What’s in store with the
new strata titles laws in NSW?
What is strata title and why is it popular?
1961 was an eventful year. In 1961, construction was well
underway on the Sydney Opera House. On 1 July 1961, the
Strata Titles Act became law in New South Wales. On 28 July
1961, Strata Plan No 1 was registered. There are now more
than 90,000 strata title schemes in New South Wales, and
almost 200,000 across Australia.
What was so remarkable about the Strata Titles Act was that
it was a world first. It introduced freely tradable land
titles for apartments in a building, unlike the restrictive
company titles system that was the only option up available
until then. It is called strata titles because the building
is divided into strata (or “layers”) with common walls,
floors and ceilings separating the strata lots.
Freely tradable means just that – the permission of the
other apartment owners is not needed to sell, transfer,
mortgage or lease the apartment. For this reason, owning a
strata apartment became just like owning a house, except
that there are rules for community living, which are called
strata by-laws; and payment contributions towards building
expenses, which are called strata levies.
Strata title has become popular for a wide variety of
properties: from villa homes and duplexes built side by
side, to 3 storey ‘walk-up’ blocks, to multi storey high
rise buildings with lifts, swimming pools, gymnasiums and
rooftop barbeques. They can be shops, offices and factory
Strata Plan No 1 – “Lindsay Gardens” 189 Liverpool Road
How does strata title work and what changes are
All strata schemes use the same legal model. Each owner has
their own legal title to their villa / home unit / apartment
(the “strata lot”). Each owner has joint ownership of the
building structure and the common property (entrances,
stairs, paths and grounds) because they hold shares in the
owners corporation (called “unit entitlements”). The owners
corporation is a separate legal entity. It even has its own
The New South Wales Government has now passed new strata
titles laws to bring the Strata Titles Act up to date, to
address strata management, strata by-laws, building defects,
renovations and maintenance, and redevelopment. The new laws
are contained in the Strata Schemes Development Bill 2015
and Strata Schemes Management Bill 2015. The new laws will
commence on 1 July 2016.
This is a guide to the new laws.
A strata scheme is managed like a company, because the
owners corporation of a strata scheme is a special form of
company. The lot owners are like shareholders who meet
annually and who elect a management committee which acts
like a board of directors.
- The Annual General Meeting is when the annual financial
statements of the strata scheme are considered, a budget and
strata levies (for the administrative fund and the capital
works fund – formerly known as the sinking fund) are agreed
for the next year; the strata insurance is agreed (and it is
decided if a new valuation is needed for the building); the
strata manager is appointed; and the strata committee is
elected. Repairs and maintenance are discussed and
resolutions are passed to obtain quotations or to carry out
The owners are invited to attend the meeting. If they are
financial, they may vote. The new laws allow tenant
representatives to attend, but they are not entitled to vote
or to be present when financial matters are being discussed.
If a professional strata manager looks after the strata
scheme, then the new laws provide that the strata manager is
to be appointed for a maximum of 3 years, and cannot receive
benefits over and above their commission. The 3 year limit
is designed to make it easier to replace unsatisfactory
The new laws allow the annual general meeting to be held at
any time during each financial year, rather than on the
anniversary of the registration of the strata plan.
- The Strata Committee is the new name for the Executive
Committee. The members are elected by the owners at their
annual general meeting to manage the owners corporation for
the next year. The office bearers are the chairperson, the
secretary and the treasurer.
In some strata schemes, the election of the strata committee
is hotly contested. Committee members looking to be elected
as office bearers gather up proxy votes before the meeting,
from owners who cannot attend. The new laws limit “proxy
vote farming”, as it is known. The limit is 5% of all votes
if more than 20 lots, and 1 vote if less than 20 lots.
The new laws impose a legal duty upon strata committee
members to act for the benefit of the owners corporation,
with due care and diligence, like company directors.
Officer’s liability is covered in the standard strata
insurance policy, but the premium may increase because of
the increased legal duty under the new laws.
- Dysfunctional strata schemes The new laws make it easier
for owners to apply to NCAT (the NSW Civil and
Administrative Tribunal) to deal with dysfunctional schemes
by forcing elections, limiting decision making, requiring
votes and issuing compliance orders.
In new medium and high rise strata developments built since
the early 2000s, the developer will register a comprehensive
‘designer’ set of strata by-laws. For low rise strata, and
for most strata schemes registered before the early 2000s,
the applicable by-laws will be the model by-laws set out in
the strata laws.
