The NSW Government is implementing significant changes to strata laws to enhance transparency and accountability within strata schemes. These reforms, effective from 3 February 2025, primarily focus on expanding disclosure obligations for strata managing agents. As a strata owner, it's essential to understand these changes and how they impact your rights and responsibilities.
Key Changes to Strata Laws
The upcoming reforms introduce several critical adjustments aimed at improving the governance of strata schemes:
Enhanced Disclosure Requirements: Strata managers must provide more comprehensive and frequent information to owners corporations, including details about their relationships with suppliers and developers, as well as any commissions or training services they receive.
Increased Penalties: Strata managers who fail to comply with the new disclosure obligations may face significant court-imposed penalties of up to $110,000.
Understanding the New Disclosure Obligations
The expanded disclosure requirements are designed to provide strata owners with clearer and more timely information, enabling better decision-making and oversight of strata managers' actions and interests.
Before Appointment of a Strata Manager
Prior to their appointment, strata managers are now required to:
Disclose Connections with Suppliers: Provide detailed information about any relationships with suppliers they routinely use, including the nature of these relationships e.g. being a subsidiary of the same parent company
Declare Advisory Roles with Developers: Inform the owners corporation if they have advised the building developer in the past two years.
During the Strata Manager’s Appointment
Throughout their tenure, strata managers must:
Seek Approval for Commissions or Training Services: When requesting approval for commissions or training services, strata managers must provide a written explanation detailing why the approval is in the owners corporation's interest, including the commission amount.
Provide Real-Time Disclosures: Notify the owners corporation promptly upon becoming aware of any new connections or interests related to the strata scheme, such as acquiring property within the scheme or establishing relationships with service providers used by the scheme.
Disclose Information at Annual General Meetings (AGMs): At each AGM, strata managers must disclose any connections with suppliers or the building’s developer from the previous 12 months, in addition to existing obligations to report received and anticipated commissions and training services.
Insurance Transparency
To enhance transparency in insurance arrangements:
Itemised Insurance Quotations: Strata managers must provide clearly itemised insurance quotes, detailing the base premium, GST, commissions, and broker fees, along with the recipients of these payments.
Ban on Uninvolved Commissions: Strata managers are prohibited from receiving commissions on insurance policies if the owners corporation obtained the quote and arranged payment independently, without the manager's assistance.
Implications for Strata Owners
As a strata owner, these reforms aim to empower you with greater insight into the operations of your strata scheme. The increased transparency facilitates more informed decision-making and ensures that strata managers act in the best interests of the owners corporation.
At Compass Strata, we always have the best interests of the owners corporation in mind. With a commitment to transparency, integrity, and exceptional service, our team ensures compliance with all legal requirements while prioritising your needs. If you’re looking for a reliable strata manager who will simplify the management process and protect your community’s interests, talk to us today. Together, we’ll make strata living stress-free and straightforward.
