Strata Schemes Management
Amendment Bill 2003

Explanatory note
This explanatory note relates to this Bill as introduced into Parliament.

Overview of Bill

The object of this Bill is to amend the Strata Schemes Management Act 1996 to
implement a number of proposals in relation to the management of strata
schemes arising from an overall review of that Act and a review of that Act in
connection with competition policy reform. The Bill includes amendments to the
Strata Schemes Management Act 1996 (“the Principal Act”) in relation to the
following matters:

(a) The Bill clarifies certain provisions relating to the exercise and delegation
of functions by owners corporations and the powers of owners
corporations to add to or alter, or grant licences for the use of, common
property.

(b) The Bill enables officers who are authorised to carry out certain fire safety
inspections of buildings and premises subject to a strata scheme to deal
with the owners corporation for the building or premises instead of
individual lot owners.

(c) The Bill requires new owners corporations to establish 10-year sinking
fund plans and enables the regulations to extend those requirements to
some or all existing owners corporations.

(d) The Bill defines a strata scheme comprising at least 100 lots (or such other
amount prescribed by the regulations) as a large strata scheme and
imposes a number of additional requirements in relation to such schemes
as well as enabling regulations to be made in respect of a range of matters
relating to the administration of such schemes.

(e) The Bill requires approval by a general meeting of an owners corporation
to the seeking of legal advice or services or the taking of legal action by
the owners corporation where expenditure will be involved.

(f) The Bill provides for disclosure of certain matters to owners in strata
schemes.

(g) The Bill requires all insurance taken out by an owners corporation to be
taken out with an approved insurer.

(h) The Bill gives a greater discretion to the Registrar of the Consumer, Trader
and Tenancy Tribunal to refer matters to Adjudicators or the Tribunal
without the need for mediation and lists specific matters that will not
require mediation.

        (i) The Bill expands the powers of Adjudicators and the Tribunal to appoint
a strata managing agent for a strata scheme that has been the subject of an
application for an order under the Act.

(j) The Bill makes a number of refinements in relation to the procedure for
meetings of owners corporations of strata schemes and executive
committees of owners corporations.

(k) The Bill makes other miscellaneous amendments and amendments by way
of statute law revision.

The Bill also amends the Retirement Villages Act 1999, the Retirement Villages
Regulation 2000 and the Conveyancing (Sale of Land) Regulation 2000 in
relation to disclosure of certain matters to prospective purchasers of lots in strata
schemes and prospective residents of retirement villages that are subject to a
strata scheme.

Outline of provisions

Clause 1 sets out the name (also called the short title) of the proposed Act.

Clause 2 provides for the commencement of the proposed Act on a day or days
to be appointed by proclamation.

Clause 3 is a formal provision giving effect to the amendments to the Strata
Schemes Management Act 1996 set out in Schedule 1.

Clause 4 is a formal provision that gives effect to the amendments to the
Retirement Villages Act 1999, the Retirement Villages Regulation 2000 and the
Conveyancing (Sale of Land) Regulation 2000 set out in Schedule 2.

Schedule 1 Amendment of Strata Schemes
Management Act 1996
Functions of owners corporations and executive committees
Schedule 1 [1] and [2] make it clear that in the event of a disagreement between
an owners corporation and the executive committee of the owners corporation
the decision of the owners corporation prevails.

Schedule 1 [3] enables the owners corporation to authorise a chartered
accountant to exercise certain functions relating to the finances and accounts of
the owners corporation.

Schedule 1 [4] prevents the functions of a strata managing agent appointed for
a strata scheme being transferred to another person by the strata managing agent
without the approval of the owners corporation.

Schedule 1 [5] inserts proposed section 29A into the Principal Act which
provides that certain functions of the owners corporation, executive committee,
the chairperson, secretary or treasurer cannot be delegated to or conferred on
anyone else except a member of the executive committee or the strata managing
agent for the scheme. This limitation is subject to section 24 of the Principal Act
that specifically allows certain functions relating to the finances and accounts of
an owners corporation to be exercised by specified persons such as accountants.

Schedule 1 [6] and [7] make it clear that by-laws for a strata scheme are of no
force or effect to the extent that they are inconsistent with the Principal Act or
any other Act or law.

Schedule 1 [8] prevents an owners corporation or executive committee of an
owners corporation issuing a notice on a person that the person has contravened
the by-laws unless a resolution of the owners corporation or executive
committee has been passed that allows the issuing of the notice or notices of that
kind. That limitation does not apply to the issuing of such a notice by a strata
managing agent authorised to do so.

Schedule 1 [9] makes it clear that the owners corporation may make a by-law
granting a licence to an owner of a lot to use common property in a particular
manner or for a particular purpose.

Schedule 1 [11] inserts proposed section 65A into the Principal Act that enables
the owners corporation by special resolution, to alter, add to or erect a new
structure on common property, or allow an owner of a lot to do so, for the
purpose of enhancing or improving the common property. The proposed section
also enables the owners corporation to address the issue of who bears
responsibility for the maintenance of the common property after the relevant
work has been carried out and provides that where the owners corporation does
not make any provision for maintenance, the owners corporation itself has that
responsibility.

