The Strata Titles Act 1985 (WA) (Original Act) was amended when the Strata Titles Amendment Act 2018 (WA) (Amendment Act) was passed on 1 November 2018. There are 7 areas of reform:
- Community schemes
- Leasehold schemes
- Flexible stages strata subdivision
- Improved management
- Simplified dispute resolution
- Better buyer information
- Safeguards for the termination of schemes
This article discusses leasehold schemes, improved management and simplified dispute resolution.
Leasehold schemes are a new type of strata. A leasehold scheme is essentially a strata / survey-strata scheme that is set up for a fixed term of 20 to 99 years. The scheme, all of the lots in the scheme and the strata leases for each of the lots all expire on the expiry day. The owner of a lot in a leasehold scheme has a long-term lease of a lot (a strata lease).
The owner of a lot (lessee) in a leasehold scheme:
- can transfer the lot and the strata lease
- can mortgage the lot
without the lessor’s consent (owner of the leasehold scheme).
Owners of the lots in a leasehold scheme are members of the strata company. They decide how to run the leasehold scheme.
New duties of strata managers
Strata managers will be regulated and made accountable to provide a far greater level of consumer protection than currently exists.
New duties of strata council members
- act honestly, with loyalty and in good faith in the performance of their functions (the duty of good faith); and
- must exercise the degree of due care and diligence that a reasonable person in their position and in the circumstances of the strata company would exercise (the duty of diligence); and
- must not make improper use of the person’s position to gain an advantage for themselves or someone else or to cause detriment to the strata company.
There is also a duty to inform the council in writing of any conflicts of interest with the strata company’s interests and to not vote on a matter in relation to which they have a conflict of interest (eg: being the owner of a company who provides the services of tradesman to work on the common property).
A council member may be personally liable unless they can show they acted in ‘good faith’ in exercising their functions. If they have acted in good faith, then the strata company can be liable for any act or omission that occurred in breach of their duties.
‘Good faith’ is not defined in the Amendment Act.
Use of technology
The reforms will allow schemes to take advantage of new technologies, such as storing scheme documents online and conducting meetings by teleconference. However, the Original Act currently requires physical copies of documents and for meetings to be conducted in person.
The reforms will enable the use of electronic means to perform the strata company’s functions. For example, the common seal of the strata company may be electronic. Votes, both for resolutions put forward at a meeting and for the election of the council of the strata company, can be received via email or in real time such as Skype or teleconferencing, if the strata company has provided for electronic voting in the notice of the meeting. Voting can also occur outside of a meeting.
Often it is difficult to convene a quorum (50% of the people entitled to vote being present for a meeting). This can cause considerable delays in and expense in re-booking the meeting. Reforms will allow those owners who are present to declare a quorum thirty minutes after the appointed meeting time (note this does not apply to two lot schemes). This means the meeting can proceed and doesn’t have to be reconvened. However, if those present can decide for the meeting to be reconvened in one week.
Reserve Fund and Maintenance Plan
Reforms will require schemes that has 10 or more lots have a reserve fund and a 10 year maintenance plan.
Currently, strata disputes are heard in 3 courts and the State Administrative Tribunal (SAT). The Amendment Act seeks to make the SAT the only dispute resolution forum.
Acknowledgments: Information obtained from Landgate WA.