On Monday, 11 December 2023, a raft of amendments to the Strata Schemes Management Act 2015 came into effect. Chris Prestipino, partner at Chambers Russell, highlights key changes to the Act that impact day to day strata governance.
This is not a comprehensive list of changes, and a raft of different laws are also impacted. For more information and detail, on the implications for your strata scheme, please contact us.
1. Strata committee elections can occur at General Meetings, not just AGMs
Was: The Act only contemplated members of the strata committee being elected at an annual general meeting.
Now: While members of the strata committee must be elected at each annual general meeting, they can also be elected at another general meeting called to elect members of the committee.
While this change may allow for greater flexibility, it discards the long-standing notion that a strata committee has a fixed “term in office” by making it easier to oust the strata committee during that term. This is likely to encourage factional disputes and may make some difficult strata schemes even more difficult.
2. Removing members of the strata committee by ordinary resolution
Was: An owners corporation could remove an elected member of its strata committee by a special resolution at a general meeting.
Now: It is easier for an owners corporation to remove a member of its strata committee, by lowering the required threshold to an ordinary resolution at a general meeting. Also, amendments now state that if a committee member is removed from office by an ordinary resolution of the owners corporation, they are banned from the strata committee for 12 months.
This makes it easier for an owners corporation to remove an individual from the strata committee, and keep them off the committee. Again, this greater degree of flexibility when it comes to strata committee members poses a real risk of creating instability arising from factional disputes.
3. Levy notice periods reduced from 30 days to 14 days.
Was: 30 days’ notice was required before a levy contribution could become due and payable.
Now: There is a provision for that notice period to be reduced to only 14 days, if the contribution is levied for the purpose of carrying out “emergency repairs” – which are defined as repairs to the building to “mitigate a serious and imminent threat to the health or safety of the occupants”.
This will give owners corporations the ability to urgently raise funds in those circumstances, but also risks imposing additional financial pressure on lot owners who can be required to pay levy contributions with little notice.
4. All schemes require Two Quotes Required for any expenditure over $30,000.
Was: Owners corporations needed to obtain at least 2 quotations for any proposed expenditure for an item or matter more than $30,000, if the scheme contained more than 100 lots.
Now: Owners corporations of all sized schemes are required to obtain at least 2 quotations for any proposed expenditure for an item or matter more than $30,000. However there is still an exception if expenditure is for emergency purposes.
5. Prohibition on demanding bonds or fees for the Keeping of animals
Was: Previous amendments over the last few years have made it almost impossible for an owners corporation to prevent an occupier from keeping an animal. However, the Act was silent as to whether an owners corporation could require a bond or fee to be paid by an occupier seeking to keep an animal.
Now: The Act now expressly prohibits an owners corporation from requiring an owner or occupier to pay a bond or fee in relation to keeping an animal, or to require insurance to be obtained for an animal.
6. Standing for a compulsory appointment application extended to the Secretary of Fair trading
Was: The Act includes a limited list of persons who may make an application to the NSW Civil and Administrative Tribunal to have a strata managing agent appointed with full authority of an owners corporation.
Will be: An amendment that has not yet come into force will include on that list for the first time the Secretary of Fair Trading.
7. Electronic record keeping will be mandatory
Was: The Act did not mandate that an owners corporation must keep electronic records.
Now: The Act now mandates that an owners corporation must keep electronic records for any record created from 11 June 2024 onwards, but does not prevent an owners corporation from also keeping hard copies of its records.
8. Notice Period for AGMs now doubled to 14 days
Was: An owners corporation was required to provide all lot owners with at least 7 days notice for any general meeting (in addition to the time required for proper service of the notice).
Now: An annual general meeting requires at least 14 days written notice – doubling the notice period. The 7 days notice period still applies for general meetings that are not annual general meetings.
9. Power of attorney can exercise voting rights on behalf of lot owners.
Was: The Act did not contemplate that a power of attorney alone could be used to exercise voting rights on behalf of a lot owner, and there was caselaw to support a view that it could not.
Now: The Act now allows for a person acting under a power of attorney to exercise a lot owner’s voting rights on their behalf at a general meeting, provided that the power of attorney authorises them to do so.