Parliament passes Strata Schemes Legislation Amendment Bill 2025 (NSW)

Parliament passes Strata Schemes Legislation Amendment Bill 2025 (NSW)

On 20 November 2024, the Strata Schemes Legislation Amendment Bill 2024 (now amended to 2025) (the Bill) was introduced in the Legislative Assembly. The Bill officially passed both houses of the Parliament on 18 February 2025 is currently awaiting assent. The Bill amends the Strata Schemes Management Act 2015 (the SSMA) and incorporates some of the recommendations in the report on the statutory review of the SSMA tabled on 29 November 2021. The Bill will also amend another nine pieces of legislation, including Community Land Management Act 2021, Fair Trading Act 1987, Conveyancing Act 1919 and Property and Stock Agents Regulations 2022.

Some of the key changes to SSMA and other legislation are summarised below:

1.Strata manager and building manager obligations

Strata managers

• Strata managers are required to give records of their exercise of functions of the owners corporation every 6 months.
• A new defence will be introduced to protect a strata manager from being liable for breach of duty, if the breach of duty is caused by the owners corporation and the agent took all reasonable steps to prevent the breach of the duty.

Building managers

• A new section will be introduced to impose a duty on the building manager to act in the best interests of the owner corporation and make it an offence if the duty is breached without reasonable excuse. The regulation may prescribe additional duties.
• The Bill grants the Secretary the power to approve the form of building management agreements. The Secretary may approve standard forms of building management agreements after the Bill comes into effect.

2.Strata committees

• • The Bill sets out a more extensive list of duties for strata committee members, from a broad duty of due care and diligence, to more specific ones. These include that strata committee members are to only use or disclose information obtained about an owner for the purpose of carrying out committee functions and that they are not to behave in a way that unreasonably affects a person’s lawful use or enjoyment of a lot.
  • Committee members will also be required to complete required training in order to remain a member of the committee. The regulation may also provide that, if a committee member fails to complete training, a notice is to be issued to require the training be completed within a prescribed time period, otherwise the member will no longer be on the committee.
  • An owners corporation will be able to vacate an officer of the owners corporation by ordinary resolution, instead of by special resolution. 

3.Changes to financial management and financial functions

• Capital works fund estimates which are required to be prepared at each annual general meeting will include expenditure to install, replace or repair common property infrastructure, fixtures and fittings for the sustainable use of the scheme.
• At the first AGM, the owners corporation is required to prepare a 10-year capital works fund plan. The legislation will require that the plan be prepared in the form prescribed by the legislation and that it be prepared with consideration of initial maintenance schedule (IMS) prepared by the original owner.
• Where an owner’s levy contribution is in arrears and would like to enter a payment plan of 12 months. An owners corporation may refuse to enter into a payment plan only be reasonably refused in particular cases. The regulation will prescribe what constitutes a reasonable refusal, and the owner will be able to apply to the Tribunal to agree if the refusal is not reasonable.
• If the owners corporation is to take action against an owner for overdue levies, the notice to take action will be increased from 21 days to 30 days. The owners corporation will not be able to take action against the owner if a payment plan is in place and is being complied with.
• If the owners corporation is to take action to recover the expense incurred in recovering levies and interests, such action may only be taken if the owners corporation has offered the owner the option of entering into a payment plan and has also obtained an order of the Tribunal or a court.
• Payments by owners in arrears must be applied in the following order:
  1. to contributions, in order of due date;
  2. to interest;
  3. to expenses of the owners corporation in recovering those contributions ordered to be under the legislation.
  The above order does not apply to the extent that a court or Tribunal orders otherwise or the owner in arrears specifies how payments must be applied.
• Where the owners corporation is to approve legal advice, the resolution will either specify the maximum costs, or note that the costs is unlimited.

