REINSW clarifies 2015 strata reforms ahead of 2020 review

14 November 2018

Following the implementation of the 2015 strata reforms, the REINSW Strata Management Chapter Committee kept a watchful eye over how the reforms impacted day-to-day practice. And they had some questions.

These questions were posed to NSW Fair Trading to receive clarification on issues causing confusion for strata agents.

NSW Fair Trading has provided answers to a series of REINSW’s questions on quorum, record keeping, by-laws and pre-meeting electronic voting for an election.*

NSW Fair Trading also advised that all proposals put forward by the REINSW Strata Management Chapter Committee have been noted and are being taken into active consideration.

Ahead of the game

Ahead of what will be the Statutory Review – Strata Schemes Management Act 2015 No 50 and Strata Schemes Development Act 2015 No 51 (the Acts) in 2020, REINSW and the Strata Management Chapter Committee began working on the areas in the Acts they believe need amending. Their first meeting was in November 2016.

They posed the following questions to NSW Fair Trading, which have now been answered:

Quorum

REINSW question

Where reaching a quorum is concerned, why is a strata scheme of 100 lots different to a block of two lots?

For a scheme with two lots, both lot owners must be present. This is not always achievable, leaving the scheme open to not progressing important matters, such as levies.

This aspect of the legislation frustrates the management of the scheme and it does not appear to have been addressed in the reforms.

NSW Fair Trading response

Under Schedule 1 cl 17(2)(c) there must be two owners present in schemes of eight or less to form a quorum at a general meeting. However, if there is only one person present, after half an hour the quorum may be considered present and the meeting may proceed.

Record Keeping

REINSW question

Under the Property Stock and Business Agents Act and Regulation, where Managing Agency Agreements (Owners Corporation) is concerned, can a strata manager retain scanned originals (soft copy) and discard the hard copy?

This action would assist with physical space saving, and will work towards paperless environments.

NSW Fair Trading response

Under section 176 the owners corporation can determine the form in which they will keep their records. By general resolution they can decide to keep their records electronically.

By-laws

REINSW question

Under the old Strata Schemes Management Act 1996 (NSW), a change to the by-laws was effective if the owners corporation lodged a notification with the Registrar-General and the Registrar-General recorded the notification in the folio of the Register for the common property.

That notification could not be lodged in the Registrar-General’s office more than two years after the resolution to change the by-laws was made.

While the Strata Schemes Management Act 2015 (NSW) anticipates ‘valid’ by-laws continuing under the new legislation – and includes similar requirements as the 1996 Act for changes to by-laws to be effective – the new laws prohibit notification of a change in by-laws to the Registrar-General’s office “more than six months after the passing of the resolution to make the by-law”.

Therefore, the lodgement period has been reduced from two years to six months.

It is unclear whether there will be practical issues for a scheme seeking to register by-laws which were validly made under the old legislation, but which will now fall outside the new six-month window.

NSW Fair Trading response

Under the transitional provisions, Schedule 3 cl 3 provides that an act under the previous legislation, such as passing a by-law and still being within the two year registration period, would be valid, but any inconsistency, such as being older than six months, may not apply if it would be inappropriate in the circumstances. This could allow those by-laws older than six months to be registered.

Pre-meeting electronic voting for an election

REINSW question

Please clarify that our interpretation of clause 14 of the Strata Schemes Management Regulation (set out below) is correct.

In relation to an election (of any kind), an owners corporation or strata committee can resolve to allow voting by electronic means if it is in “real time”, but neither an owners corporation nor strata committee can resolve to use electronic options to do “pre-meeting” voting in respect of an election.

This means voting at elections cannot occur prior to the meeting, because persons entitled to vote at elections must be either physically present and vote at the meeting or must vote in “real time” by agreed electronic means (i.e. as resolved by the owners corporation or strata committee).

NSW Fair Trading response

The interpretation of clause 14 of the Strata Schemes Management Regulation is correct in that pre-meeting voting cannot be used for elections.

REINSW and the Strata Management Chapter Committee have asked more questions of NSW Fair Trading and are awaiting response. They have been advised that their questions will be answered as quickly and in as much detail as possible.

REINSW is committed to working for the most fair and equitable outcomes for strata managers, owners and tenants. In posing these questions and receiving clarification from NSW Fair Trading, the Strata Management Chapter Committee will have a solid argument for improvement and necessary change to the Acts in 2020.