This page provides a summary of all the changes to community lands laws.
2023 reforms to community land laws
Changes to community land laws started on 11 December 2023. The changes implement some recommendations from the 2021 Report on the Statutory Review of the Strata Schemes Development Act 2015 and Strata Schemes Management Act 2015 to community land laws.
Key changes include:
Pets and assistance animals
- prohibiting associations from charging a resident a fee or bond or requiring insurance for a pet kept on a lot,
- clarifying that by-laws cannot affect the ability of assistance animals to perform their duty on a lot or association property,
- maintaining the privacy of persons with an assistance animal by clarifying the forms of evidence that schemes can request to establish an animal is an assistance animal, and
- restricting associations from making by-laws or decisions that prohibit the keeping of a pet on a lot (not yet commenced).
Association committees
- increasing the cap on the number of committee members from 9 to 15,
- prohibiting a person from serving again on a committee for a period of one year after being removed, and
- making it easier to remove committee members,
- preventing members from participating or voting on a matter where they have a financial interest.
Meetings
- placing restrictions on how many owners a power of attorney or company nominee can represent.
- requiring original owners to provide key documents at least 14 days before the first annual general meeting of the association, and
- extending from seven to fourteen days, the minimum period for giving notice of the annual general meeting of a neighbourhood association.
Finances and notices
- requiring community land schemes to keep new records in an electronic form – this begins on 11 June 2024,
- enabling tenants to provide their own notice of their tenancy to the association where a landlord or agent has failed to do so, and
- requiring the landlord’s agent to give a copy of any changes to the by-laws and management statement to the tenant within 14 days of the change starting,
- requiring a landlord’s agent to give a copy of by-laws and any management statement to a tenant within 14 days of the tenant signing the rental contract,
- requiring a landlord’s agent to provide notice of a tenancy to the association,
- requiring associations to obtain at least two independent quotes for proposed expenditure over $30,000,
- allowing payment of levies in 14 days, instead of 30 days, for necessary repairs to mitigate a serious or imminent threat to a resident’s health or safety,
- clarifying the rules around repayment of money that has been transferred between administrative and capital works funds, or has been paid from one fund for expenses that should have been paid from the other fund.
Managing agents and facilities managers
- giving standing to the Commissioner for Fair Trading to seek the appointment of a compulsory managing agent at the NSW Civil and Administrative Tribunal (not yet commenced),
- requiring managing agents to give notice of the expiry of their contract with the association, within three to six months before contract expiry, and
- the appointment of strata managing agents, facilities managers or others who assist with the management, maintenance or repair of association property ends at the first annual general meeting.
By-laws
- clarifying that by-laws must comply with the Community Land Management Act 2021 regardless of when they were made.
Transitional arrangements
A transition period to 11 March 2024 will apply to the following reforms:
- an original owner must provide key documents to the association at least 14 days before the first Annual General Meeting,
- a landlord’s agent must give a copy of the by-laws and any management statement to the tenant within 14 days of the tenant signing the rental contract, and
- a landlord’s agent must provide notice of a tenancy to the association.
During this period, NSW Fair Trading will be focused on educating the industry to help them understand and comply with the provisions above.
Fines will apply from 11 March 2024.
Previous reforms
2022 changes to community scheme laws
Summary of the changes
Changes to community scheme laws start from 30 September 2022 relating to electronic voting and electronic seals.
The key changes:
- enable schemes to meet and vote in person, or by using electronic means specified in the notice for a meeting without the need for a resolution adopting those means, except for pre-meeting electronic voting which will require a prior resolution and will not be able to be used for elections of the association committee.
- require the secretary of an association, or a managing agent, to take reasonable steps to ensure each person entitled to participate in and vote at a meeting can do so, if electronic voting is used - whether or not that way of voting has been adopted by resolution.
- make some updates to procedures for the nomination and election of association committee members and office holders.
- enable associations to keep and use an electronic form of their seal for the execution of documents in accordance with certain requirements.
