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Owners’ Corporation Law - November 2015

29 Oct 2015

NSW reforms show the way

The Owners’ Corporation Act in Victoria will be 10 years old early next year. When the legislation first came out, it was hailed around Australia as a highly progressive, sleek and sophisticated example of lawmaking at its “laissez-faire” best.  

However, like all acts of Parliament, it suffers from the same curse – the Act represents a particular era at a static point in time. While policymakers try their best to “future-proof” legislation to cater for developing trends, it is often difficult and amounts to no more than guesswork to accurately predict future innovations and preferred future modes of living.

In this case, and over the last 10 years, the skyline of Melbourne has transformed dramatically, with hundreds of new high-rise buildings being erected.

Last month in NSW, the State Government introduced the new Strata Reform Bill, which is set to start in early 2016. The new legislation brings in a number of controversial changes, including the ability of 75 per cent of the owners of old buildings to sell their block to developers against the wishes of the other 25 per cent.

To combat building defects, developers will now be required to create an account and bond in the Owners Corporation’s name with no less than 2 per cent of the value of the building stored there as a fund for dealing with building defects that arise within the first five years of occupation in the building.

In addition, developers will be held to account and must pay the difference if they promise fantastically low levies for running costs when they sell the units, only for owners to discover upon settlement that the levies are far in excess of what was stated.

In other big changes, local councils will now also be permitted to patrol basement car parks and issue fines to unlawfully parked cars, and the vexed topic of proxy farming is addressed so that one individual can only hold up to 5 per cent of votes in larger buildings, so that more owners get to participate on committees.

Owners’ corporation managers can only be elected for a maximum period of 12 months at the first AGM of a new building and caretaker agreements expire automatically after 10 years and without extension.

Not all of the amendments in NSW will be suitable for adoption in Victoria, however many owners’ corporations in NSW are hailing the changes as a big step in the right direction. It will only be a matter of time before Consumer Affairs announces a comprehensive review of the Victorian legislation in this area.

This columnist suggests the Consumers Affairs policymakers will be adopting the “cut and paste strategy” with the bulk of the NSW amendments.

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