Schedule 1 [11] also inserts proposed section 65B into the Principal Act that
enables an owners corporation, by special resolution, to grant a licence to an
owner of a lot to use common property in a particular manner or for a particular
purpose without the need for making a by-law (as referred to in Schedule 1 [9]).

Schedule 1 [10] makes a consequential amendment.

Fire safety inspections
Schedule 1 [11] inserts proposed section 65C into the Principal Act to enable a
person authorised to carry out a fire safety inspection of a building or premises
under the Environmental Planning and Assessment Act 1979 to give a notice to
the owners corporation for a strata scheme requiring it to organise access to the
common property and also, if specified, one or more individual lots. The owners
corporation commits an offence if it does not comply with the notice but has a
defence in relation to access to an individual lot if the owner or occupier denied
the access or could not be contacted.

Schedule 1 [26] enables the owners corporation to apply for an order of an
Adjudicator requiring the occupier of a lot in the strata scheme concerned to
provide access for the purposes of a fire safety inspection. A fine may be
imposed under the current provisions of the Principal Act for refusal to comply
with an order of an Adjudicator.

Sinking fund plans
Schedule 1 [14] inserts proposed section 75A into the Principal Act which
requires the owners corporation for a strata scheme established after the
commencement of the proposed section to prepare 10-year sinking fund plans
and to complete and review the plans at specified intervals. The regulations may
extend those requirements (with necessary modifications) to some or all existing
owners corporations.

Schedule 1 [13] requires an owners corporation to take account of any such
sinking fund plan when preparing the annual estimate of amounts of
contributions required to be levied for the sinking fund.

Provisions relating to large strata schemes
Schedule 1 [53] and [54] define large strata scheme as a strata scheme
comprising 100 or more lots (or more than such other number of lots as may be
prescribed by the regulations). Utility lots and parking lots are not to be included
in the calculation.

Schedule 1 [13] requires an owners corporation for a large strata scheme when
preparing estimates of the amounts of contributions to be levied for the
administrative and sinking funds to specify amounts for proposed expenditure
on individual items or matters likely to arise before the next annual general
meeting. Schedule 1 [15] inserts proposed section 80A into the Principal Act
which prevents the executive committee of a large strata scheme from spending
more than that specified amount plus 10 per cent on the relevant item or matter
in the period until the following annual general meeting unless approved by the
owners corporation. Proposed section 80C provides an exception in emergency
situations.

Schedule 1 [15] inserts proposed section 80B into the Principal Act which
requires the owners corporation for a large strata scheme to obtain 2 quotations
before spending an amount over that prescribed by the regulations. Proposed
section 80C provides an exception in emergency situations.

Schedule 1 [19] substitutes section 107 of the Principal Act so as to require the
owners corporation for a large strata scheme to have its accounts and financial
statements audited in accordance with the Australian Auditing Standards before
presentation at the annual general meeting.

Schedule 1 [35] enables regulations to be made in respect of certain matters
regarding the administration of large strata schemes.

Schedule 1 [42] requires a proxy for meetings of an owners corporation for a
large strata scheme to be given to the secretary of the owners corporation at least
24 hours before the first meeting to which it relates. The current requirements
that enable proxies to be presented at the relevant meeting still apply to other
strata schemes.

Schedule 1 [48] provides that, for large strata schemes, notice of an executive
committee meeting must be given to each owner and executive committee
member and, in addition, be displayed on a notice board if a notice board is
required to be maintained. For other strata schemes, notice must be displayed on
the notice board or, in the alternative, given to each owner and executive
committee member if a notice board is not required to be maintained.

Schedule 1 [49] provides that, for large strata schemes, the minutes and
resolutions arising from an executive committee meeting must be given to each
owner and executive committee member and, in addition, be displayed on a
notice board if a notice board is required to be maintained. For other strata
schemes, minutes and resolutions must be displayed on the notice board or, in
the alternative, given to each owner and executive committee member if a notice
board is not required to be maintained.

Schedule 1 [46] and [50] provide that Schedules 2 and 3 relating to procedures
for meetings of owners corporations and executive committees of owners
corporations and to the constitution of executive committees are subject, in the
case of large strata schemes, to the regulations.

Legal action by owners corporations
Schedule 1 [15] inserts proposed section 80D into the Principal Act which
prevents an owners corporation from seeking legal advice or services, or taking
legal action, that will require payment unless a resolution has been passed at a
general meeting approving the owners corporation doing so. Regulations may be
made exempting types of legal services or legal action from the operation of the
proposed section.

Schedule 1 [34] provides that if a disclosure is made to an owners corporation
in respect of the costs of legal services to be provided to the owners corporation,
the owners corporation must give a copy of the disclosure to each owner and
executive committee member within 7 days of the disclosure being made.

Schedule 1 [35] provides for regulations to be made in respect of the provision
of legal services to an owners corporation.

Insurance
Schedule 1 [17] inserts proposed section 88A into the Principal Act which
requires that all insurance that must or may be taken out by an owners
corporation must be taken out with an insurer approved by the Minister.

Currently that requirement applies only to some forms of mandatory insurance.