The temporary COVID-19 measures for community schemes ended on 29 September 2022.
The new laws include a transitional provision to enable pre-meeting electronic voting arranged for a matter before 30 September 2022 to be used at the relevant meeting, even if the meeting is held after that date and no resolution has been passed adopting pre-meeting electronic voting.
For further detail on these changes, see the meetings and voting and responsibilities of an association pages, and the following legislation:
New Community Land Management Act 2021
The Community Land Management Act 2021 changes the ways community land schemes operate. It brings the law into line with strata scheme law. Below is a summary of the key impacts of the new Act.
Meetings and voting
Community land schemes can now meet and vote electronically
The Community Land Management Act 2021 (2021 Act) modernises the community land laws to allow associations to authorise by resolution meeting and voting electronically (teleconference, video-conference, email or other electronic means).
In response to the COVID-19 pandemic, the NSW Government had temporary powers to grant associations the ability to meet and vote electronically. These measures were only a temporary measure until the new Act was passed.
With the new law, associations can now pass a resolution to authorise the use of electronic voting and keep in place the practices it was able to trial during the pandemic.
New restrictions on proxy farming or harvesting
The 2021 Act imposes limits on the number of proxies people can hold. The total number of proxies that can be held depends on the number of lots within the scheme:
- 20 lots or less – only one proxy can be held
- more than 20 lots – a number that is not more than 5% of the total number of lots (for example, if a scheme has 100 lots the maximum that can be held is 5 proxies).
These limits do not prevent a person who owns more than one lot from appointing a single person to hold all their proxies.
Learn more about meetings and voting.
Committees and office bearers
Executive committee name change
The 2021 Act changed the name of the ‘executive committee’ to ‘association committee’.
Committees can also be called by the kind of scheme that is, for example, ‘community committee’, ‘precinct committee’, or ‘neighbourhood committee’.
Changing the name away from ‘executive’ reflects that the purpose of the committee is to administer the scheme and is not to be considered some form of executive body that rules accordingly.
Clearly defined office holder roles
The 2021 Act clearly provides for the functions of each of the officeholders of the association. This helps to outline what each role does and who is responsible for what.
The chairperson presides at meetings of the association and the association committee. They also make determinations as to quorum and other procedural matters at the association and committee meetings.
The secretary is responsible for preparing and distributing minutes, maintaining the association roll, enabling the inspection of association documents, convening meetings of the committee and association, and answering communications to the association.
The treasurer is responsible for managing the accounts of the association, notifying members of contributions levied, preparing association information certificates, keeping accounting records, and preparing the financial statement.
Tenants in neighbourhood schemes
Tenant representatives can be elected in neighbourhood schemes
In neighbourhood associations where at least half of the lots are tenanted, the tenants can nominate a tenant representative on the committee.
The tenant representative is entitled to:
- receive a copy of the agenda
- attend and speak at committee meetings but can still be asked to leave the meeting if financial issues are to be discussed.
The tenant representative does not have a vote and is not counted for determining a meeting quorum.
Tenants and meetings of the neighbourhood association
Tenants can attend neighbourhood association meetings but are not allowed to address the meeting unless authorised to do so by resolution.
Tenants do not have the same rights to attend or elect a representative for community or precinct schemes.
Managing agents
New restrictions on the duration of contracts and on terms of appointment
A managing agent’s maximum term of appointment is 3 years, with renewals allowed.
The association committee can extend the appointment of the managing agent for successive blocks of up to 3 months after their term has expired, but not past the next annual general meeting (AGM). This allows the association time to seek a new managing agent if they wish.
If an agent is appointed for the maximum allowed period of 3 years, then their contract automatically includes an option for them to extend their appointment for a further 3 months. The agent must advise the association in writing that they will do this, but this is overruled if the association has given the agent 3 months’ notice that it will not be reappointing them.
If the association decides to terminate the appointment of a managing agent, the association must give them at least one month notice of that decision.
