greater ease. The new process simply requires the OC to place a notice on the item, wait for a specified period and upon its expiry, arrange for the removal or disposal of the item.
  • Occupancy rules diluted: By-laws changes which may have the greatest impact include the watering down of occupancy rules. The regulations now provide that for the purpose of the 2 persons to a bedroom limit, close relatives, carers and certain others are exempt. For example, a married couple, their 2 children and 2 grandparents could live in a 1 bedroom unit even with a by-law limiting occupancy to 2 persons per bedroom.

The widespread changes referred to above and in our earlier article will radically alter the strata landscape. It is vital that all strata lot owners and tenants alike keep up with these changes.

If you have any questions about purchasing or selling a strata unit or if you have questions about the functioning of your strata scheme, contact us at Forum Law for a free 30-minute conversation on (02) 9560 3388 or in our friendly office in Leichhardt where parking for clients is free.

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