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Construction Laws in Strata Communities

Construction laws and processes affecting strata and community schemes

Recently, we have received various enquiries about construction laws, proposed design and construction contracts and building contracts especially those affecting strata schemes. Basically, complex construction works are needed to be done involving the owners/developers (more commonly called Principals in the realm of construction laws), architects, builders, subcontractors, surveyors, superintendents etc. What do all these mean? We cover some of the basic issues below.

The construction industry broadly involves 3 categories of works:

  1. Construction works (yes, you guessed it);
  2. Design and construction works; and
  3. Project/construction management.

Construction works

This is distinct from design and construction works in that construction is conditional upon the prior provision and settlement of the design. The Principal would engage an architect or a design team to prepare and provide detailed project design documentation including drawings and specifications. Then, the Principal would engage a builder separately to complete the design (who would usually sub-contract out various parts of the works including the necessary supplies). So, basically, the Principal would enter into an architectural agreement with an architect or architectural firm and then a building/construction contract with the builder. Depending on the complexities of the arrangement, the Principal would engage a superintendent to administrate the building contract. The role and scope of the superintendent works can be defined in the building contract. Sometimes, the superintendent can issue directions on behalf of the Principal. In other instances, the superintendent can have a certification role (however, please be mindful about a potential conflict as the certification requirements may need to be independent).
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COVID LAWS for STRATA

Further extension of Covid-19 laws for strata and community schemes

From 21 July 2021, owners corporations and community associations can once again hold meetings and vote electronically (eg. teleconference, video-conferencing/Zoom, email etc), that is, even if the schemes have not previously resolved to allow them. And yes, these include strata/executive committee meetings.

The existing regulations on executing documents without the common seal and serving notices of meetings via email will also remain. Witness to the affixing of the common seal can be done via audio visual link. The new extension will be in force until 20 January 2022.

For further information about strata changes during COVID or any strata matter generally, contact one of our strata lawyers on 9635 7966COVID

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Strata – COVID Stay at Home Orders

Covid stay-at-home orders and what is “at home” for strata lot owners/occupier?

All of you should (or are deemed) to know, there are various health orders currently in-force due to Covid. We often hear the requirements to “stay at home”. But it is a timely reminder to consider again what is a home for strata lot owners or occupiers?

As most strata owners should know, they own the “airspace” insider their unit/apartment but also co-own the entire strata building and the common properties with the other owners as per their unit entitlements. So, is the nice looking patio downstairs a part of your home? Normally, yes. But please, use some common sense, not for covid / isolation purposes! The Parliamentary intention is that people should isolate at home, as much as they can away from other people etc. Good luck!

Matthews Folbigg has experienced strata lawyers that can assist lot owners and strata managers with advice. if you would like to speak with a strata lawyer, please call us on 9635 7966

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Renewal, Upgrade, Redevelopment and Sale Processes for Strata Buildings

Strata building renewal, upgrade, redevelopment and sale processes

So, you have a brick and mortar strata building (or a part of it). The ordinary repair and maintenance issues should be simple enough. That aside, what happens if you need or want something more? Just like renovating a home, should the strata building be renewed, upgraded, redeveloped or “flipped”(hopefully at a profit)? We explore some of these issues below.

Strata renewal, upgrade and redevelopment works

The Owners Corporation always has the power to change its common property within the building. This can involve a transfer of part common property to the individual lot owner(s) by way of a special by-law or subdivision and transfer (and vice versa). We say vice versa because lot owners and the Owners Corporations would often “swap” their land or airspaces to reconfigure their use. The subdivision and transfer can also be done in favour of a third party developer, in whole or in part (we’ve seen some creative ways of how builders and developers can structure their proposals – eg. the developer may retain a part of the redeveloped building as payment). If the changes to the building are significant, you will likely need a team of consultants, for example, accountants, valuers, surveyors, architects, builders, financers, real estate agents, town planners, certifiers etc (depending on the complexities of the proposal).

