strata titles act 1998 - dpipwe.tas.gov.audpipwe.tas.gov.au/documents/strata titles act consultation...

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Strata Titles Act 1998

Consultation Paper

J u n e 2 0 1 8

Department of

Primary Industries, Parks, Water and Environment


Consultation Paper

Department of Primary Industries, Parks, Water and Environment 1

Contents .............................................................................................................................................

OVERVIEW ............................................................................................................................. 2

Background .......................................................................................................................... 2

Submissions in Response to this Paper ............................................................................ 3

The Next Stage ................................................................................................................... 3

Previous Review Process – External Consultation .......................................................... 4

Section by Section Review ................................................................................................. 4

Strata Living in Tasmania .................................................................................................. 4

Key Issues Raised Regarding the Strata Titles Act 1998 ................................................... 6

ISSUES ..................................................................................................................................... 6

Division of Land by Strata Plan ......................................................................................... 7

Effect of Registration .......................................................................................................... 8

Nomination of Proxies ....................................................................................................... 8

Inspection and Availability of Records ............................................................................. 9

Insurance............................................................................................................................11

Model By-Law 1 – Duty to Keep Lot in Good Order and Repair ................................13

Amendment to Community Development Wording...................................................14

Meaning of Common Property .......................................................................................14

Time Period for Dealings Lodged with the Recorder ..................................................15

Unanimous and Ordinary Resolution .............................................................................16

Activation of a Body Corporate ......................................................................................17

Education regarding Strata Ownership .........................................................................18

Application for Relief Process .........................................................................................19


Consultation Paper


OVERVIEW

Background

The Strata Titles Act 1998 (the Act) regulates strata developments and day to day strata living in

Tasmania. It is an Act that is designed to have flexibility to accommodate the needs of small strata

schemes in addition to large strata schemes.

Upon registration of a strata plan, all of the owners of the lots in a strata scheme form the body

corporate.

A body corporate manages the day to day living in a strata scheme and is responsible for a range of

compliance, financial, insurance and essential services matters.

The primary role of the Act is to establish the rights and responsibilities of individuals and of

members of the body corporate.

In a residential strata scheme, housing is grouped. For many this provides a secure, community

atmosphere.

Combined with smaller areas, such as gardens to maintain, and the use of common facilities, strata

living is an attractive option for many people.

Strata ownership continues to grow within Australia, and with approximately 31,389 strata lot titles

within Tasmania it represents around 9% of land ownership.

The Act was reviewed by the Recorder of Titles (Recorder) as part of the Department of Primary

Industries, Parks, Water and Environment’s Legislative Program.

The intention of the review was to ensure that the Act is fulfilling its role as the legislative framework

for the Tasmanian strata community.


Consultation Paper


Submissions in Response to this Paper

This consultation paper provides an opportunity to comment on the key issues raised regarding the

Strata Titles Act 1998 and possible options for addressing those issues.

Submissions are welcome on any or all of the issues raised.

Please forward submissions to:

Recorder of Titles

Review of Strata Titles Act 1998

Land Titles Office

Land Tasmania

GPO Box 541

HOBART TAS 7001

Or:

[email protected]

The closing date for submissions is midnight 28 July 2018.

All submissions will be treated as public documents and made available on the Department’s website.

If you wish your submission to be treated as confidential, either in whole or in part, please note this

in writing at the time of making your submission. (However, see below on the Right to Information

Act 2009.)

The Right to Information Act 2009 and confidentiality

By law, information provided to the Government may be provided to an applicant under the

provisions of the Right to Information Act 2009 (RTI). If you have indicated that you wish all or part

of your submission to be confidential, your statement detailing the reasons may be taken into

account in determining whether or not to release the information in the event of an RTI application

for the assessed disclosure. You may also be contacted to provide any further comment.

The Next Stage

A consultation report containing recommendations will be prepared regarding amendment of the

Act and forwarded to the Minister for Primary Industries and Water for her information.

Approval to amend the Act will subsequently be sought.


