Sunday, July 07, 2024

Strata law reform on the cards as NSW Fair Trading swamped with complaints

Strata agents will be targeted in a raft of new laws designed to stop dodgy dealings, ban shady commissions, and improve trust in strata schemes following a surge in complaints.
NSW Fair Trading received 965 complaints about strata agents in the five years to 2023, most commonly related to rules of conduct and finances. In the past year, there were 273 complaints against strata agents, compared to 16 against strata executive committees and 43 against strata owners corporations.

Proposed new laws will increase penalties for agents who fail to disclose information about commissions, strengthen their conflict-of-interest disclosure requirements, and ban agents from receiving a commission on insurance products when they have not played a role in finding the best deal for residents.
The government’s draft laws are in consultation with the Owners Corporation Network and Strata Community Association and will be considered by parliament later this year.
Owners Corporation Network Executive Director Karen Stiles said many owners were in “a world of pain” thanks to limited regulation over the sector.
“We certainly welcome more stringent regulation of strata managing agents and service providers, including building managers,” she said.
Stiles said the NSW Strata Commissioner needed greater resourcing to ensure compliance.
“What’s missing is an audit team. We want boots on the ground, making audit teams visible to make sure people are complying,” she said.

The number of strata schemes has grown exponentially in the state amid a push for higher-density housing. As of June 30, there were 86,466 strata schemes, compared with 75,824 in 2016. More than 1.2 million people live in strata communities across NSW.

Minister for Better Regulation and Fair Trading Anoulack Chanthivong said the reforms would boost confidence in investing and living in strata schemes.
“We want to change the perception that strata managing agents easily, and readily, take advantage of owners by significantly increasing the consequences for those who do the wrong thing,” he said.
“The new laws are designed to take immediate action to help restore confidence in living and investing in strata schemes, ensuring more people consider apartment living as a housing option.”
St Ives resident Kristyn Haywood supports the proposal to increase transparency. She recently submitted a complaint to Fair Trading after her strata company Bright & Duggan allegedly incorrectly recorded votes to keep Meriton, the building’s developer, on a costly building caretaker contract.
Meriton was awarded the contract in 2013 for the 300-unit build.
In May, the strata voted on whether Meriton should be retained as building manager, or go with a cheaper contract. Haywood said the motion was defeated, but a Meriton company nominee with voting rights called a poll vote.
The strata manager said the voting software froze, so the manager recorded the results manually. Meriton was retained as the building manager by 40 unit entitlements.

But Haywood said the tallies did not match up. Two other residents against the Meriton contract also confirmed that their votes had been incorrectly recorded.
Bright & Duggan hired lawyers to examine the vote, but this review assumed votes had been recorded correctly and only examined the strata manager’s decision to count the votes manually.
“We weren’t listened to, and we didn’t get an independent investigation,” Haywood said.
A Bright & Duggan spokesperson said the manual vote count was double-checked and, while the votes were close, it was approved in Meriton’s favour.
“[Haywood] has the right to challenge any decision of the meeting through legislated dispute and resolution mechanisms. We have also advised her on the process to follow should she wish to raise the matter again with all owners at a future meeting,” the spokesperson said.
“Disputes and issues in a strata scheme come up from time to time.”
A Meriton spokesperson said they were not responsible for running the Owners Corporation meeting or calculating the votes, and threatened this masthead with legal action “for appropriate relief for any loss or damage” if its caretaker fees were to be made public.
The spokesperson also called Haywood’s complaint “unfounded” and her assertions “vexatious”.
Meriton has built more than 80,000 residential apartments nationally, but the spokesperson declined to say how many of those apartments had building management services provided by the company.