Property and Development Lawyers

Changes to Strata Law – Developer's Guide

April 28, 2016 Joseph Taouk

Changes to Strata Law

  • Strata Schemes Management Act 2015 (the Act) and associated Regulations have been amended effective from 1 July 2016.
  • Along with the the introduction of the new Act, will be the Strata Schemes Development Act 2015.

Restrictions on Parties With Connections to Developer

  • Unless they are an owner in the building, any building manager or equivalent who has a connection to the developer, particularly if that connection is not disclosed cannot be appointed or elected to the Executive Committee.
  • There are also significant restrictions on developers granting strata schemes to strata managers / agencies with whom they have a previous connection.
  • The Executive Committee will become the Strata Committee.

Initial Maintenance Schedule

  • The developer must provide an initial maintenance schedule to the Owners Corporation at its first annual general meeting.
  • The Initial maintenance schedule must outline the various anticipated costs associated with the future maintenance of common property.  Whilst it the schedule must be provided, it is not binding on the Owners Corporation.

Levies

  • The developer must provide an estimate of levies to the Owners Corporation. If the Owners Corporation determines that those levies were inadequate, they can seek an order from the Tribunal that the developer compensates it for the shortfall.

Limited Proxies

  • If a strata scheme has 20 lots or less, a proxy holder is restricted to a maximum of 1 vote.
  • If a strata scheme has more than 20 lots, a proxy holder is restricted to a maximum of 5% of the total number of lots.

Contract of Sale Obligations

  • Voting restrictions in the Contract of Sale means that a developer cannot direct a purchaser to cast a vote in a particular manner at a meeting.
  • The developer cannot force the purchaser to give a proxy to any other person.

Building Defects

  • A motion must be on the agenda of each AGM to consider building defects and rectification.  This is required to be on the meeting agenda until the statutory warranty period expires.
  • The developer is not entitled to vote on this motion.
  • This does not apply to certain buildings, such as those with four or more stories for instance.

To Whom Does This Apply?

  • This applies to the developer and not the builder.

Appointment of a Building Inspector

  • The developer must appoint a qualified building inspector, who will carry out a building inspection.  This must take place within 12 months of the building works being completed, and the initial period has expired.
  • Hefty fines apply if this is not done, being upwards of $20,000.
  • The consultant appointed (whom must be listed on a public register) must be agreed between the developer and Owners Corporation, but the costs are borne by the developer.

Reporting

  • Reports and content of the reports to be produced by the consultant are guided by the Regulations and must be carried out at different stages, depending on whether the report is an interim or final one.

Bond

  • The developer must pay a bond of 2% of the building contract price for the purpose and use of rectifying building defects.
  • The developer must pay the bond before receiving an occupation certificate, which is administered by the NSW Government.
  • Among other rules and guidelines, the bond is to be returned to the developer either 60 days following the final inspection report, or after period of 2 years has lapsed from completion, whichever is the later.

Strata Renewal

  • Also of particular significance is the process outlined in the Strata Schemes Development Act 2015 for the collective sale or redevelopment of a strata scheme.  The general process involves:

Strata-Renewal-Process

 

 

 

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