Consultation Paper


Previous Review Process – External Consultation

In 2010, consultation was undertaken by the Land Titles Office (LTO) with stakeholders of the strata

community.

A letter was sent to various stakeholder groups which make up the strata community. This included

solicitors, strata management firms, local councils, insurance firms and private individual strata

owners who had corresponded with the LTO.

The purpose of the letter was to capture information regarding where the strata community had

identified issues with the implementation of the Act.

Recipients of the letter were directly invited to participate in the review. An LTO Office Circular

was also issued to the wider group of stakeholders to notify them of and inviting participation in the

review. The LTO Office Circular was also made available on the Department of Primary Industries,

Parks, Water and Environment’s website and was accessible to the general public.

Accordingly the request was broad in nature to allow participants to the review an opportunity to

raise any issues they felt necessary for the LTO to consider.

The LTO received a total of 34 submissions from various parts of the strata community. A number

of the submissions were from owners of a lot in a strata scheme who raised issues unique to them.

For example, where an Order has been made according to the Application for Relief process within

the Act.

The detail within the submissions was broad and covered a wide range of sections within the Act.

Section by Section Review

A section by section review was undertaken by an internal working group within the LTO on behalf

of the Recorder of Titles during which submissions made during the consultation process were

taken into account.

Strata Living in Tasmania

“Strata Living in Tasmania” (Strata Living) is a key reference booklet for stakeholders within the

strata community and provides an important introduction to strata development living in Tasmania.

As part of the review it was determined that the publication provided by the Land Titles Office to

the strata community of Tasmania,

Strata Living will be updated to reflect any legislative amendments and capture key policy outcomes

of the review.


Consultation Paper


During the review process it became clear that some of the proposed amendments by respondents

could be more effectively dealt with in a revised version of Strata Living rather than legislative

amendment.

These will be included in the Options posed to address the issues.

The new edition of Strata Living will be in electronic form and be distributed to key stakeholders

within the Strata Community of Tasmania with an LTO Office Circular to also be prepared.


Consultation Paper


Key Issues Raised Regarding the Strata Titles Act 1998

The key issues identified during the review are:

1. Division of land by strata plan

2. Effect of Registration

3. Nomination of proxies

4. Inspection and availability of records

5. Insurance

6. Model By-Law 1 – Duty to keep lot in good order and repair

7. Amendment from “Community Scheme” to “Community Development Scheme”

8. Meaning of common property

9. Time period for dealings lodged with the Recorder

10. Unanimous and Ordinary Resolution

11. Activation of a Body Corporate

12. Education regarding Strata Ownership

13. Application for Relief Process


Consultation Paper


ISSUES

1. Division of Land by Strata Plan

The issue raised relates to how land can be divided by way of a strata plan.

When the Act was initially drafted, the majority of strata developments were in the form of

high-rises or conjoined.

However as strata development has evolved strata may now also take the form of separate villas.

There are numerous ways a strata plan can be divided, which has been problematic for the LTO due

to the technical nature of how plans are drafted.

Section 4 of the Act states:

(1) Land under the Land Titles Act 1980 may be divided……

(4) ……both vertically and horizontally under this Act but vertical division of land into strata is not

a necessary feature of a division of land by strata plan.

The words “but vertical division of land into strata is not a necessary feature of a division of land by

strata plan” is considered by the Recorder to be unnecessary and confusing.

The person preparing the strata plan is best positioned to determine if vertical division or vertical

and horizontal division of the land is required.

Option 1 – Status Quo

This option would involve no amendment to the Act.

This would result in section 4(4) of the Act remaining the same and not removing any unnecessary

confusion arising from “but vertical division of land into strata is not a necessary feature of a division of

land by strata plan”.

