New Strata Laws: 75% of Owners May Collapse a Strata

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Two long-anticipated strata reform bills have just been introduced to NSW Parliament, aiming to improve strata living and reduce red tape for strata managers.

This new legislation will allow stratas to be collapsed by 75% of owners rather than unanimous consent as the current law demands.

This will significantly change the way apartment complexes can be sold, upgraded and redeveloped, marking a relaxation of regulations welcomed by many.
A series of checks and balances are also planned to ensure that dissenting owners are protected under the new law.

Why are new laws needed?

On October 14, NSW Minister for Fair Trading Victor Dominello introduced the Strata Schemes Development Bill 2015 and Strata Schemes Management Bill 2015 into parliament.

This follows the Strata Title Law Reform Position Paper released by the government late in 2013, kicking off the strata reform process.

There has long been a push to free up the management of strata schemes, which are heavy with legislation restricting their closure.

The new laws, proposing a total of 90 changes, are also designed to streamline the entire strata system and allow ageing strata schemes to be regenerated.

It is hoped the reforms will assist developers interested in redeveloping strata apartment buildings. This will encourage urban renewal as well as boosting the housing supply – especially in desirable suburbs where many potential development sites are tied up in aged strata schemes.

What are the new requirements for collapsing stratas?

Enabling a strata to be collapsed or ended by only 75% of owners, rather than all of them, marks a significant change in strata laws.

Checks and balances will include compensating lot owners with at least the market value of their lot along with moving costs.

Renewal plans will also be referred to the Land and Environment Court for final consideration and possible rejection if:

• The renewal plan has not followed proper processes or been developed in ‘good faith’.
• The amount to be paid to a dissenting owner is less than the compensation value of the lot.
• The terms of settlement are not just and equitable.

A free advice service is planned to assist and protect elderly and vulnerable owner-occupiers of strata units, along with a free advocacy program to assist vulnerable owners.

What other new regulations are planned for strata schemes?

Other changes have been introduced in a bid to improve strata living, reduce restrictions and increase protection of owners. They aim to:

• Make it easier for owners to carry out minor renovations.
• Combat the practice of proxy voting.
• Introduce mandatory defect inspection reports.
• Free up regulations concerning annual general meetings.
• Make building managers and strata managers more accountable.

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While the reform bills are still being considered by Parliament, it is likely strata schemes will soon see the benefit of more flexible and user-friendly laws – making life easier for the strata manager and all stakeholders in the industry.

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