4.Repair and maintenance obligations

• • If an owner wants to take action against the owners corporation for a breach of duty to maintain and repair property under section 106, the limitation period will be increased from 2 years to 6 years after the owner first become aware of the loss.
  • Fair Trading will be able to investigate, monitor and enforce the owners corporation’s compliance with section 106 to repair and maintain common property, and will be able to do so by exercising the following powers:
    • Information gathering power, such as power to require documents or answers and power to record evidence;
    • Powers in relation to premises, such as power to enter premises and power to apply for a search warrant;
    • Seizure and destruction of items that are in contravention of section 106;
    • Remedial actions such as accepting an undertaking from an owners corporation;
    • Issue a compliance notice to the owners corporation in the event that there is a breach of section 106.

5.Works to common property

• • • • Where an owner wants to carry out minor renovations and applies for the approval of the owners corporation, the strata committee with the power to exercise the functions of the owners corporation will be able to refuse the approval. In this case, the committee will have to give written notice of the refusal and reasons for the refusal to the owner within 3 months of the request. If written notice is not given within 3 months, it will be deemed that approval is provided by the committee. A record of approved minor renovations will have to be kept for 10 years.
      • An owner must give consent before a common property by-law conferring special privilege is added. The legislation will require consent also be given if such by-law is amended or deleted.

6.Assistance animals

Currently under the SSMA, a by-law has no effect if it prohibits or restricts the keeping of assistance animals in a lot, or creates unreasonable burden for the use of assistance animal on a lot or on the common property. The Bill allows for a by-law to be introduced such that a person keeping the assistance animal is required to provide evidence that the animal is an assistance animal. The types of evidence that would suffice such requirement are set out in the SSMA and will be complemented by the regulation.

7.Developer obligations and off-the-plan sales

The original owner, being the developer of the property, has the responsibility to prepare the Initial Maintenance Schedule (IMS) for the common property in accordance with the regulations. The legislation will further require that, for a multi-story scheme, prior to the first AGM, the developer must engage an independent surveyor to review and certify the IMS and the estimates of the contribution. It will be an offence if the developer fails to comply with the requirement, or engage a surveyor who is connected with the developer.

8.Sustainability and Accessibility

• • A by-law will have no effect if it prevents installation of sustainability infrastructure solely to preserve the external appearance of the building, unless the building is heritage-listed or within a heritage conservation area.
  • A new item will be included in the required items of the agenda for AGM, being an item to consider environmental sustainability within the scheme, including the common property annual energy and water consumption and expenditure.

9.Records

• • • The regulation will prescribe the maximum fee to be charged for inspecting owners corporation records under section 183.
    • A strata information certificate must include information on the exclusive supply networks/embedded networks in the strata scheme.

10.Changes to other legislations

• • • • The changes will be mirrored in the Community Land Management Act 2021 and Community Land Management Regulation 2021 as they apply to community schemes.
      • In recognising that owners corporations may often lack legal expertise in contracts, the Bill proposes to amend the Fair Trading Act 1987 so as to extend the application of unfair contract terms provisions in Australian Consumer Law and the associated remedies to two types of standard form contracts: (i) a supply of goods and services to the owners corporation or association, and (ii) a sale or grant of interest of an interest in land to an owners corporation or association.
      • The Conveyancing Act 1919 and Conveyancing (Sale of Land) Regulation 2022 will also be amended to the effect that, a contract of sale for off-the-plan properties must disclose whether it is likely to include an exclusive supply network/embedded network.
      • Property and Stock Agents Regulation 2022 will be amended to exclude from the agency agreements, terms to the effect that requires the owners corporation or community association to pay for the agent’s professional indemnity liability and, unless the agreement is covered by a professional standards scheme, terms limiting the agent’s liability to a specific amount.

This Bill has included a wide range of amendments and will affect many stakeholders in strata schemes and community schemes. The government has allowed for a transition period for the industry and the owners to familiarise themselves with the upcoming reform, before the changes are scheduled to be rolled out from mid-2025.

This article is written by Coco Chen, a Solicitor in our NSW office.

Author’s note: This article was first published on BAGL website on 18 December 2024, after the Bill was first introduced in the Parliament. It has been amended to reflect the final version of the Bill which was passed by the Parliament.

© Bugden Allen Group Legal Pty Ltd. This is general information only and not legal advice. You should not rely on this information without seeking legal advice tailored to your specific circumstances.