Option 2 – Amend the Act by omitting the words “but vertical division of

land into strata is not a necessary feature of a division of land by strata plan”

from section 4(4)

This option would remove the unnecessary confusion arising from the words “but vertical division of

land into strata is not a necessary feature of a division of land by strata plan”.

https://www.legislation.tas.gov.au/view/html/inforce/2006-12-18/act-1980-019


Consultation Paper


This option recognises that the person preparing the strata plan for the division of land is best placed

to determine what is required in the circumstances depending on whether the development is

conjoined, high-rise, villas, or a mix of these.

Question:

Does the Act need to include any statement about vertical and horizontal division in addition to

that in the proposed amended Section 4(4)?

2. Effect of Registration

The issue raised is with regard to the effect of registration of a strata plan and the process

subsequent to registration.

A strata plan does not form part of the Land Titles Register under the Act. However the folios

created from that strata plan do form part of the Land Titles Register.

Folios from a strata plan are created under Section 33(13) the Land Titles Act 1980.

Section 8 of the Act also deals with the effect of registration. It duplicates with the authority set out

in section 33(13) and should be omitted.


This option would involve no change.

This option would not address the issue of the unnecessary duplication of authority.

Option 2 – Amend the Act to omit section 8 and rely on the authority

under section 33(13) of the Land Titles Act 1980

A consequential amendment will also need to be made to section 33(4)(C) of the Land Titles Act

1980, to give effect to the principle that strata plans do not form part of the Register.

Question:

Is the proposed omission of Section 8 required?


Consultation Paper


3. Nomination of Proxies

Under section 76 of the Act, the nomination of a proxy must be in writing.

A proxy must be nominated in advance of a meeting of the body corporate to ensure the voting

process is valid.

There has been confusion in how bodies corporate are to operate in relation to the form a proxy

can properly be nominated by body corporate members.

Currently the Act does not state that the nomination in writing may be done electronically.

The Act however is clear that the proxy must be in writing and it is open to the body corporate to

determine what form is considered acceptable.

Strata Living will be amended to include that it may be done in electronic form to address potential

confusion.



Legislative amendment would not be required on the basis that it is clear that a proxy must be in

writing and it is open to a body corporate to determine what written form is acceptable.

A body corporate is able to refuse to accept a proxy nominated in writing electronically.

Option 2 – Amend the Act to clarify the way proxies must be nominated

and the manner of writing which is acceptable

The Act would be amended to specifically provide that a proxy may be nominated in writing

electronically, for example via an email.

This removes any confusion in relation to proxies nominated in writing electronically.

Question:

Is there any reason why a body corporate be able to refuse a proxy nominated in writing

electronically?


Consultation Paper


4. Inspection and Availability of Records

Through enquiries to the LTO the failure to specifically provide the right to obtain body corporate

documents, such as minutes of meetings and financial records, results in members of bodies

corporate being refused copies of such information.

Lot owners can therefore encounter difficulty in accessing body corporate records to be properly

informed about body corporate matters.

This can occur if the records are deemed by the secretary to be private or sensitive in nature,

resulting in disagreements within strata developments on what information should be shared.

An example may include access to bank statements where a lot owner may wish to check on what

and how much has been spent by the body corporate.

Sections 83 and 97 provide that financial information and copies of by-laws must be provided to the

lot owner upon application to the body corporate. Section 118 provides for the Recorder to force

the body corporate to provide documents to lot owners if satisfied that the information has been

wrongly withheld.

The Recorder considers it is fair and reasonable for such copies to be provided, as owners should

be able to view this information.

These documents are essentially body corporate owned documents and are not the property of the

person handling the records, such as the secretary or treasurer.



Amendment of the Act would not be required on the basis that the provision of records is a matter

for the body corporate to determine on a case by case basis in accordance with the current sections

83 and 97.

This option does not address the issue or strengthen a lot owners rights to accessing records of

the body corporate.

Option 2 – Amend the Act to specifically state in sections 83 and 97 that

body corporate records are to be produced on the reasonable request of

lot owner/s

This option addresses the concerns raised during the review and by limiting it to where it is a

reasonable request it provides the basis for an application for relief if a request is refused resulting

in the Recorder determining what is reasonable in the circumstances.


