NSW: Strata Managing Agents Legislation Amendment Act 2024

On the 24 October 2024, LookUpStrata hosted a webinar titled Change is Coming: Strata Managing Agents Legislation Amendment Act 2024 presented by Christopher Kerin, Kerin Benson Lawyers. Christopher detailed significant upcoming changes to the strata managing agent legislation in New South Wales, Australia.

The Strata Managing Agents Legislation Amendment Act 2024 was passed in September 2024 but has not yet been enacted. The changes aim to address fairness and transparency concerns raised by recent reports, particularly those highlighted in ABC media coverage. This Act amends six different pieces of legislation, including the Strata Schemes Management Act and Regulation, the Community Land Management Act and Regulation, and the Property and Stock Agents Act and Regulation.

While this Act is specific to New South Wales, these changes may eventually affect legislation updates in other Australian states.

NSW: Change is Coming! The Strata Managing Agents Legislation Amendment Bill 2024 | Chris Kerin, Kerin Benson Lawyers – Oct 2024

key changes introduced by Strata Managing Agents Legislation Amendment Act 2024

The key changes introduced by this legislation can be categorised into four areas:

Greater disclosure obligations

• Gifts and benefits: The Act prohibits strata managers from requesting or accepting any gifts or benefits unless they fall under one of four exceptions:
  1. Remuneration for management services.
  2. A monetary commission disclosed in the management agreement or approved by the owners corporation (OC).
  3. A training service disclosed in the management agreement or approved by the OC.
  4. A gift valued under $60.
• Monetary commissions and training services: When seeking OC approval for a monetary commission or training service, strata managers must provide a document detailing the following:
  • The commission amount and calculation method.
  • The monetary value of the training or an estimate if the value is unknown.
  • The nature of the relationship between the strata manager and the provider of the commission or training.
  • Why the commission or training is in the best interest of the OC.
• AGM reporting: At each Annual General Meeting (AGM), strata managers are required to report:
  • Any commissions or training services received in the preceding 12 months, including particulars of the commission or training.
  • Any expected commissions or training services in the following 12 months.
  • Whether a supplier of goods or services for the strata scheme or an original owner of the scheme became connected to the agent in the preceding 12 months.
  • The names of suppliers and original owners connected to the agent, details of the nature of the relationship, and details of the goods and services provided by the supplier.
• Notice before entering contracts: Strata agents are now required to give written notice to the OC before signing contracts for goods or services if:
  • A commission or training service may be provided or paid to the managing agent.
  • The contract is with a person connected to the managing agent.
• Notice of new connections: Strata agents must provide written notice to the OC as soon as possible after becoming aware of any of the following:
  • A supplier of goods or services for the strata scheme becomes connected to the agent.
  • The original owner of the strata scheme becomes connected to the agent.
  • The agent acquires a direct or indirect pecuniary interest in the strata scheme.
• Disclosure of interest by potential agents: Before appointment, a potential strata managing agent must disclose to the OC:
  • Any connections with the original owner (developer).
  • Any direct or indirect pecuniary interest in the strata scheme.
  • Connections with suppliers who routinely provide goods or services for other strata schemes managed by the potential agent.
  • Any advice given to the original owner (formally or informally) during the previous two years about the strata plan, another strata plan, or a community plan.
• Insurance quotation qequirements: When providing insurance quotations, strata managing agents must now include a breakdown of the costs, including:
  • Base premium amount (excluding commission).
  • Commission (excluding broker fee) as an amount and a percentage of the base premium.
  • Broker fee as an amount and a percentage of the base premium.
  • Stamp duty, levy amounts, underwriting agency fees, GST, and other prescribed charges.
  • The names of the persons who will ultimately receive the commission and broker fee.
  • A statement indicating whether the person providing the quotation is connected to the agent.

Limitations on powers

• Proxy votes: Limitations have been placed on how a proxy can vote in relation to approving monetary commissions and training services.
• Agency agreement restrictions: New provisions in the Property and Stock Agents Act 2002 and Regulation 2022:
  • Prevent strata agents from requiring commission payments in certain circumstances.
  • Prohibit agency agreements from including provisions that allow agents to require commission payments for insurance purchases arranged by the OC without the agent’s assistance.

Strengthened enforcement and compliance powers for the Office of Fair Trading

• Enforcement of commission disclosure: The Office of Fair Trading can now apply to the New South Wales Civil and Administrative Tribunal (NCAT) to order a strata managing agent to pay undisclosed commissions to the OC.
• Enforceable undertakings: The Act replaces existing provisions relating to undertakings by licensees with a new section (210A) in the Property and Stock Agents Act 2002, aiming to provide the Office of Fair Trading with better tools to manage strata managing agents who have engaged in misconduct.

Increased maximum penalties and penalty infringement notices

• The Act significantly increases penalties for various offenses, including failure to disclose commissions and other breaches. Some penalties have been doubled, while others have increased tenfold.

When is the Strata Managing Agents Legislation Amendment Act 2024 coming in?

While the Strata Managing Agents Legislation Amendment Act 2024 was passed in September 2024, it will come into effect upon proclamation, which has not yet occurred. Christopher Kerin expects the proclamation to happen in the next month or two, with possible related changes over the remainder of 2024 and into 2025.

Presentation slides: Strata Managing Agents Legislation Amendment Bill 2024

Download the slide pack from today’s presentation here: Strata Managing Agents Legislation Amendment Bill 2024

This post appears in Strata News #718.

Christopher Kerin
Kerin Benson Lawyers
E: enquiries@kerinbensonlawyers.com.au
P: 02 8706 7060

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