News

The Strata Schemes Management Act 2015 is a cornerstone piece of legislation that governs how strata schemes operate in New South Wales. As urban living continues to rise, and more Australians choose apartments, townhouses, and units within strata developments, understanding this Act has never been more important.

This legislation lays the foundation for how owners’ corporations, strata committees, residents, and professional managers must conduct business within a strata environment. From transparent financial practices to by-law enforcement, this guide breaks down everything you need to know about the Act and how it affects everyday strata life.

Overview of the Strata Schemes Management Act 2015

The 2015 Act replaced older regulations with a more unified and contemporary framework that seeks to streamline management processes, define responsibilities clearly, and reduce disputes through formal governance mechanisms.

Purpose and Scope of the Act

The Strata Schemes Management Act 2015 was introduced to provide a legislative framework that guides how all strata schemes are managed throughout New South Wales. Its main objectives include ensuring fair representation within strata communities, encouraging financial transparency, and promoting peaceful communal living. The Act applies to both residential and commercial strata schemes and introduces a legal structure that deals with everything from the formation of owner corporations to how strata meetings are conducted.

The scope of the legislation includes:

• Financial Management: It outlines how levies must be collected, how budgets should be planned, and how funds are allocated toward capital works and day-to-day operations. It requires all schemes to maintain an administrative fund and a capital works fund to support repairs, maintenance, and upgrades to common property.
• Dispute Resolution: The Act provides mechanisms through which owners or residents can raise concerns, and escalate matters through formal processes such as mediation or tribunal intervention, ensuring issues are addressed fairly.
• Meeting Protocols: Detailed procedures must be followed when conducting annual general meetings and other meetings of the owner's corporation, including timelines for issuing notices, voting eligibility, and quorum requirements.

Who the Act Affects

The impact of the Act is far-reaching and applies to multiple parties involved in a strata community:

• Lot Owners: These individuals are legal owners of units or lots within the strata scheme. They are expected to contribute levies for the upkeep of common property and participate in decision-making through meetings and votes. The Act mandates that owners act in the best interests of the strata scheme when exercising their rights and responsibilities.
• Residents and Tenants: While not always owners, tenants must still comply with the scheme's by-laws, including noise restrictions, the use of shared facilities, and general behaviour in common areas. They also have the right to be informed about changes to by-laws or strata management practices that may affect them.
• Strata Committees: These are elected groups of owners responsible for making decisions on behalf of the wider owners' corporation. The committee's actions are bound by the Act and must reflect the collective interests of the lot owners. They’re tasked with implementing resolutions, managing communications, and coordinating with managing agents.
• Strata Managing Agents: These professionals handle day-to-day operations and administration under a service agreement. The Act regulates how they are appointed, what responsibilities they must fulfil, and how their performance is reviewed.
• Developers: Developers of strata properties have obligations under the Act during the initial period after registration. These include disclosing relevant information to the owner's corporation, such as building documentation and maintenance reports, to ensure a smooth transition.

Key Provisions and Responsibilities

The Act outlines clear roles and operational standards for all involved in a strata scheme, which are essential for maintaining lawful and harmonious living arrangements.

Owners Corporation Duties

The owner's corporation is responsible for managing the strata scheme and making decisions on behalf of all owners. Their duties include:

• Maintaining Common Property: This refers to any part of the property not owned individually but shared among residents, such as gardens, driveways, lobbies, stairwells, and pools. The owner's corporation is obligated to repair and maintain these areas, ensuring they are safe and functional at all times.
• Managing Financials: Owners corporations are tasked with budgeting for operational expenses and longer-term capital works. They must establish two separate funds: an administrative fund for routine expenses and a capital works fund for significant repairs or upgrades. Accurate bookkeeping and the annual adoption of financial statements are essential under the Act.
• Holding General Meetings: The Act requires the scheduling and proper conduct of general meetings, where owners vote on key issues like by-law amendments, budget approvals, and contract engagements. These meetings must adhere to procedural rules, such as providing appropriate notice and following structured agendas.
• Enforcing By-Laws: Enforcement mechanisms must be in place for any breach of by-laws. Owners corporations can issue notices to residents in breach and pursue fines through NCAT if necessary. This helps maintain order and consistent standards in shared living environments.