Consultation Paper


This option strengthens a lot owners rights to accessing records of the body corporate.

Option 3 – Amend the Act to provide a list of documents that should be

provided at every general meeting/annual general meeting of a body

corporate

This option would address what documents/records should be available such minutes of meetings,

bank statements, consultant agreements etc.

Question:

Should a body corporate be able to decide when and what to provide upon request?

Question:

Are sections 83 and 97 wide enough to cover all documentation held by a body corporate?

5. Insurance

Under section 99 of the Act, the body corporate must insure all buildings and other improvements

(if any) on the strata site.

In many circumstances it has become clear that insurance companies are willing to provide individual

insurance rather than body corporate insurance. However this is not required insurance for the

purposes of the Act.

The Recorder of Titles does not regulate the insurance industry and control what insurance cover

it provides to clients.

Strata lot owners wishing to comply with the Act can find it very difficult to engage other lot owners

to obtain the appropriate body corporate insurance where those lot owners have obtained

individual insurance.

This can be due to, for example, a lack of understanding of the requirements of the Act and/or an

inactive body corporate.

Under section 103 of the Act, if the body corporate does not obtain the required insurance, a lot

owner may obtain the insurance and recover the cost of the premium from the body corporate.


Consultation Paper


Whilst the Recorder of Titles cannot regulate the insurance industry or determine what products

they wish to provide to their clients, the provision of individual products could lead to significant

problems for strata schemes when an accident or other issue occurs on the strata development.

This is due to the common property not being properly covered by individual insurance policies

which creates problems not only for the lot owner with regard to public liability, but also with

regard to Applications for Relief.



Legislative amendment would not be required on the basis that the Act is currently clear that

insurance taken out by the body corporate is required for the benefit of the lot owners within the

strata scheme.

Option 2 – Amend the Act to enable a strata lot owner to take out

individual insurance for their lot and their share in the common property

This option replicates the approach taken by Victoria with regard to individual policies that are

separate to that of a body corporate policy.

Option 3 – Amend the Act by removing the requirement for specific

insurance to be taken out

This option would involve amendment of the Act to remove the requirement for insurance and lot

owners can take out whichever insurance they wish (if any) depending on the advice of the insurance

industry.

What policies that are provided to lot owners would be a matter for the Insurance industry to

determine.

Option 4 – Clarify Strata Living

This option would result in a review of the information provided in Strata Living in Tasmania.

The intention being to raise awareness of the need to obtain body corporate insurance and the

more clearly explain the risks associated with ignoring section 99 of the Act.


Consultation Paper


Question:

Who should be responsible for obtaining insurance of buildings and improvements on the site of a

strata development?

Question:

Would the insurance industry be prepared to issue individual insurance policies?

6. Model By-Law 1 – Duty to Keep Lot in Good Order and

Repair

Model By-Law 1(1) states “The owner of a lot must keep buildings and structural improvements on

the lot in a state of good repair and to a standard in keeping with other buildings and structural

improvements on the site”.

It was raised as part of responses within the external review that the wording of “structure” within

the by-law causes confusion within the strata community.

The reason for this confusion is a lot does not just have structural improvements on the site.

Other improvements may be garden beds, landscaping and other such improvements that whilst

they may not be considered structural in nature, do also require the need to be maintained and kept

in good order and repair to comply with the requirements of the By-Law.

Further, the By-Law has proved difficult to apply with regards to Applications for Relief.


This option involves no change to Model By-Law 1 and does not address the issue.

The Recorder would continue to assess applications for relief on the basis of the current wording

including “structure”. In effect all improvements of a non-structural nature would not be covered

by Model By-Law 1.

Option 2 – Amend the Act to remove ‘structure’ from Model By-Law 1

This option would address the issue by extending the application of Model By-Law 1 to include both

structural and non-structural improvements.

Strata Living in Tasmania would be updated to reflect this amendment.