The strata by-laws can be changed by being added to, altered
or removed. By-laws can give approval for renovations, the
use of swimming pools and garden areas, installation of
antennas and solar panels, and so forth.
Strata by-laws deal with keeping animals, car parking
(especially visitor car parking), noise and behaviour of
occupants and visitors, restrictions on children playing on
the common property, restrictions on drying washing on
balconies (where visible from the street), changing the
appearance of the lot from the street (blinds and curtains
need to colour match the rest of the building) and floor
coverings (to prevent noise transmission).
- New Strata By-laws New model by-laws will be available.
They will apply to new strata schemes where a comprehensive
set of by-laws is not registered by the developer. The new
model by-laws will not automatically apply to current strata
schemes. They will only apply to current strata schemes if a
special resolution (a 75% vote) is passed, at a general
meeting of the owners, to replace their current strata
The new model by-laws address several issues of concern
which the current model strata by-laws do not cover. In
- A limit of 2 adults per bedroom is to apply, to prevent
- Fines are to be imposed for parking illegally on
- There is to be better noise control;
- Prohibitions against smoke drift from cigarettes and
barbeques on balconies;
- Small pets are to be allowed, without approval.
- Notices of meeting may be sent by email, instead of posted
or hand delivered.
- Voting will be possible through the post, electronically
and through secret ballots.
The introduction of new model by-laws will present an
excellent opportunity for all strata schemes to consider
whether their current strata by-laws need to be updated. We
will develop a template for strata schemes to compare the
current model by-laws with the new model by-laws, to make it
easy to decide whether new model by-laws should be adopted.
The template will be prepared when the new model by-laws are
released before 30 June 2016.
Building defects, renovations and maintenance
The owners corporation is responsible for maintenance and
repair of the building and the other common property,
because it is the owner of the building and the other common
property. The definition of building includes the external
walls, windows and doors, as well as the floors, ceilings
and the roof. Building defects are the responsibility of the
- New Strata Buildings The new strata laws lay down a
procedure to be followed for new buildings. They apply for 2
years after completion, when it is still possible for the
owners corporation to pursue the builder to rectify the
building defects, or to recover the cost of rectifying the
defects. It has two parts:
- Building defects need to be identified and rectified. The
initial meeting of the owners corporation is to be given an
initial maintenance schedule by the developer. Obtaining
initial building defects inspection reports is to be an
- Funds need to be available to pay for defects
rectification. The new law will require that the builder pay
a building bond of 2% of the building cost to cover the cost
The owner of a lot owns the skin of paint on the inside of
the external walls and ceiling, the floor coverings, and the
services (water, drains, electricity, gas) from the point at
which they enter through the wall / ceiling / floor.
- Renovations and maintenance by the owner The new laws
clarify what work and renovations need to have the approval
of the owners corporation, and what do not, as follows:
Cosmetic works inside the apartment, namely:
- installing or replacing hooks, nails or screws for hanging
paintings and other things on walls
- installing or replacing handrails
- filling minor holes and cracks in internal walls
- laying carpet
- installing or replacing built-in wardrobes
- installing or replacing internal blinds and curtains (no
change to the external appearance)
are permitted without the approval of the owners
Renovations inside the apartment (known as minor
- renovating a kitchen,
- changing recessed light fittings
- installing or replacing wood or other hard floors
(floating timber floors, tiles)
- installing or replacing wiring or cabling or power or
- work involving reconfiguring walls, windows and doors
- renovating a bathroom
- installing an air conditioner
are permitted with the approval (a 50% vote) of the owners
corporation at a general meeting.
Currently, the approval of all of the owners is needed to
redevelop a strata scheme. The new strata laws make
redevelopment of strata buildings easier.
Some buildings have deteriorated beyond repair because they
passed their useful life, others are sited on land which is
valuable and could support higher density, and yet others
are badly damaged by fire, flood or earthquake so as to be
The new laws will allow for redevelopment the building.
Safeguards exist along the way, such as: there must be a
collective sale / renewal plan which must be supported by at
least 75% of the owners; the compensation payable will be
for the whole building, and be payable according to the
ownership shares; and the plan must be approved by the Land
and Environment Court.
As the NSW Minister for Innovation and Better Regulation,
Victor Dominello, said when the new strata laws were passed
“Today more than two million people live and work in strata.
The new laws will cater for the needs of 21st century strata
Cordato Partners took part of the public consultation
process for the new strata laws – submissions were made on
reform options in November 2012 and on the draft strata
bills in August 2015. We consider the new strata laws to be
a great improvement on the current laws.
This article was first published by Cordato Partners in
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