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Short Term Letting Restrictions

Short-term letting restrictions and how they impact you

As most of you would know, short term lettings in strata units and houses were causing a big fuss some years ago. Then, there were the debates (including parliamentary debates) as to whether these should be permitted, prohibited or permitted with conditions. Even now, we hear about the massive out of control Airbnb parties from time to time. Then again, there are the many success stories behind these passive income gems. So, where are we at now?

For NSW, the statutory framework governing short term letting has three main parts being: (i) the strata legislation, (ii) the mandatory code of conduct, and (iii) the planning laws.

Strata legislation for units and apartments

On and from 10 April 2020, the Strata Management Scheme Act 2015 was amended to include a new section 137A. In essence, the owners corporations can make a by-law by way of a special resolution in general meeting to ban short term rental accommodation where the person giving the rental arrangement does not occupy the lot as their principal place of residence. In short, the person granting the short term rental needs to live in the lot. If you (or your strata scheme) want to allow short term rentals, we suggest you to arrange a by-law to be made to expressly allow them, subject of course to conditions.
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Property Law Tested by Developer

Jobema Developments Pty Limited is the first developer to test the new property law introduced by the Conveyancing Amendment (Sunset Clauses) Act 2015, which requires vendors to either obtain the consent of purchasers before they can rescind an off-the-plan contract in reliance on a sunset clause in the contract, or to obtain the permission of the Supreme Court to do so.

Facts:

In this case, Jobema, the defendant, purchased a development site from Xycom, who had exchanged a number of off-the-plan contracts with a sunset date for the registration of the strata plan of 31 December 2015. As part of the purchase, Jobema would assume Xycom’s obligations under the exchanged off-the-plan contracts, one of which was with Mr Wu.

Xycom had carried out minimal work on the project before it had been sold. While Jobema commenced work immediately, the project was not completed by the sunset date. As required by the new legislation, notice of the proposed rescission was served on Mr Wu and the notice cited several reasons for the delay and the proposed rescission. Mr Wu did not consent to the rescission and Jobema subsequently applied for leave in the Supreme Court under the Conveyancing Act.
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Changes to Property Laws – Strata

IMPORTANT CHANGES TO PROPERTY TRANSACTIONS
The Conveyancing (Legislation) Amendment Act 2018 introduces changes that will provide better protection for purchasers buying property off the plan and more flexibility to those using electronic land contracts and deeds.

Off the plan Contracts:
An off the plan contract is used to sell a property such as a strata unit without its own separate title, given the property does not exist at the time contracts are exchanged.

Off the plan contracts can be beneficial to both property developers and purchasers. For property developers, finance is generally dependent on the percentage of lots that have been pre-sold.

For purchasers, these off the plan contracts are a popular way to enter the property market. This is because the construction and settlement periods can take years, providing extra time for buyers to save funds required for settlement.

However, due to the very nature of the transactions, off the plan purchasers are particularly vulnerable to the actions of developers. The new laws aim to address this vulnerability.
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Changes to Short-Term Rental Accommodations – Is the Holiday Over

The Department of Planning and Environment is currently in the process to introduce state-wide planning framework for Short-Term Rental Accommodation (STRA) following reforms provided to the Fair Trading Act 1987 (NSW) and Strata Schemes Management Act 2015 (NSW) at the end of 2018.

The changes proposed are as a result of the ever growing easily accessible holiday rental market whereby STRA in New South Wales initially compromised of a voluntary Code of Conduct – Holiday Rental Code of Conduct – originally adopted in 2012.

With growth in the industry outpacing policy changes, owner’s corporations were forced to use strata laws to manage STRA impacts and locally derived planning controls. Due to the difficulty surrounding the permissibility of uses, concerns have been raised by local communities as a result of noise, parking and house availability. In 2015, the NSW Legislative Assembly Committee on Environment and Planning conducted an inquiry into the adequacy of the regulation into STRA finding that planning laws needed to be amended to regulate the STRA.
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