The most significant amendments to NSW strata laws are now here. We breakdown the major changes and new obligations imposed for strata managers, building managers, owners’ corporations (OC) and their strata committees.
Some of the new provisions came into effect on 1 July 2025 with others due to come into effect later this year.
Changes in effect from 1 July 2025
One of the most significant reforms affects the terms and conditions of contracts between suppliers to OCs. This is of particular relevance to strata managers and building managers.
In the Second Reading Speech of the Strata Schemes Legislation Amendment Bill 2024 Minister Anoulak Chanthivong MP stated:
“There are already more than 86,000 strata schemes in New South Wales, with 50 per cent of New South Wales likely to be living in strata in the next 15 years.
The bill introduces important reforms that aim to improve accountability and confidence in strata managing agents and building managers. These reforms build on the Government’s reforms to disclosure requirements that will commence in February 2025 by ensuring that owners have confidence in their strata manager and building manager.”
Strata managers must ensure that there are no unfair contract terms in strata management agency agreements when:
- It is a new agreement (for example, when being appointed to a new OC);
- Renewing an existing agreement; or
- Updating or varying terms of an existing agreement.
This includes removing any terms that:
- Require an OC to pay for the agent’s professional indemnity liabilities, including the insurance excess, or
- Limit an agent’s liability to a specific amount, unless the agreement is covered by an approved professional standards scheme.
The NSW Civil and Administrative Tribunal (NCAT) will have powers terminate or vary agreements appointing strata managers or a building manager if either party carries on a business that is contrary to law and involves the supply of services to the OC or owners and occupiers of lots.
The bill also imposes a statutory duty on building managers to act in the best interests of the OC or the association in carrying out their duties, unless doing so would be unlawful.
New defence for strata managers
Section 57(1) of the Act allows OCs to delegate functions to their strata managers. At present, a breach of that duty by the OC lands at the feet of the strata manager (not the OC).
The reforms introduce a new defence for strata managers to prosecution for breaches of that duty if the agent establishes that the breach of the duty was caused by the owners corporation, and the agent took all reasonable steps to prevent the breach of the duty.
For suppliers of goods and services to owners’ corporations
The bill prohibits unfair terms in standard form contracts for the supply of goods or services as well as the sale or grant of an interest in land to an OC or association. The bill does this by amending the Fair Trading Act 1987 so that prohibited unfair contract terms and associated remedies under the Australian Consumer Law apply to such contracts. Prohibiting unfair contract terms will help strengthen consumer protections and encourage suppliers of goods or services to ensure their contracts have compliant terms.
New duties for strata committee members
The bill introduces additional duties and obligations on strata committee members obliging them to comply with strata and community land scheme laws and acting with honesty and fairness, due care and diligence and exercise their respective function for the benefit of the OC. This will be a big change for some committees.
Mandatory formal training for strata committee members
The Government will work with the sector to roll out mandatory training to support committee members in meeting their duties under the Act. A member of a strata committee of an OC who fails to complete the required training ceases to be a member of the strata committee.
Strata committees
The reforms introduce new statutory duties on strata committee members.
Strata committees will be required to provide written reasons for any refusal of minor renovation requests within 3 months of the application. Absent written reasons, lot owners will have deemed approval of the application.
Repairs and maintenance obligations of OC and increase limitation period for section 106 claims
If an owner or other person has damaged common property and the OC has taken legal action against them, the OC cannot delay making repairs to the common property if a delay would affect a person’s access or use of the common property or a lot or the safety of buildings, structures or common property.
For example, if an owner causes damage to pool glass presenting a safety concern and breach of swimming pool regulations, the OC must not delay getting the repairs done.
The reforms have significantly extended the time to make a claim under section 106 from 2 years to 6 years. Section 106 gives an owner the right to take legal action if they incur losses due to the OCs failure to meet its strict obligation to repair and maintain the common property. Under this provision, an owner can usually seek orders requiring necessary repairs and maintenance, as well as compensation for lost rental income and the replacement of damaged belongings.
Accessibility
The threshold for passing a special resolution for accessibility infrastructure (meaning any part of the common property to facilitate a person with a disability having access to the common property or a lot) has been lowered from 75 per cent in favour of the resolution to a majority vote.
Importantly, the scheme will be required to consider the impacts of refusing to install the infrastructure on people with disability, and whether a given building can support the type of infrastructure required to provide access.
Sustainability infrastructure
Some schemes previously had by-laws (strata rules) that prohibited the installation of sustainability infrastructure if it affected the external appearance of either common property or an individual owner’s property.
These types of by-laws are now prohibited, except where the building is heritage-listed or located within a heritage conservation area.
Additionally, the OC is now required to consider environmental sustainability at each annual general meeting (AGM). The AGM agenda must include an item addressing sustainability within the scheme, which involves reviewing the annual energy and water usage and related costs for the common property.
Changes to come later this year
New statutory duties on building and facilities managers
Building managers must now act in the best interests of the OC. The reforms no longer permit persons to exercise the role of a building manager on a voluntary or casual basis or whilst a member of the strata committee.
The bill imposes a statutory duty on building managers to act in the best interests of the owners’ corporation or the association in carrying out their duties.
More accountability for developers on newly built strata schemes
Changes include:
- Requiring the developer to have the initial maintenance schedule and initial levy estimates certified by an independent surveyor. This will support new owners to plan and carry out effective repairs and maintenance for their new strata complex.
- Increasing penalties for a developer who fails to meet these new obligations (up to $55,000).
Key Takeaways
The key takeaways for the new amendments are:
- OCs and their strata committees should ensure any new strata management agency agreement does not contain any unfair terms and conditions.
- Strata committee members must take heed of their new statutory duties in exercising their function, however the government will provide new mandatory training to assist members in comprehending the scope of the new duties.
- Strata managers and building managers now have a statutory duty to ensure that new and renewed agency agreements do not contain unfair terms and conditions. Strata managers should seek legal advice.
- Strata managers now have a statutory defence to breaches of a duty delegated to them by an OC where the breach was caused by the OC and the manager took all reasonable steps to prevent the breach.
- It is now easier to approve improvements to accessibility infrastructure.
- Lot owners will have a clearer and easier path to minor renovations with prompt written reasons of refusal required.
- OCs must repair and maintain common property presenting safety concerns or preventing lot access even if the damage was caused by another party or lot owner.
Further detail or all the changes can be found on the NSW Fair Trading website here. You can access the Strata Schemes Legislation Amendment Bill 2024 here.
Please contact us to discuss risk management and insurance for strata schemes, strata managers or building managers.
