LEGAL UPDATE: STRATA TITLES AMENDMENT ACT 2018

11 May 2020 by Amy Dunlop

Clarity and fairness is the call, but will we see this?

Publishing House

The Strata Titles Amendment Act 2018 came into effect on 1 May 2020. Some of the changes brought in by the Act may affect you and the running of your strata company.

The changes modernise how stratas are run and deliver a better strata framework for years to come for buyers, owners, tenants, managers, council and property developers.

The key areas addressed by the amendments are:

  1. Disclosure obligations

  2. Dispute resolution

  3. Scheme termination

  4. Strata management and by-laws

  5. Introducing leasehold strata

  6. Staged developments and subdivision

Disclosure obligations

Buyers must now be provided with more information prior to signing a contract of sale.

A seller must now provide a buyer with:

  • estimated strata levy contributions over a 12-month period

  • the most recent statement of accounts of the strata scheme

  • information pertaining to any amount already owed to the strata company by the current lot owner

  • the minutes from the most recent AGM of the strata company

  • information about any termination proposals received by the strata company

 

If the seller does not do this the buyer may have a right to delay settlement or avoid the contract.

Dispute Resolution

The State Administrative Tribunal (SAT) is now the only body to deal with strata disputes and it will have broader powers to resolve disputes and enforce the by-laws of a strata company.

Strata companies can still apply to the courts for recovery of outstanding unpaid levies.

Scheme Termination

Gone are the days of a single owner applying to the courts to have a scheme terminated without any vote or safeguard for vulnerable owners.

The changes provide for:

  • unanimous decision to terminate in schemes with four or less lots

  • comprehensive safeguards including independent reviews by SAT if there are dissenting owners, which will afford dissenting and vulnerable owners more protection

streamlined processes whereby all owners are favourable to the termination

Strata Management and By-Laws

By-Laws made easier

The new changes aim to improve scheme management, minimise disputes and level the playing field for owners. The reforms have looked at making the by-laws fairer, less discriminatory and reasonable for all owners. They provide clarity to strata companies on the nature of the by-laws and the voting requirements necessary to change any by-law. Anytime a by-law is changed or deleted a consolidated and updated set of by-laws must be lodged with Landgate so that any existing or prospective owner can see them.

Maintenance plan and reserve fund

 

If a strata scheme has 10 or more lots, or has a $5 million replacement value to common property, the strata company must have a 10-year maintenance plan and a reserve fund for same. This new requirement must be implemented by the first AGM one full year after the commencement of the new reforms.

 

Modernising the schemes

 

Strata management has been pulled into modern times with electronic options for scheme communications, voting and meeting attendance. It will also be easier to approve improvements to common property concerning sustainability infrastructure and disability access.

 

Regulation of strata managers

Strata managers will need to:

  • obtain educational qualifications

  • have a written contract specifying the functions they will perform

  • obtain a criminal record check

  • obtain professional indemnity insurance cover

  • lodge an annual return to Landgate regarding the schemes they manage.

 

The amended Act does still allow for volunteer managers, however they will be subject to the statutory duties together with conditions such as being an owner in the scheme and not earn more than $250 per annum for each lot in the scheme.

Introducing leasehold strata

A leasehold strata title is a strata lease for each lot in the scheme, with each lease expiring on the same date and having a term of between 20 and 99 years.

This type of land ownership  should improve access to and produce more affordable housing options. It is expected that development of these stratas will occur at strategic sites such as transport hubs or inner city living and lifestyle locations like  the coastline or other waterfront precincts.

Staged developments and subdivision

Developers now have greater flexibility to develop strata schemes in stages without eroding the rights of owners who bought into earlier stages of a development. A developer no longer has to submit a management statement but rather set out the details of the staged development in the scheme’s by-laws (called “staged subdivision by-laws”). This will help to protect the rights of current owners while making the process of staged development or subdivision less onerous on the developer.

If you have any questions about your obligations or rights under the Strata Titles Amendment Act, please contact Alex Zilkens.

Disclaimer: This email bulletin is provided for your information only, and is not a substitute for legal advice. Zilkens Lawyers takes no responsibility for the use or misuse of this information.