Strata Titles Act Reform. Sean Macfarlane, Senior Lawyer, Landgate
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1 Strata Titles Act Reform Sean Macfarlane, Senior Lawyer, Landgate
2 Progress of reforms Public Consultation Drafting Instructions 2015 Cabinet approval to draft Bill announced 2016 PCO drafting Bill We are here 2016 For Parliament Introduce Bill to Parliament Consulting Stakeholders as we go Parliament passes Bill
3 What are the reforms? Two new types of strata Community title Leasehold strata Flexible staged development Management of schemes Dispute resolution Vendor disclosure Termination of schemes
4 Community title scheme: What is it? A new type of strata which has: Multiple sub-schemes within umbrella community scheme Each sub-scheme has a strata company Strata Company Strata Company Strata Company Strata Company Strata Company Strata Company Strata Company
5 Community scheme management Each of those strata companies operate under the community corporation Community corporation and member companies have their own management statements
6 Why Community schemes for WA? Community schemes already exist in other states & countries Community schemes are ideal for large scale development Development staging is more flexible because it is clearly set out to buyers & owners up front
7 Structure of community scheme Management Scheme plan
8 Features of community schemes Up to three tiers of management Allowing a mix of strata and survey-strata Facilitate mixed use No development contract Community Development Statement required
9 Community Development Statement CDS: more than a planning instrument CDS contains similar information that would be included in a structure plan: planning, design and development info: Subdivision & development: staging, timing & sequencing Land use: Location of proposed lots and intended use Location of infrastructure, amenities, facilities, roads Architectural and design themes May include maps, plans, diagrams, text, sketches & tables
10 CDS: Life cycle, status and effect Apply to WAPC for approval of CDS Pre-registration: planning decision maker to give approved CDS due regard Development period: binds developers, owners & planning decision maker Post development CDS will be given due regard Amend CDS: 75% resolution then apply to WAPC
11 Community schemes common property Community property - community corporation maintains All owners in community and member corporations pay levies All owners in community and member corporations can use Secondary community property - secondary community corporation maintains and all owners in: Secondary community and member corporations pay levies Secondary community and member corporations can use
12 Leasehold strata what is it? Strata scheme is set up for a fixed term (20-99 yrs) Buyer acquires long term lease of lot (strata lease) Owner of strata lease issued with Certificate of Title Strata lease owner: can transfer lot & strata lease mortgage the lot without the lessor s consent. Strata company responsible for managing buildings and common property (not the lessor)
13 Leasehold strata options Loosely based on NSW leasehold strata legislation Only over freehold land & s75 LAA conditional tenure Strata leases for 20 to 99 years Staging of leasehold schemes permitted Off-the-plan sales of leasehold permitted Leasehold strata or survey-strata (not community title) Development options: by land owner or developer
14 Staged Development - variations Difficult to vary a staged scheme development now Major variation on plan requires consents of owners, registered interest holders and caveators Reforms will widen the definition of minor variations Decision of what is minor variation will be reviewable through the State Administrative Tribunal (SAT)
15 Staged: Deemed consent process Only applies to registered interest holders & caveators Non-minor variation: serve notice on interest holders Interest holder must respond within 30 days No response within 30 days: consent is deemed Objections to variation must be reasonable Developer can apply to SAT to review objection and if not reasonable, SAT will deem consent has been given Staged development disputes resolved at Tribunal
16 Strata manager regulation Statutory duties imposed on strata manager: Hold strata company funds in a trust account Inform strata company before contracting with associate Act honestly, with loyalty and in good faith Keep and provide records of key services delivered Strata company given power to terminate strata manager contract if contract or statutory duty is breached & not rectified Strata manager can apply for stay of termination
17 Improve management of schemes Allow electronic notices, voting & record keeping (levies may also be ed) Strengthen by-law enforcement By-laws cannot be unreasonable or oppressive Easier to install sustainable infrastructure (solar, etc.) Statutory duty imposed on strata council members Act honestly and in good faith Exercise due care and diligence
18 Dispute resolution Currently: 4 different forums and complex provisions Research: SAT effective in resolving strata disputes Strata disputes resolved in specialist forum: SAT Simplify dispute resolution provisions in Act Empower SAT to streamline dispute processes
19 Strengthen SAT powers Monetary orders up from $1000 to $75,000 Penalty for breach of any by-law Resolve strata manager and strata company disputes Amend and repeal by-laws and resolutions Resolve leasehold and community title disputes Resolve vendor disclosure disputes
20 Buyers given more useful information Full set of by-laws and minutes of recent AGM Details of levies and insurance policies Details of administrative and reserve fund accounts Electronic disclosure allowed
21 Buyer avoidance rights Notifiable variations: Seller to tell buyer if variation impacts buyer Seller to tell buyer of variation within reasonable time Administrative by-law change is not a variation Buyer avoidance rights clarified: Buyer will have 10 days to avoid (now 7 days) Cannot avoid if sale contract specifies variation
22 Majority termination of schemes Termination process must be followed: Proposal must contain prescribed information Proposal served on all owners and mortgagees All owners must be given 3 months before voting Vote must be properly held All ratified proposals must be reviewed by Tribunal Vote needed to ratify termination proposal: 75% of lots in schemes of 4 or more lots 2 owners in a scheme of 3 lots 1 owner in a scheme of 2 lots Leasehold strata: 75% lots & lessor Community schemes: 75% of lots
23 SAT review of termination No majority termination without SAT Order SAT must be satisfied of the following: Termination process properly followed Each owner to get fair market compensation (s241 LAA) Proposal is just and equitable Extensive guidance provided to SAT: Must consider views of owners and mortgagees May consider condition of buildings and cost to maintain May consider UE and use of proxies Removal costs must be provided Business losses to be compensated Consider taxes and stamp duty
24 Next Steps Put up flyers Get more information & subscribe to newsletter Contact us
25 Questions? For more information:
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