Consultation Paper


This clarification would assist both the Recorder and the strata community by including non-

structural lot improvements, such as garden beds, under Model By-Law 1.

Question:

Should Model By-Law 1 cover non-structural improvements?

7. Amendment to Community Development Wording

In the prior development of the Act, the term ‘community scheme’ is used where ‘community

development scheme’ is the correct wording.

Option 1 – Amend the Act to replace “community scheme” with

“community development scheme” wherever it appears

This option addresses the issue by ensuring that the defined term is used and in doing so corrects

the drafting oversight.

8. Meaning of Common Property

Common property is owned by strata lot owners, each having an undivided interest in a common

space which can be used for the enjoyment of all lot owners.

Common property in a strata development may include areas such as gardens, driveways,

recreational spaces and is also inclusive of shared infrastructure such as water pipes.

The Act currently contains multiple references to the meaning of common property which are in

part different complicating the practical application of these sections, particularly in relation to

applications for relief.

Applications for relief continue to be made where a degree of confusion remains as to what does

and does not form part of common property in a strata development.

A singular and consistent meaning is required to provide certainty in interpretation and application.




Consultation Paper


This would result in the meaning of common property remaining inconsistent and does not address

the practical issues faced by the strata community and the LTO.

Option 2 – Amend the Act to include a consistent meaning of common

property

The introduction of a consistent meaning of common property would promote better interpretation

and application of the term which is of benefit to both the strata community and the LTO.

It would enable a body corporate to identify what is common property within its strata development.

Question:

Have you encountered any problems with defining the common property within a strata

development?

9. Time Period for Dealings Lodged with the Recorder

Currently the Act is silent on the time period for when dealings are to be lodged with the Recorder

after a resolution of the body corporate is made in order to give effect to that resolution.

A long period of time without any action taken can cause undue disruption and delays. An example

could be where an exclusive use by-law is granted to a lot owner for parking on common property,

yet the dealing is not lodged with the Recorder to give it actual effect under the Act to authorise

the lot owner to park there.

It is proposed that the Act be amended to insert a “general” provision to provide a time period

within which dealings should be lodged to give effect to resolutions made by the body corporate.

The Recorder considers three months is an appropriate time period allowing enough time to

progress the dealing but is not unnecessarily lengthy.

The Recorder will also need the ability to grant extensions subsequent to that period subject to a

written application where the Recorder is satisfied that an extension is justified. An example of

where an extension cold be granted is where a resolution has been made but the lot owner is not

available to sign the appropriate documentation to lodge with the LTO.


This option involves no change and the Act would be silent as to a time for lodgment of dealings

required to give effect to a resolution of the body corporate.


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This option does not address the issue.

Option 2 – Amend the Act to introduce a new provision to require a body

corporate to lodge with the LTO all dealings required to give effect to a

resolution of a body corporate within a specified timeframe of 3 months

from the date of the resolution

This option addresses the issue by providing a timeframe within which dealings to give effect to a

resolution of the body corporate must be lodged with the LTO.

The time period of 3 months from the date of resolution allows enough time to prepare the dealings

but is not too lengthy that a person who has the benefit of a resolution is adversely impacted by a

delay.

In addition, the section would provide the Recorder with the ability to grant an extension of time

upon a written application where the Recorder is satisfied that an extension is justified.

This option ensures that resolutions of a body corporate are acted upon in a timely manner.

Question:

Is 3 months an appropriate amount of time to lodge the dealings?

10. Unanimous and Ordinary Resolution

The strata environment attempts to strike a balance between private ownership rights and

community living.

The types of resolutions required for dealing with certain matters has an impact on this balance.

The Act currently provides for both unanimous and ordinary resolutions. The latter is more

consistent with the underlying principle of strata living and democracy in general, in that a strata

scheme should be able to make decisions for the benefit of the majority.

After weighing up the positives and negatives of both, the Recorder determined that the default

position should be that an ordinary resolution requiring the support of the majority to be successful

is the preferred voting method.