Managing agents now need to disclose conflicts of interest and commissions
Managing agents must disclose certain interests to the association before being appointed by the association. The managing agent must disclose:
- if they are connected with the developer
- any direct or indirect pecuniary interest in the scheme, other than the interest arising from the prospective management contract.
Managing agents must report to the AGM whether they have received any commissions in connection to the exercise of their functions on behalf of the scheme during the last 12 months. They must also provide an estimate on the commissions they believe they will receive in the next 12 months.
Learn more about managing agent responsibilities.
Finances
Sinking fund is renamed to capital works fund
The 'sinking fund' of the association is now called the 'capital works fund'.
The name change better reflects the purpose of the fund as the former name could cause confusion about its purpose.
Auditing of association accounts and financial statements is now mandatory for larger associations
Associations with an annual budget exceeding $250,000 must now ensure that their accounts and financial statements are audited before being presented to the AGM. The audit must be carried out in accordance with the Australian Auditing Standards.
Associations with annual budgets not exceeding $250,000 can still choose to have their accounts and financial statements audited.
Statement of key financial information
The association is now required to prepare a statement of key financial information, in addition to the financial statement.
The statement of key financial information summarises the key financial information of the association in an easy to read manner to ensure association members can easily understand the financial position of the association.
The statement must specify:
- the fund and reporting period it is being prepared for
- the balance carried forward from the last period
- the total income received
- the total interest earned
- the total contributions paid and total in arrears
- the total expenditure for maintenance
- the total expenditure for administration costs
- the balance of the fund and balance of the previous period
- the principal items of expenditure for maintenance proposed in the next year.
Learn more about managing finances.
Management statements and by-laws
By-laws cannot be harsh, unconscionable or oppressive
The 2021 Act gives association members new protection from unjust by-laws.
By-laws that are adopted by the association are prohibited from being harsh, unconscionable or oppressive.
Association members can now seek an order from the NSW Civil and Administrative Tribunal (Tribunal) revoking part of the management statement if they believe a by-law to be harsh, unconscionable or oppressive.
Associations can adopt limits on occupancy within the scheme
An association can now adopt a by-law to limit the number of adults who may reside in a lot by reference to the number of bedrooms of the residence. The limit may not be fewer than two adults.
These limits can be imposed to help prevent overcrowding within a scheme and the overuse of association facilities.
Learn more about management statements.
Managing, repairing and maintaining association property
Association members can make a claim for damages against the association if they suffer a loss because it failed to maintain and repair association property
Associations will continue to have a duty to maintain and repair association property under the 2021 Act. The new law allows association members the ability to hold the association accountable for failures to comply with its duty.
Association members are able to apply for an order from the Tribunal for damages suffered due to the association breaching its duty to maintain and repair if the loss was reasonably foreseeable.
The association member will have 2 years to seek these damages. This 2-year period begins when they first become aware of the loss.
The 2021 Act, however, does recognise that sometimes it may not be appropriate for the association to repair or replace property. As such the association can determine by special resolution to not maintain, repair or replace association property as long as the decision will not affect the safety of the building, structure or association property, or detract from the appearance of the property.
Developers must prepare an initial maintenance schedule and hand it over before the first AGM
Developers are now required to prepare an initial maintenance schedule at the end of the initial period. This is to be provided to the association at the first AGM.
The initial maintenance schedule provides for the maintenance of association property and is intended to set out those matters the association needs to be mindful of in preparing its capital works fund plan. However, the association is not bound by what is outlined in the initial maintenance schedule.
The initial maintenance schedule must include maintenance and inspection schedules for such things as:
- embedded networks and micro-grids
- stormwater and other drains
- dams
- gas and water monitoring wells
- asset protection zones, if the property is on bushfire prone land.
If your association has already exited the initial period prior to the new Act commencing then the developer is not required to provide your association with an initial maintenance schedule.
