Monthly Archives: October 2015

Birth Notice – Twin strata laws delivered of the NSW parliament Tuesday, 27 October 2015; Both houses and bills are well

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Good Evil Twin

The most significant strata law reform packages ever delivered of a government of this country have been delivered safely through both houses of the NSW parliament.

To be named the Strata Schemes Development Act 2015 and the Strata Schemes Management Act 2015, the twin laws came in at 117 and 141 pages respectively and contain 90 new features. The laws are expected to become operative on 1 July 2016.

One twin will become the bad twin and the other the good twin. ‘Development’ will be the black knight, ‘Management’ will be the white knight.

Development introduces the concept of the forced sale of real property upon a 75% resolution of owners and will be misunderstood. The forced sale provisions will scare people initially although in reality it’s not nearly as scary as it looks. In the detail there is quite a lot of consumer protection.

The more endearing of the twins, ‘Management’, will make life easier for many. Online voting, simplified renovation approval processes and kinder by-laws will make living and investing in strata easier and more pleasant. Management will have however pack a solid punch when developers and strata managers abuse owners with improper disclosure and conflicts of interest.

Like all newborns, there will be sleepless nights and teething problems but both bills are expected to mature into productive and useful members of society.

Let’s hope everyone plays nicely in the meantime.

Sometimes being responsible means pissing people off too

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Opening of 2015 NSW Parliament

If the mark of good law reform is that all stakeholders are a little pissed off, then the new strata laws introduced last night to the NSW parliament is on the money. After 15 years in gestation, strata is about to get a bit harder for everyone; developers, owners corporations and strata managers alike. Mercifully, strata lawyers seemed to have been spared.

Developers are probably the hardest hit. They have to deliver an initial maintenance plan before settlement, put 2% of sales on deposit for building defects claims, fund a defects report in the first two years and become liable for understated estimates of future levies. For good measure they can’t become the strata manager for at least 10 years. The big boys won’t like that.

For strata managers the reforms are all about more disclosure. There must be annual disclosure of insurance and other commissions. Gifts and ‘soft dollar’ benefits from strata suppliers are out. Free training by lawyers and donations by banks and insurers to the manager’s annual seminar are also in scope.

Strata committees, as they will now be known, have tougher duties of disclosure and due diligence but they get immunity from personal liability for anything done in good faith. The twist is that the liability for their negligence or breach of statutory duties gets passed on the owners corporation as a whole so no-one is off the hook.

The headlines about this reform will focus on the historic attempt to allow owners to force co owners to sell their home and investment properties if 75% of owners by number, not voting entitlements, so decide. This is ground breaking: a first for any Australian parliament that has been more than 12 years in gestation. I’m proud to be one of the co-creators of ‘Renewal Plans’ that will safeguard all owners in these tricky situations (Teys, M and Russell, P, 2000, Renewing Our Strata Titled City: The Beginning of a Better End).

While renewal plans will be the focus of the media and the lobbyists as they try to increase the required level of support from 75%, it’s the more mundane matter of repairs and maintenance that will in practice be the most significant of the 90-odd reforms. Owners corporations become liable in damages to its members for breaches of statutory duty if they don’t maintain and keep common property in good and serviceable repair.

This is set to bring an end to the procrastination and ineffectiveness owners corporations and their strata managers, who are running around in ever-decreasing circles trying to avoid the inevitable responsibility and expenditure required to fix cracks and leaks.

Claims for breach of statutory duty rather than contests over strata renewal plans will be the real strata lawyer’s picnic and will fund many renovations and trips to Aspen. Just wait and see.


Michael Teys is the author of ‘Growing Up: How Strata Title Bodies Might Learn to Behave’, a specialist strata lawyer and the founder of Block Strata. You can follow him at www.michaelteys.com and on Twitter @michaelteys.

*The title quote is sourced from Colin Powell on the topic of leadership

Heartbroken self-managers need a hand in small strata

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Frustrated_man_at_a_desk_(cropped)

It wasn’t the work or even the legal liability that stopped Robert (name changed) from managing his own strata, it was the lies and broken promises from his fellow owners. As the kids say, he was just over it. And so ended another successful but very one-sided term of self-management of a red brick strata scheme.

The red brick blocks of Sydney are fairly simple things. Built to withstand a nuclear attack they are as strong as some might say plain. Usually they are six homes side by side on the ground with a shared driveway and minimal gardens. Sometimes they might have a floor or two above but hardly ever a lift. They also come in packs of two, four and ten.

At one point in the sixties or seventies Robert thought he was up for managing this themselves. It couldn’t be much harder than what he managed at work.  Have an annual meeting, strike a budget, collect the levies four times a year and pay the gardener every once and a while, more in summer. There was the insurance but a broker handled that.

Each year when the owners gathered there was a vote of thanks, never a gift of a bottle or two but there was that sense of satisfaction that came to a volunteer of a job well done that kept him coming back. But things changed.

Strata laws got more complex, councils got funny about fire safety, things needed replacing, owners wanted air conditioning and floating floor boards and people got ruder. The last straw; more changes to the strata laws. You see, more consumer protection comes at a price and our friend is sure he’s not going to be the only one to pay for it.

So this red brick block will now get a professional strata manager. There will be more paper and rules than before, and of course there’ll be the cost but it will be shared evenly and at least when our mate leaves someone will be left in charge.

A bottle of wine for Robert with the vote of thanks might have been the cheaper option but that’s the way of the world.

If you manage a small block and want to discuss options for full or partial management of your strata call Block Strata on (02) 9562 6500 now for a free no obligation inspection and management plan.

Want to get in touch? Contact me