Legislation update | Update on strata reforms in Western Australia

You can see our previous update on strata title reforms and new community titles legislation here.

The amended Act seeks to implement:

• Better information for strata buyers;
• More efficient dispute resolution;
• A fairer process for scheme termination;
• Improvements to strata management;
• Leasehold strata as a new form of land title; and
• More flexible staged subdivision.

Better buyer information

Sellers of strata-titled land will need to be aware of new disclosure obligations which aim to help buyers make more informed decisions before buying into a strata scheme.

Sellers will need to provide buyers with:

• estimated strata levy contributions over a 12-month period;
• the most recent statement of accounts for the scheme;
• any amount already owed to the strata company by the seller;
• the minutes from the most recent annual general meeting of the strata company (or any extraordinary meeting that has been held since);
• a full set of the scheme by-laws; and
• information about any termination proposal received by the strata company.

Non-compliance may result in the buyer being able to delay settlement or avoid the contract. 

Efficient dispute resolution

The State Administrative Tribunal (SAT) will receive broadened powers to resolve disputes and enforce by-laws. All new strata disputes will be heard in the SAT, with the exception that unpaid levies will need to be recovered through civil legal proceedings in the courts.

New scheme termination process

Starting 1 May 2020 all new strata scheme termination proposals must comply with new processes.

Schemes of four lots or less must have unanimous consent to terminate.

For termination of schemes containing five lots or more:

• A proposal must be submitted which details what is proposed, and the compensation that will be offered to each owner.
• If 80% or more agree to termination, then the proposal will be referred to the SAT for a ruling.
• In SAT proceedings, dissenting owners will be provided with representation services at the proponent’s expense. Owners who are assessed as ‘vulnerable’ will also be provided with extra assistance (such as an interpreter, and financial guidance) at the proponent’s expense.
• SAT has no power to confirm termination unless satisfied that: the termination process was adequately followed; the proposal is just and equitable; and every owner will receive fair market value for their lot.

Management improvements

Strata By-laws

• By-laws must not be unfair, discriminatory, oppressive, or unreasonable.
• A consolidated set of by-laws will need to be lodged with Landgate every time a by-law is changed, added, or deleted.

Maintenance and reserves

• Every ‘designated strata company’ will need to prepare a 10-year maintenance plan and have a reserve fund. These will need to be in place in time for the first AGM that occurs after 1 May 2021 (being 12 months after commencement of the amendments to the Act).
• A ‘designated strata company’ is defined as:
  • A strata company for a scheme with 10 or more lots; or
  • A strata company for a strata scheme that has a building replacement cost of more than $5 million; or
  • A strata company for a survey strata scheme if the replacement cost of the improvements on the common property is more than $5 million.

Tools for improved, modernised scheme management

• Electronic options for scheme communications, voting, and meeting attendance.
• Easier strata company approval for the installation of sustainable infrastructure (e.g. solar panels) and improving disability access, on common property; and easier processes for improvements to common property more generally.

Strata managers

Strata managers will have statutory duties, to:

• Act honestly, with reasonable skill and care;
• Have sufficient knowledge of the Act (as amended);
• Not improperly use information or their position;
• As soon as practicable inform the strata company of any conflict of interest;
• Disclose any benefit or remuneration that exceeds $100 from a single source in a year.

Strata managers will also need to:

• Attain educational qualifications by 1 May 2024;
• Have a written management contract (with existing contracts to be updated within six-months);
• Obtain a current national criminal record check for themselves and employees who perform strata management functions (six-month grace period);
• Have professional indemnity insurance (six-month grace period); and
• Lodge an annual return with Landgate containing general information about the scheme under their management. (This is to be lodged for the first time between 1 January 2022 and 31 March 2022, and then annually for the four years following. It is intended that this will enable the government to determine if the licensing of strata managers is viable or required in the future).

The new statutory duties will also apply to volunteer managers in a modified form:

• Volunteer managers must own one of the lots in the strata scheme they manage. They will need to have a written agreement or contract with the strata company, and cannot be paid more than $250 for each lot in the scheme each year. Volunteer managers will not be required to obtain educational qualifications or hold professional indemnity insurance.

Leasehold strata

A leasehold strata title is a built strata or survey strata scheme set up for a fixed term of between 20 and 99 years. Under this new form of tenure:

• Each lot in the scheme is leased, with all leases expiring on the same date.
• Once the leasehold scheme expires or is terminated, the land and any buildings will revert to the owner of the freehold in the scheme.

Flexible staged development and subdivision

• The amended Act seeks to protect the rights of early buyers in staged strata developments while making the process less cumbersome for developers where changes to an initial proposal are needed.
• Details of staged development will now be set out in the scheme by-laws as ‘staged subdivision by-laws’.
• The definition of a ‘significant’ variation has changed. A significant variation may be one of two ‘Types’:
  • Type 1 notifiable variations occur after a contract for the sale and purchase of a lot in a strata titles scheme is entered into but before the settlement date. They include:
    • the area or size of the lot or proposed lot is reduced by 5% or more;
    • a proportionate increase or decrease in unit entitlement of 5% or more, against the sum of all notified unit entitlements; and
    • anything relating to a proposal for the termination of the strata titles scheme is served on the seller by the strata company.
  • Type 2 notifiable variations are those not giving rise to a type 1 notifiable variation. They too occur after a contract for the sale and purchase of a lot in a strata titles scheme is entered into but before the settlement date. Type 2 notifiable variations include:
    • the scheme plan is modified in a way that affects the lot or the common property;
    • the schedule of unit entitlements is modified in a way that affects the lot;
    • the scheme by-laws, or proposed scheme by-laws, are modified;
    • the strata company or developer enters into or varies a contract likely to affect the rights of the buyer (usually, this will be a contract for the provision of services or amenities to the strata company or to members of the strata company); and
    • a lease, licence, right, or privilege over the common property in the strata titles scheme is granted or varied.

Additional notifiable variations may be prescribed by regulation.

• Where a significant variation is notified to a person with a ‘designated interest’:
  • that person has 60 days to respond. If they wish to object, they must notify the developer with written reasons, within 60 days;
  • the developer may apply to SAT to review the grounds of any objection that is received; and
  • persons with designated interests who do not respond within the 60-day time frame can be taken to have given their consent.

Thank you to Morgan Barnsby, Law Clerk, for assisting with this article.

Please contact David McMullen on (08) 9321 0522 should you require any advice on the above changes to strata laws in Western Australia.