Associations can now more easily install sustainability infrastructure
Associations can now pass ‘sustainability infrastructure resolutions’ to seek the approval of the following:
- finance sustainability infrastructure
- add, alter or erect a new on association property for the purpose of sustainability infrastructure
- amend the management statement to change the by-laws to install and/or use sustainability infrastructure.
These resolutions, like special resolutions, are passed based on the value of the votes. This is determined by examining the unit entitlement of each lot that votes on the measure. However, unlike a special resolution where not more than 25% can vote against the resolution, the threshold is lower so that less than 50% of the vote are against the resolution.
Sustainability infrastructure is broadly defined to capture many changes to the association property where it seeks to achieve the following purposes:
- reduce consumption of or to increase the efficiency of the consumption of energy or water
- reduce or prevent pollution
- reduce the amount of waste sent to landfill
- increase the recovery or recycling of materials
- reduce greenhouse gas emissions
- facilitate the use of sustainable forms of transport, including installing electric vehicle charging stations.
Utility supply contracts for neighbourhood associations now have contract limits
Any agreement that a neighbourhood association enters into for the supply of electricity, gas or any other utility will now automatically expire either at the conclusion of the first AGM if entered into during the initial period or after 3 years in any other case.
This is to protect neighbourhood associations from having unfair long term utility supply contracts entered into on its behalf by the developer and give the association the flexibility to explore other options for contracts at regular intervals.
To provide a transition period for pre-existing contracts, any contracts that are in force before 1 December 2021 will instead expire 10 years after the law commences unless the contract was due to expire earlier.
This provision does not apply to an electricity embedded network that may exist in a neighbourhood scheme.
Facilities managers
Associations can now appoint facilities managers to help manage the scheme
A community land scheme may engage a facilities manager. These are sometimes called building managers, caretakers or resident managers.
The facilities manager helps with the day-to-day running of a scheme within community lands. They may help the association:
- manage association property
- control the use of association property by people other than owners and residents
- maintain and repair association property.
The facilities manager may also perform duties such as security, cleaning, and managing the gardens and grounds of the scheme.
Restrictions on facilities manager appointment and mandatory disclosure
An association can vote at a general meeting to appoint a facilities manager. The appointment must be in writing under a facilities management agreement and the contract cannot be for more than 10 years.
Before they are appointed, a facilities manager must disclose to the association:
- if they are connected with or providing services on behalf of, the original owner (the developer) since this would present a conflict of interest where the association’s interests may not come first
- any direct or indirect benefit – called a pecuniary interest – in the scheme (other than them benefiting from the prospective appointment itself).
Learn more about facilities manager responsibilities.
Initial period definition
A new definition for 'initial period' will make it easier for it to end, to shift the association from developer control to association member control.
The initial period of a scheme begins when the plan is registered. The initial period ends at different times for different schemes:
- neighbourhood and strata schemes – the initial period ends when one-third of the total unit entitlement has transferred from the original owner
- precinct and community schemes – the initial period ends when at least one-third of the total unit entitlement under the scheme is made up of either or both:
- former development lots that have been subdivided into subsidiary schemes (that is, precinct, neighbourhood or strata schemes), for which the initial period has expired, and
- development lots that are not owned by the original owner and for which an occupation certificate under the Environmental Planning and Assessment Act 1979 has been issued for development on the lots.
Resolving disputes
Voluntary internal dispute resolution
The ability for associations to establish a voluntary internal dispute resolution process has now been recognised in the law.
This allows associations to establish processes to manage and resolve issues internally before escalating to external dispute resolution services like NSW Fair Trading and the NSW Civil and Administrative Tribunal.
Adjudicators have been abolished
The 2021 Act abolishes the role of adjudicators and their ability to make binding determinations for associations. Instead, the functions have been streamlined and consolidated into the NSW Civil and Administrative Tribunal.
If associations or association members wish to seek binding orders, they must now make an application to the Tribunal.
Learn more about dispute resolution.