The Devil is in the Strata Disclosure Details
or, when there’s no such thing as too much disclosure …
A Quick Read
You’ve heard the idiom ‘the devil is in the details’ many times.
The new NSW strata laws about strata manager [and building manager] entitlements, commissions, benefits, training, connections, pecuniary interests and gifts, plus the attached disclosure obligations, are exactly that for strata stakeholders as they are very very detailed, involve lots of disclosures, need to happen regularly and have serious penalties and consequences if not done.
So, is it time to get this strata devil out by disclosing a lot more details?
[a 24:00 minute read, with 4777 words]
The Full Article
INTRODUCTION
Since 3 February 2025 new provisions in New South Wales strata title laws apply mandatory disclosure obligations and other restrictions and consequences on strata managers and building managers in relation to strata buildings, strata committees and strata owners.
They are, in my opinion, perfect for the idiom ‘the devil is in the details’. This idiom refers to a catch or mysterious element hidden in the details of an activity or thing, indicating that although something may seem simple, the details are complicated and likely to cause problems.
So, NSW strata citizens need to know about these disclosure details.
Similar provisions also apply to community title buildings, but that’s for another [future] GoStrata Media article.
If you’re a free subscriber, you’ll only see a shorter version of this article. However, you can request a preview with more information.
Paid subscribers, on the other hand, get the full article, including more details, links to primary sources, useful third-party information, and the ability to make comments.
WHAT DOES THIS ARTICLE COVER ?
This article is about the way the new NSW strata laws operate in an easy to understand way that’s not jargon filled or legalistic. So, it’s suitable for all strata citizens.
And, it covers the following topic areas.
INTRODUCTION
WHAT DOES THIS ARTICLE COVER?
WHY THE DETAILS ARE IMPORTANT
SOME TECHNICAL STUFF
SOME KEYWORDS & THEIR MEANINGS
WHO MUST DISCLOSE THINGS?
TO WHO MUST DISCLOSURE GO [AND HOW]?
IT’S NOT JUST ABOUT DISCLOSURE
ABOUT INSURANCE SPECIFICALLY
ABOUT COMMISSIONS, PAYMENTS & NON MONEY BENEFITS
ABOUT TRAINING SERVICES
ABOUT GIFTS
ABOUT RELATIONSHIPS & CONNECTIONS
ABOUT STRATA BUILDING PECUNIARY INTERESTS
DISCLOSING BEFORE MANAGING
PENALTIES
OTHER LEGAL EXPOSURES
CONCLUSIONS
WHY THE DETAILS ARE IMPORTANT
Obviously, strata managers who must comply with the new strata disclosure laws should know and understand the disclosure obligations for strata and licensing law compliance, business risk management, liability exposures, good strata building management and reputational reasons.
And, strata committee members and strata owners who benefit from them need to know the new strata disclosure laws so that they can properly assess whether or not they are getting proper disclosure, do something about it if they aren’t, make decisions about the things that are disclosed, and, if necessary, to enforce their rights.
I also believe that suppliers of strata goods and services to strata buildings should be familiar with the new strata disclosure laws and what strata managers must disclose to strata buildings. If those suppliers pay commissions or other money to strata managers, provide them with ‘benefits’, provide training, and/or have a relationship [we’ll get into that soon] with them, then they’re involved in both compliance and, potentially, breaches.
There’s already some simplified information for strata citizens like the following.
The consumer information on the NSW Fair Trading website here and here .
Commentary by various strata law firms and legal businesses like:
Plus, you can read the Explanatory Note to the Strata Managing Agents Legislation Amendment Bill 2024 submitted to NSW Parliament as an overview [or crib sheet] of the changes.
And, it’s very likely there’ll be more [and more] published over time.
But be careful using ‘free’ summaries to make important business, strata building operations and legally serious and risky decisions as they have disclaimers all over them, so they’re not something you can rely on.
SOME TECHNICAL STUFF
The new strata laws, which started on 3 February 2024, result from changes made by the Strata Managing Agents Legislation Amendment Bill 2024.
That Bill changes parts of the following other laws.
Strata Schemes Management Act 2015
Strata Schemes Management Regulation 2016
Property and Stock Agents Act 2002
Property and Stock Agents Regulation 2022
SOME KEYWORDS & THEIR MEANINGS
Let’s start with some keywords because these words don’t always mean what they say, and what they mean is important.
