Gazettal of strata regulations heralds big changes

Are you ready for Commencement Day?

The impact of the amendments to the Strata Titles Act 1985 will be substantial.

Seller Disclosure: need to comply with two regimes for the same scheme

Developers will need to understand that contracts for the sale and purchase of strata / survey-strata lots entered into:

• prior to Commencement Day will be governed by the current Act’s seller disclosure regime; and
• after Commencement Day will need to comply with the seller disclosure regime under the amended Act.

Expanded powers of SAT to resolve strata disputes

The State Administrative Tribunal (SAT) is being given broad jurisdiction and greater powers to resolve strata disputes, including disputes which involved an event that occurred prior to Commencement Day.

Staged Subdivision

The amended Act and the Regulations provide that where a developer varies a stage of subdivision as detailed in the staged subdivision by-laws, the consent of owners and interest holders will only be needed if:

• the unit entitlement of an existing lot changes by more than 10%;
• the number of lots in the next stage changes by more than 10%; or
• a change to an easement or restrictive covenant has an adverse material impact on existing lots within the scheme.

By-laws

A strata company must update its by-laws into a consolidated set when it changes its by-laws after Commencement Day.  That update to the by-laws is required because the amended Act:

• reclassifies by-laws as governance and conduct by-laws;
• repeals some of the existing Schedule 1 and 2 by-laws; and
• provides a detailed list of when by-laws are invalid, including that unreasonable by-laws are invalid.

Strata company duties

The amended Act specifies that the strata company must not act in ways that are unreasonable, oppressive, discriminatory or unfairly prejudicial.

Developer duties include disclosing defects

The Regulations expand the types of Key Documents a developer needs to give to the strata company and those include documents relating to building defects.

Statutory duties imposed on council members

Members of the council of the strata company (Council Members) will need to act in the best interests of the strata company, disclose a conflict of interest and not vote on a matter at a council meeting if they have a conflict of interest.

Statutory duties imposed on Strata Managers

The amended Act will:

• impose statutory duties on strata managers; and
• empower the strata company (the client of the strata manager) to terminate the strata management contract if the strata manager breaches a statutory duty or the contract.

The Regulations specify that strata managers will need to undergo national criminal record checks, hold minimum professional indemnity insurance coverage of $1 million and complete a specified number of units from the Certificate IV in Strata Community Management.

Majority Termination

The Regulations detail the requirements for the person seeking to terminate a strata / survey-strata scheme (Proponent) to provide funding to:

• All owners within a strata scheme to obtain legal and specialist financial advice if their scheme is subject to a majority termination proposal with owners entitled to $1,500 and vulnerable owners entitled to $3,000.

• Dissenting owners to obtain legal representation in SAT if the majority termination is subject to the SAT fairness and procedure review, with owners entitled to $5,000 and vulnerable owners entitled to $9,000.

Lavan Comment

The amendments to the Strata Titles Act 1985 represent the most significant reforms to property law in Western Australia in the last 20 years. 

The amended Act will impose new statutory duties on owners, Council Members, strata companies, developers and strata managers.

SAT’s jurisdiction to hear strata disputes will include the power to award damages with no upper limit for financial losses suffered as a result of a person breaching their statutory duties under the Act.

The amended Act will also provide many useful mechanisms to resolve existing problems in strata.

Obtaining specialist legal advice on how to comply with the amended Act will enable Developers, Council Members, strata managers, owners and strata companies to achieve the best outcomes from the strata reforms.

If you require any advice on strata management, strata disputes, subdivision of strata, seller disclosure or majority termination under the amended Strata Titles Act 1985, please contact Tim Morgan or Sean Macfarlane.