The Recorder does however, acknowledges the need for the ability for bodies corporate to require

a unanimous resolution for particular matters.


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Accordingly, bodies corporate would still be provided with the ability to make by-laws requiring

resolutions on particular matters to be unanimous.

It is also proposed that a new section be created which would specifically provide that all resolutions

are general (i.e. the majority) unless the body corporate makes a by-law stipulating that a unanimous

resolution is required for a particular matter(s).



This is on the basis that the balance between private ownership rights and community living is

considered to be appropriate.

Option 2 – Amend the Act to change all sections that require a unanimous

resolution to require an ordinary resolution

Bodies corporate would be provided with the ability to make by-laws requiring resolutions on

particular matters to be unanimous.

Question:

Should majority decisions be the standard position unless a by-law is made for unanimous

decisions for particular circumstances or decisions?

Do you see any issues in the application of the proposed amendment to change unanimous

resolutions to ordinary resolutions?

11. Activation of a Body Corporate

The body corporate is comprised of all lot owners in a strata scheme and is created on registration

of the plan by the Act. All strata schemes have a body corporate.

A body corporate can range from two members in a two lot strata scheme (such as two villa units)

through to 100 plus members in a large strata scheme (such as a high rise development).

The role of the body corporate is to manage the strata development and to take ownership of

common property. The body corporate is responsible for administering and enforcing the by-laws

of the strata scheme, arranging body corporate insurance and maintaining common property.


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Problems arise when a body corporate is inactive and not fulfilling its obligations, especially where a

lot owner who attempts to activate the body corporate is unable to contact the other owners or

the other owners are unwilling to participate.

If the lot owner is unsuccessful in activating a body corporate, the lot owner has the option of filing

an Application for Relief with the Recorder of Titles requesting an Order requiring a meeting to

take place of the body corporate members.



This is on the basis that the Act is clear in what the responsibilities are of a body corporate.

Option 2 – Amend the Act to introduce a new provision to state that upon

an application by a lot owner the Recorder can call a meeting in an attempt

to activate the body corporate

This option provides a mechanism to activate a body corporate through the holding of a meeting by

the Senior Strata Adjudicator. The intention is to facilitate the meeting in the first instance, with the

intention that the body corporate address its own affairs form that point on.

Two other issues exist which are not considered to be in the scope of this Consultation Paper and will be

reviewed separately.

12. Education regarding Strata Ownership

During the review concerns were raised regarding the lack of awareness by the purchaser of the

ramifications of purchasing a strata lot.

Other concerns raised include a lack of governance for strata managers that are engaged by bodies

corporate.

It was concluded that these concerns may be due to lack of a working knowledge of the Act and

strata ownership within Tasmania, including with regard to the requirements of buying into a strata

development.

It should be noted that the Recorder of Titles does not regulate the strata management, legal or

real estate industries.


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Continued education and awareness will, however, be provided to the public through Land Tasmania

internet site, Strata Living in Tasmania, LTO Office Circulars and other strata brochures to increase

knowledge of the Act.

This is in addition to engaging with peak bodies and identifying and pursuing avenues to ensure

accurate strata information is known by the purchaser before completing settlement - such as the

development of a brochure to outline the special requirements of strata ownership in Tasmania.

13. Application for Relief Process

The Application for Relief process (Part 9 of the Act) is quasi-judicial and designed to be an affordable

and efficient dispute resolution process.

The LTO is undertaking an internal review of the process separate to the review of the Act. Any

comments can be provided and will feed into any future decision-making in relation to the

Application for Relief process.

It should be noted that in other jurisdictions a judicial body (such as the Victorian Civil and

Administrative Tribunal) addresses strata related disputes rather than the Registrar/Recorder of

Titles via the LTO as in Tasmania.

The formation of a new Tribunal within Tasmania is being considered and may provide a better

forum for initially dealing with Applications for Relief.

strata titles act 1998 - dpipwe.tas.gov.audpipwe.tas.gov.au/documents/strata titles act consultation...

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