A Building Manager is defined as the person or organisation appointed by a strata building to assist it in managing, controlling, maintaining and/or repairing common property, but without delegations of functions.
[see section 66 of the Strata Schemes Management Act 2015]
That’s pretty straightforward.
Commission is not specifically defined in the Strata Schemes Management Act 2015, and the word has many meanings in the wider English language. So we need to choose a meaning that makes sense and is appropriate.
I think that meaning is: a payment to someone that is related to the amount or value of something.
Obviously, an insurance Commission is covered by the term. But, the term is also likely to include any payment that is made for supplying any kind of goods or services to Owners Corporations.
A Commission also specifically includes Insurance Broker Fees.
[see definitions in section 4 of the Strata Schemes Management Act 2015]
Connection [or being Connected] is defined as being one of the following people or organisations in relation to another person or organisation:
a relative,
a relative of a person in an executive position,
an employee,
a person engaged by them,
an executive [a director, manager or secretary or holds a management role],
an organisation that employs them,
an organisation that engages them,
an organisation of which they are an executive,
a related corporation under the Corporations Act 2001,
an executive of a related corporation.
a person or organisation that holds a financial interest [shares or a right to money] in them,
a person or organisation that can exercise power to significantly influence them,
a trustee,
a beneficiary, or
a child, spouse or defacto of a beneficiary
[see section 7 of the Strata Schemes Management Act 2015]
[see also regulation 62 of the Strata Schemes Management Regulation 2016]
So, that’s a lot of potential Connections for Strata Managers that extend widely to the obvious people and organisations and to far less obvious other Connections.
The gift is not defined either, but the strata laws pick up the definition of Gift from the Electoral Funding Act 2018 to include giving or receiving goods or services without payment or for less payment than they’re worth unless they were given for voluntary work.
[see definitions in section 4 of the Strata Schemes Management Act 2015]
[see also definitions in section 4 of the Electoral Funding Act 2018]
That means [for Strata Managers] all kinds of things that a supplier of goods or services might give them as part of typical business development and marketing activities like presents [wine, gourmet baskets, chocolates, sports memorabilia, etc], entertainment [like meals, drinks, show tickets, etc], travel expenses to events, free work or holidays junkets, etc.
Insurance Broker Fee is not specifically defined, but it’s much easier to understand since it’s a charge made by an insurance broker when acting as an insurance agent.
Original Owner is defined as the person or organisation that originally owned the Owners Corporation’s land and is typically referred to as the developer.
[see definitions in section 4 of the Strata Schemes Management Act 2015]
Owners Corporation is defined and is the legal entity that’s created when a strata plan is registered and the common property vests to its ownership and control. It’s not actually a corporation [as in a company] and has an unusual status as separate from but comprising all the strata owners.
[see section 8 of the Strata Schemes Management Act 2015]
But for the purpose of the new strata disclosure laws, consider an Owners Corporation to be the legal entity for the strata building including its member strata owners.
I often simply refer to Owners Corporations as the strata building.
Pecuniary Interest is not defined or used in the new strata laws or anywhere that directly relates to strata titles law. The ordinary meaning of a Pecuniary Interest is a financial interest by which a person or organisation receives [or loses] money or value from a thing.
In other words, it’s an interest in something that matters to them financially.
Relationship is not defined either, but it is used in the new strata laws and is a useful term to use for Connections as well as for the connected supplier businesses Strata Managers routinely use, and that must be disclosed to Owners Corporations.
[see section 71(2)(b) of the Strata Schemes Management Act 2015]
So, I think it’s helpful to think about the Relationships Strata Managers have as a shortcut way to understand Connections.
Strata Manager [or Strata Managing Agent} is defined as the person or organisation appointed and delegated an Owners Corporation’s functions to manage its affairs and common property.
[see definitions in section 4 of the Strata Schemes Management Act 2015]
So, that’s straightforward.
You know who you are.
Training Service is also not defined but is easy to understand since it’s training of any kind whether [or not] it is in person or online, in groups or singly, formal or informational, and delivered by qualified or unqualified persons.
In this article, I use all these terms in a Capitalised Bold Font so you know they have special meanings.