The strata industry has been impacted significantly by social distancing measures to restrain the spread of COVID-19. This is particularly so, because the legislation governing the strata industry is very strict and specific about how things need to be done. Built-in rigidities about how to convene a meeting of the Owners Corporation, and how to affix the seal of the Owners Corporation, have got in the way of strata buildings carrying out their day-to-day decision making process.

The process of strata law reform to respond to the current crisis has commenced, but is moving slowly. The NSW Government has the legislative basis to make changes, but has not yet passed any specific regulations to assist the strata industry. Find out what has been done, and what still needs doing…

‘Regulation making’ power to respond to the COVID-19 pandemic

The lack of flexibility in the Act has finally been recognised by the NSW Government (perhaps a little too late?) and on 24 May 2020, changes have been made to the Strata Schemes Management Act 2015 (NSW) (the Act). The NSW Government now has regulation making power to respond directly to the health crisis created by COVID-19. That’s the good news.

Potential changes

In this article, we explore some of the rigidities we have encountered in the Act, and how future regulations may assist the strata industry cope with the health crisis.

Conducting meetings of the Owners Corporation

The Act provides that all meetings of the Owners Corporation must be cast ‘in person’. This means that if your strata scheme does not have a specific by-law allowing electronic voting, the votes must be cast in person. At times during this crisis, that has not been possible.

Changes to the Act indicate that new Regulations may be passed that will allow votes to be cast electronically, even if the Owners Corporation has not passed a special by-law permitting this practice. This is a sensible change.

Affixing the seal of the owners corporation

The Act regulates how the seal of the owners corporation must be affixed to a document. Currently, section 273 of the Act provides that the seal must only be affixed in the presence of ‘2 persons, being owners of lots or members of the strata committee’ if the scheme is not managed by an agent. In light of COVID-19 social distancing requirements, the simple act of affixing a seal can be difficult. This means that important documents, such as contracts and by-laws, may not be validly executed by the Owners Corporation or need to be put on ‘hold’ until the requirements of the Act can be fulfilled.

Changes to the Act now facilitate the passing of Regulations to allow the seal of the Owners Corporation to be affixed remotely.

Extra time

The Act provides that an Annual General Meeting must be held once in each financial year. Changes to the Act could mean that an extension of time is granted for the holding of an Annual General Meeting.

When will these changes take effect?

At the time of writing (26 May), the NSW Government has not made any specific regulations to reflect the issues currently experienced by all stakeholders in the strata industry. This reaction is delayed and is not in line with the government’s fast response to assist tenants and stakeholders in the commercial and residential leasing arena.

The delayed response to the strata industry means that the existing requirements of the Act are still binding on the Owners Corporation. Accordingly, the passing of new Regulations will be a welcome relief to a struggling strata industry.

Any new Regulations will be repealed on 13 November 2020.

Watch this space for further updates.

Contact Mariam Chalak on 0410 914 128 for a no obligation chat.

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