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The Strata Managing Agents Legislation Amendment Bill 2024 was introduced in the Legislative Assembly on 14 August 2024.On 30 October 2024, the Governor proclaimed that the amendments would take effect from 1 November 2024.
The proposed amendments will affect Strata Schemes Management Act 2015 (“SSMA”), Property and Stock Agents Act 2002 (“PSAA”), Community Land Management Act 2021 (“CLMA”), and the corresponding regulations.
The proposed amendments are an effort to address the recent complaints around failures to disclose commissions and conflicts of interest and to boost people’s confidence in strata living, by strengthening the disclosure obligations on agents in regard to any commissions or benefits and toughening the penalties for noncompliance.
The amendments to SSMA and CLMA and associated regulations include the following aspects:
- An increase in maximum penalties and in penalty notice amounts for certain offences.
A strata managing agent will potentially face higher penalties if they request or accept a gift or benefit without owners’ corporation approval, or if they fail to report receiving a commission or training services at the general meeting. A strata managing agent or a building manager may face higher penalties if they fail to disclose their interests, either by being connected with the original owner, or by any pecuniary interest in the strata scheme, before their appointment.
- A tightened set of rules around an agent’s disclosure obligations.
For instance, for a strata managing agent to receive the owners’ corporation’s approval to receive commission or training service, the approval must be given by resolution at a general meeting. The motion for the resolution to give the approval is to be accompanied by a set of relevant documents detailing the nature and monetary value of the commission or the training service and why the approval is in the best interests of the owners’ corporation. A commission is defined to specifically include an insurance broker fee. Other disclosure obligations include the requirement for the agent to give written notice to the owners’ corporation when they become aware of a connection between themselves and a supplier of goods and services for the strata scheme.
- A stricter approach towards obtaining insurance for the strata scheme.
The current legislation requires at least 3 insurance quotations to be obtained by the strata manager. The amendments introduce penalties for a breach of this obligation and set out specific information that must be included in the quotations, including a breakdown of the charges and the persons to whom the commission and broker fee will ultimately be paid.
Amendments to the PSAA and Property and Stock Agents Regulation (“PSAR”) will essentially ban terms in strata managing agency agreements that allow an insurance commission to be paid to the managing agent where the owners’ corporation obtained the insurance quote and arranged to buy the insurance itself.
If you would like to have a further read on the bill, please follow the links below:
Strata Managing Agents Legislation Amendment Bill 2024 (nsw.gov.au) – NSW Parliament website
https://www.parliament.nsw.gov.au/bill/files/18630/First%20Print.pdf – Text of Bill
XN Strata Managing Agents Legislation Amendment Bill 2024.pdf (nsw.gov.au)– Explanatory Notes
https://www.nsw.gov.au/media-releases/new-laws-introduced-to-improve-strata-living – Media Release
—Emma Smythies, Partner in our NSW office
© Bugden Allen Group Legal Pty Ltd. All information contained in this article is of a general nature only and you should obtain specific legal advice in relation to any property-related affairs on any of the topics mentioned.
