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By-Law Review – Is Your Owners Corporation Ready For The New Legislation?

The new Strata Schemes Management Act 2015 (new Act) comes into force on 30 November 2016 – less than four months. Regulations to accompany the new Act are currently under review and are expected to be enacted in much the same form as drafted. The new Act will replace the existing Strata Schemes Management Act 1996.

In the words of Minister Victor Dominello in his second reading speech, the new Act is ‘the culmination of the Government’s landmark reform of New South Wales strata title laws that began in 2011. The importance of those reforms to the people of New South Wales should not be underestimated.’ The reforms mark the most significant changes to strata title laws in New South Wales since introduction of the Strata Titles Act in 1973.


Of the more than 90 reforms, one in particular requires further examination given its impact on all of the approximately 75,000 strata schemes in New South Wales. I refer to the requirement for the owners corporation of an existing strata scheme to review its by-laws no later than 12 months after the commencement of the new Act. Whilst the nature and extent of such ‘review’ is not clear, executive committees (‘strata committees’ under the new Act) will need to do more than a cursory review of the scheme’s by-laws if they want to satisfy their duty to act in the best interests of the owners corporation.


Whilst there is no apparent penalty for failure to do so, the review should incorporate the preparation of a consolidated set of by-laws, which are then registered with the Land and Property Information Department (LPI). Section 141(3) of the new Act requires the secretary to keep a consolidated and up to date copy of the by-laws for the strata scheme. Given this requirement, it is recommended an owners corporation prepare a consolidated set of by-laws and then proceed to undertake the necessary review. The reviewed set of by-laws can then be registered in a consolidated form with LPI.


Whilst the review does not need to take any particular form, it would be advisable for the strata committee to engage in a consultative process with owners. Such a process might involve inviting suggestions from owners on what rules they would like included or excluded from the by-laws. The strata committee could then undertake a review of the suggestions and propose an amended set of by-laws for adoption. Alternatively, any changes to the existing by-laws could be considered on a one-by-one basis. In either event, it should be noted that the requirement for the passing of a special resolution at general meeting to change the by-laws still applies to the review process.


A good starting point for a strata committee in considering their current by-laws and whether changes are warranted would be to consider the proposed new model by-laws contained in the regulations to the new Act. Whilst the model by-laws are entirely optional, there are some significant changes in the new Act which are likely to prompt discussion on several important issues including occupancy limits, pets and smoking.


As part of the review process, it would be advisable for an owners corporation to engage the assistance of an experienced strata lawyer who can guide the strata committee through the review process, including:

  1. Undertaking appropriate searches of the common property title and by-law dealing history and preparing a consolidated set of by-laws for the scheme;
  2. Providing advice and assistance to the strata committee and owners in understanding the nature and effect of the by-laws and reviewing existing or proposed by-laws for their legal validity and enforceability;
  3. Preparing appropriate motions for an owners corporation to consider adopting changes to the by-laws; and
  4. Attending to registration of any changes to the by-laws with the LPI.

At Small Myers Hughes, we can provide advice and assistance on any one or all of these matters and have a dedicated strata team who are committed to providing timely and cost-effective solutions to owners corporations and strata committees alike. We also offer fixed fee price solutions so that strata committees can budget for the costs associated with the mandatory by-law review process with certainty. Please contact us for a no obligation quote.

 

Liability limited by a scheme approved under Professional Standards Legislation
Disclaimer – This article is provided for information purposes only and should not be regarded as legal advice.
 

Posted in: Body Corp Blog at 04 August 16

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Author: Jarad Maher

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