Schedule 1 [16] makes a consequential amendment.

Provisions relating to disclosure and procedure for meetings
Schedule 1 [22] requires an owners corporation to give a written statement of
the current contributions relating to a lot in a strata scheme if requested to do so
by the operator of a retirement village that is subject to that strata scheme. That
requirement will enable the operator to meet the disclosure obligations imposed
under the amendment included in Schedule 2.3.

Schedule 1 [36] and [37] require the agenda for the first annual general meeting
of an owners corporation to include items to discuss the preparation of the 10-
year sinking fund plan and the appointment and functions of a caretaker.

Schedule 1 [38]–[40] require certain documents and plans relating to a strata
scheme to be produced at the first annual general meeting of the owners
corporation for the strata scheme and enables the regulations to prescribe other
documents that must also be produced.

Schedule 1 [41] increases the penalty for an original owner or lessor failing to
produce such documents.

Schedule 1 [43] contains an amendment ensuring that notice of a meeting of an
owners corporation must be given to first mortgagees and covenant chargees if
the meeting will deal with certain matters that they are entitled to vote on.

Schedule 1 [44] provides that the notice of an annual general meeting of an
owners corporation must include a form of motion to decide if any matter is to
be determined only by the owners corporation in general meeting. Schedule
1 [45] provides that a corresponding agenda item must be included in the agenda
of an annual general meeting as well as an agenda item relating to the
preparation or review of the 10-year sinking fund plans, if relevant.

Schedule 1 [47] clarifies that the owners corporation has power to remove more
than one or all of the members of the executive committee from office by special
resolution.

Dispute resolution and powers of Adjudicators and Tribunal
Schedule 1 [23] enables the regulations to exclude classes of strata schemes
from the dispute resolution provisions.

Schedule 1 [24] gives a greater discretion to the Registrar of the Consumer,
Trader and Tenancy Tribunal to accept an application for an order of an
Adjudicator or the Tribunal even though mediation has not been attempted. The
Registrar may accept such an application if the Registrar considers that
mediation is unnecessary or inappropriate. In addition, mediation is not required
in cases where the application relates to specified orders.

Schedule 1 [25] clarifies that the current powers of an Adjudicator to make
orders to give effect to agreements or arrangements arising out of a mediation
session include giving effect to the terms of a written agreement entered into by
parties to the mediation. Such an order can only be made with the agreement of
the parties to the mediation.

Schedule 1 [27] expands the circumstances in which an Adjudicator may make
an order, on application, appointing a strata managing agent for a strata scheme.

Schedule 1 [31] gives a specific power to the Tribunal, on its own motion, to
make an order appointing a strata managing agent in cases where the
management structure of a strata scheme that is the subject of an application for
an order under the Principal Act or an appeal to the Tribunal is not functioning.

This is similar to a power that Adjudicators already have.

Schedule 1 [28] removes a current limitation that requires a strata managing
agent appointed by an Adjudicator on his or her own motion to be chosen from
a panel of nominees chosen by prescribed persons or bodies.

Schedule 1 [12], [29], [30], [32] and [33] contain statute law revision
amendments clarifying the provisions for the making of applications for certain
orders.

Miscellaneous amendments
Schedule 1 [18] provides that all records required to be kept by the owners
corporation under the Act are to be kept for at least 5 years or such other period
as may be prescribed. Currently various periods are prescribed by the
regulations.

Schedule 1 [19] substitutes section 107 of the Principal Act so as to provide that
if an owners corporation has its accounts and financial statements audited the
auditing must be done in accordance with the Australian Auditing Standards,
unless the strata scheme concerned comprises not more than 2 lots.

Schedule 1 [20] and [21] remove a requirement that a person obtain the written
authorisation of the owner of a lot to carry out certain inspections of the records
of an owners corporation or to obtain a certificate as to certain financial and
other matters relating to the lot. That authorisation will be able to be given in any
manner.

Schedule 1 [28] and [54] put it beyond doubt that a strata managing agent
appointed under the Principal Act can be a corporation.

Schedule 1 [51] and [52] insert into the Principal Act a savings and transitional
regulation-making power and transitional provisions consequent on the
enactment of the proposed Act.

Schedule 2 Amendment of Act and Regulations
Schedule 2.1 amends the Conveyancing (Sale of Land) Regulation 2000 to
require a vendor of a lot in a strata scheme to attach a copy of any by-law for the
strata scheme that grants exclusive use of, or special privileges over, common
property in the strata scheme.

Schedule 2.2 amends the Retirement Villages Act 1999 to require information
about living in a strata scheme to be given to a prospective resident of a
retirement village that is subject to a strata scheme.

Schedule 2.3 amends the Retirement Villages Regulation 2000 to require the
current strata contributions for a lot in a retirement village that is subject to a
strata scheme to be included in the disclosure statement required to be given to
a prospective purchaser of the lot.

Note: If this Bill is not modified, these Explanatory Notes would reflect the Bill as passed in the House. If the Bill has been amended by Committee, these Explanatory Notes may not necessarily reflect the Bill as passed.

 

---

[Index] [Search] [Download] [Bill] [Help]