Strata Committee and Voting Procedures

Strata committees are elected at general meetings and are responsible for making day-to-day decisions. Under the Act:

• Committee Formation and Eligibility: Only lot owners or nominated representatives can serve on the committee, and each member must be properly elected through a formal resolution. The number of committee members can vary, but there must always be a chairperson, secretary, and treasurer.
• Voting Rights and Proxy Rules: Voting within the committee and at general meetings is highly regulated. The Act permits the use of proxies but places restrictions to prevent abuse, such as limiting the number of proxies one person may hold. Electronic voting and postal ballots are also allowed under certain conditions.
• Decision-Making Framework: Simple majority resolutions are used for regular decisions, but more significant matters, like by-law changes or property upgrades, require special resolutions (75% approval) or unanimous resolutions, depending on their impact. All decisions must be minuted and filed for future reference.

Strata Managing Agents

Strata managing agents are professionals hired to perform administrative functions. Their role includes:

• Contractual Engagement: Managing agents must be formally appointed through a resolution passed at a general meeting. Contracts typically outline duties, remuneration, and performance review clauses. These appointments are capped in duration to prevent indefinite engagement without owner oversight.
• Financial Management: Agents are responsible for managing trust accounts, issuing levy notices, paying contractors, and preparing financial reports. The Act demands that all financial dealings be transparent and available for inspection by the owner's corporation.
• Regulatory Compliance: Agents must hold a valid licence, follow codes of conduct, and act in good faith. Any breach or conflict of interest must be disclosed. The Act enables the termination of agents for misconduct or unsatisfactory service with proper notice.

Changes Introduced by the 2015 Act

The reforms introduced by the 2015 legislation aimed to modernise strata law by making it more transparent, accessible, and responsive to the needs of communities living in strata schemes.

Improved Transparency and Record-Keeping

The Act includes provisions that require better access to information for lot owners and tighter controls on documentation:

• Document Retention: Strata schemes must now keep all financial records, correspondence, and meeting documentation for at least seven years. This allows new owners or prospective buyers to conduct due diligence.
• Strata Roll Accuracy: Maintaining a current strata roll is a legal requirement. This includes names and contact details of owners, their lot numbers, and tenancy arrangements. Outdated information can result in missed communications or procedural errors during voting.
• Access to Records: Lot owners can formally request to view records held by the owner's corporation or the strata manager. Requests must be acknowledged within a certain timeframe and may be subject to an access fee.

By-Law Enforcement and Updates

The Act simplifies the creation, amendment, and enforcement of by-laws:

• Custom By-Laws: Strata schemes are empowered to draft rules that suit their unique circumstances. These can include restrictions on smoking, pet ownership, noise control, or renovation protocols. The only requirement is that they not be harsh, unconscionable, or discriminatory.
• Procedural Reforms: Changes to by-laws now require a special resolution and must be lodged with NSW Land Registry Services. There is also a 12-month transition period during which new schemes must review and update their by-laws.
• Stronger Penalties: Enforcement has been strengthened by allowing fines to be imposed without first requiring repeated notices. NCAT can also grant orders for compliance, and repeat offenders may face escalating consequences.

Compliance and Common Pitfalls

Compliance is an ongoing responsibility and requires constant awareness of legislative updates, procedural integrity, and sound record management.

Staying Up to Date With Legal Requirements

Keeping compliant with the Strata Schemes Management Act 2015 involves:

• Engaging Legal Professionals: Owners corporations or committees should consult strata lawyers or experienced agents for advice on complex decisions or dispute resolution strategies.
• Annual Reviews: Conducting yearly operational reviews ensures that records, insurance, and budgets align with legal obligations.
• Training and Development: Committee members should undertake training to understand their governance roles. NSW Fair Trading offers guidance materials, and accredited training programs are available through industry bodies.
• Technology Adoption: Leveraging digital tools for record-keeping, communication, and voting can streamline processes and help avoid procedural oversights.

Penalties and Breach Management

Violations of the Act can carry financial and legal consequences:

• Financial Penalties: Owners’  corporations or individuals found breaching requirements may be fined. This includes failure to hold AGMs, improper financial reporting, or unauthorised alterations to common property.
• Dispute Escalation: The NCAT process offers mediation and adjudication for unresolved issues. Engaging legal help early can prevent minor issues from becoming contentious legal battles.
• Internal Governance Failures: Poor meeting conduct, conflicts of interest, or lack of transparency can lead to internal conflict and even legal exposure. All members of the committee and managing agents must act ethically and within the law.

Contact Strata One for Guidance

Understanding the Strata Schemes Management Act 2015 can be daunting, but you don’t have to handle it alone.

At Strata One, we can help you simplify the complexities of strata legislation with expert support. Whether you need help updating by-laws, navigating your compliance obligations, or reviewing your committee’s procedures, we’re here to support your strata scheme with clarity and professionalism.

Reach out to Strata One today to learn how our experienced team can ensure your community complies with the law, manages risk effectively, and promotes cooperative strata living.