One More Step Along the Yellow Brick Road of Victorian Strata Law Reforms
The latest strata law reform journey may end soon and we can finally say, goodbye …
Victorian strata law has developed steadily over 54 years. But this week there are some [exciting] developments after almost 5 years.
Introduction
After a quiet 2020 for Victorian strata law reform, a few things suddenly happened this week and everyone in strata [lockdown] land is getting excited that these long-running changes may finally happen.
So, here’s an update on where things are at now with the proposed changes as well as this week’s developments. Plus, there’s an overview of the history of Victorian strata laws to put it all in context.
Latest reforms history & current status
In late 2015 and early 2016 Consumer Affairs Victoria released 2 issues papers covering:
property agents including owners corporation [Victorian strata] managers,
owners corporation issues, and
land and business sales.
More than 100 submissions were on owners corporation issues which Consumer Affairs Victoria said indicated a ‘high level of dysfunction’.
You can find the 2015 owners corporation issues paper and read the submissions here.
In 2016 the Victorian government issued an options discussion paper ‘Options for reform of the Owners Corporations Act 2006’ inviting submissions by 16 December 2016 about the following terms of reference:
assess the four Acts to identify improvements that could be made to the legislation, having regard to the experiences of stakeholders and to developments that have taken place since each of the Acts came into operation
examine the efficiency and effectiveness of the regulatory arrangements governing the conduct of licensed practitioners involved in the sale of land, real estate transactions and the management of owners corporations, and
recommend necessary amendments to improve the operation of the legislative arrangements set in place by these Acts.
More than 69 submissions were made to the options paper.
You can find the 2016 owners corporation options paper and read the submissions here.
In 2019 a draft bill was issued.
That bill was introduced to the Victorian parliament on 10 September 2019.
The second reading speech in the lower house [Legislative Assembly] was introduced on 11 September 2019.
And, the second and third reading speeches in the Legislative Assembly were approved on 20 February 2020.
The bill then entered the upper house [Legislative Council] and the second reading speech was introduced in the Legislative Council on the same day.
The rest of 2020 was a bit of a snooze.
But just earlier this week, things moved rapidly since:
some amendments by the Greens and the Government were proposed on 16 February 2021,
the Government’s amendments [only] agreed on 16 February 2021, and
the second and third reading speeches for the amended Bill in the Legislative Council were approved on the same day.
And, now the amended Bill has been referred back to the Legislative Assembly to consider and, hopefully, approve the amendments.
Then, if the changes are approvedm we might get the new strata laws.
If you’re bored you can keep an eye on the progress of the law in parliament here.
Key Victorian strata law changes
So, what’s changing in Victorian strata law?
Quite a bit as there are more than 90 changes and some include quite a few new detailed provisions. So, here’s a link to the detailed summary of the changes submitted to parliament that covers all of them [warning: It’s a very long read].
I’ll be writing a more detailed review of the nes Victorian strata laws after they’re actually finalised and scheduled to start. After all, the journey’s not really over yet.
So for now, I’ll just highlight this week’s proposed changes and why they’re interesting.
The Government proposed the following changes, that were approved and are now included in the Bill:
to modify the latest default start date for the new laws from 1 January to 1 December 2021 [there’s a clue to a likely start date],
to introduce new definitions and approved/prescribed terms for hotel and resort management contacts, and
tweaking the initial meeting disclosures to exclude compliant 3 year plus hotel and resort management contacts.
Including provisions for hotel management contracts bring regulation to a small but significant subset of strata investment property and owners. However, the devil is in the details, so the effectiveness of the controls will depend on the prescribed terms. But I can’t see why those contracts shouldn’t be disclosed at the first meeting even if they complying when they’re longer than 3 years.
The Greens proposed the following changes, but none were approved:
that approval for legal proceedings require an ordinary majority decision and not a special [three quarter] vote,
that approval for common property alterations for sustainability items require an ordinary majority decision and not a special [three quarter] vote,
to add battery energy storage to identified sustainability items and widen some other types, and
to clarify and widen the initial meeting disclosures in relation to third-party managers.
Why not add more kinds of energy-saving items to the new provisions about them; if some energy saving is good why not more? Plus, why not reduce the required approval levels as many other states have done as an incentive?
And, finally, why should legal proceedings require a special [three quarter] vote?
This is a high approval threshold that will operate to restrict strata building [and consequently strata owners’] rights and prevent necessary and appropriate legal action to be taken in their interests. After all, every other member of Victorian society [individuals, corporations, etc] doesn’t need special rules to exercise their legal rights.
Presumably, the barrier is justified by the [high] cost of legal actions, the exposure to costs orders if unsuccessful, anti-lawyer sentiment, and vested interests that don’t want to empower strata legal actions.
But, that’s wrong and part of a worrying trend around the country that I’ll be separately writing about.
A short history of Victorian strata law
Over 54 years there’s been a steady development of Victorian strata laws where changes occur slowly, but at gradually increasing speed.
The first Victorian strata laws were introduced in March 1967 with the Strata Titles Act 1967 [with 42 pages, 50 sections, and 3 schedules] which brought this exciting property title to the state.
In December 1974 the Cluster Titles Act 1974 was added to allow ‘flat strata complexes’ [with 30 pages, 41 sections, and 6 schedules].
In July and August 1998, the Subdivision Act 1998 [with 118 pages, 150 sections, and 3 schedules] and the Subdivision (Body Corporate) Regulations 1989 [with 55 pages, 68 sections, and 1 schedule] replaced the existing laws as a major overhaul after 2 decades of strata building development and– links
In 2001, the Subdivision (Body Corporate) Regulations 2001 [with 58 pages, 82 sections, and 1 schedule] replaced the existing laws since they had a 10-year expiry. But, because the 10 years expired before then, there was also the short-lived Subdivision (Body Corporate) (Interim) Regulations 2000 to cover the gap.
In December 2007, the Owners Corporations Act 2006 [currently 164 pages, 234 sections (but with quite a few sub-parts) and 3 schedules] and the Owners Corporations Regulations 2007 [currently 26 pages, 23 sections, and 2 schedules] were introduced as a major overhaul of the existing laws.
Since then there have been 16 sets of changes [mostly minor] except for the following.
In 2013 where revised and extended provisions were introduced to allow the costs of repair, maintenance, replacement, and upgrade works to be allocated to strata owners where the common property benefitted only those owners.
In 2016 where a new Division was added to cover short-stay accommodation [the Air BNB & serviced apartment phenomenon] that:
defined short stay accommodation,
prescribed conduct and behaviour rules,
permitted complaints to the strata building,
required strata building decisions on complaints, and
added legal remedies over short stay accommodation including VCAT orders, compensation & penalties.
So, we’re eagerly waiting for this new and exciting refresh to Victorian strata laws.
But, for Victorian strata stakeholders, it’s been a long [slowish] and winding road of strata law development that’s continuing for a bit longer.
Francesco ...
Feb 19, 2021