Strata Schemes Management Act 2015 (NSW)

The Strata Schemes Management Act 2015 (NSW) is the primary legislation governing the management of strata schemes in New South Wales (NSW), Australia. Strata schemes are used to manage multi-unit residential buildings, such as apartments and townhouses, where individual ownership of units is combined with shared ownership of common areas like hallways, gardens, and parking.

The Act establishes the legal framework for managing the common property in strata-titled buildings and outlines the rights and responsibilities of lot owners, the Owners Corporation (the governing body for the strata scheme), and other stakeholders.

Key Features of the Strata Schemes Management Act 2015 (NSW)

1. Owners Corporation

The Owners Corporation, also known as the body corporate, is established automatically when a strata plan is registered. Under the Act, it is responsible for:

• Maintaining and repairing common property.

• Managing the financial and legal affairs of the strata scheme.

• Enforcing by-laws and resolving disputes within the building.

  
  

The Owners Corporation is made up of all the lot owners in the strata scheme and must hold regular meetings to make decisions regarding the management of the property.

2. Strata Committee

The Strata Committee is a group elected by the Owners Corporation to carry out the day-to-day functions of managing the strata scheme. The Strata Committee has the authority to make certain decisions on behalf of the Owners Corporation, but major decisions, such as significant expenditure or changes to by-laws, must be approved by the Owners Corporation at a general meeting.

3. By-laws

Strata schemes operate under a set of rules called by-laws, which regulate the behavior of residents and the use of common property. By-laws may cover issues such as:

• Pet ownership.

• Noise levels.

• Parking.

• Use of common facilities.

  
  

The Act allows the Owners Corporation to create, amend, and enforce by-laws. Lot owners and tenants must comply with these by-laws, and breaches can result in fines or legal action.

4. Levies and Financial Management

To manage the costs of maintaining and repairing common property, the Owners Corporation collects strata levies from the lot owners. These levies contribute to funds for:

• Day-to-day maintenance.

• Long-term capital works.

• Insurance for the building.

  
  

The Act requires the Owners Corporation to maintain two separate funds: the administrative fund for routine expenses and the capital works fund for long-term repairs and upgrades.

5. Maintenance of Common Property

Under the Act, the Owners Corporation is legally obligated to maintain and repair common property, which includes shared areas like the roof, external walls, lifts, stairways, and swimming pools. Lot owners, on the other hand, are responsible for maintaining their individual units. Disputes over maintenance responsibilities can arise, and the Act provides a framework for resolving these disputes.

6. Dispute Resolution

The Act includes provisions for resolving disputes within strata schemes, whether between lot owners, tenants, or the Owners Corporation. If internal resolution efforts fail, disputes can be escalated to the NSW Civil and Administrative Tribunal (NCAT), which has the power to make legally binding decisions.

7. Strata Managing Agents

Owners Corporations can hire a strata managing agent to handle the day-to-day management of the scheme. The agent's responsibilities may include collecting levies, arranging maintenance, and ensuring compliance with legal requirements. The Act outlines the appointment process for managing agents and specifies how their contracts can be terminated if necessary.

8. Insurance

The Owners Corporation is responsible for insuring the entire building, including common property and any shared facilities. This includes both building insurance and public liability insurance to cover injuries or accidents that occur on common property. Lot owners are responsible for insuring the contents within their own units.

Changes Introduced by the Strata Schemes Management Act 2015 (NSW)

The 2015 Act introduced several key changes to improve transparency and governance in strata schemes. Some of the significant reforms include:

• Stronger By-Law Enforcement: The Act introduced harsher penalties for repeated breaches of by-laws and streamlined the process for enforcing these rules.

• Mandatory Annual Reporting: Strata schemes are now required to provide annual financial reports to all lot owners, ensuring greater transparency in financial management.

• Defects Bond Scheme: For new buildings, the Act introduced a defects bond scheme, which requires developers to lodge a bond equivalent to 2% of the building’s contract price to cover any building defects identified within the first two years of completion.

Rights and Responsibilities of Lot Owners

Under the Act, lot owners have the right to:

• Vote at Owners Corporation meetings.

• Access strata records and financial reports.

• Request repairs and maintenance of common property.

At the same time, lot owners must:

• Pay levies on time.

• Comply with the by-laws.

• Maintain their individual property.

Conclusion

The Strata Schemes Management Act 2015 (NSW) provides a comprehensive framework for the management of strata-titled properties in New South Wales. It establishes the rights and responsibilities of lot owners, the Owners Corporation, and strata managing agents, ensuring the smooth functioning of strata schemes. Whether you’re a property owner, investor, or resident in a strata building, understanding the key provisions of this Act is essential for navigating the complexities of shared ownership and living in a multi-unit development.