How should small strata schemes manage trip hazards identified in a WHS report?
Page 10 | QIA
Can a strata manager refuse to hold an AGM on site due to WHS concerns?
Page 12 | Premium Strata
Strata insurance commissions and related entities, what must be disclosed?
Page 18 | Australian Consumers Insurance Lobby
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Disclaimer: The information contained in this magazine, including the response to submitted questions, is not legal advice and should not be relied upon as legal advice. You should seek independent advice before acting on the information contained in this magazine. Strata legislation is updated regularly. The information in this magazine is based on the legislation at the time of publishing.
financial information should strata managers provide to owners?
Sean
does section 55 require strata managers to provide to owners? Allison
How should small strata schemes manage trip hazards identified in a WHS report?
Craig
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Can a strata scheme move unused insurance payout funds into the capital works fund?
Can an owners corporation reallocate an insurance payout to the capital works fund if there are no repairs to carry out?
Our NSW strata scheme received a large insurance payout after the 2019 bushfires, but it did not follow the usual claim process. An owner lodged the claim, the insurer denied it, and the owner then went to the ombudsman and succeeded.
The owners corporation has held this money in its account for about five years. We do not have paperwork that specifies what the money must be spent on. Our strata manager claims NSW strata rules require the money to be used for repairs, even though no repairs seem necessary.
Can owners approve, at an AGM, moving this insurance payout into the capital works fund and using it for other capital works spending?
The most conservative and legally sound approach is to apply the funds in line with the settlement documentation unless and until a tribunal determines otherwise.
This is a legally unusual situation and not one that arises frequently in NSW strata practice.
As a general principle, insurance proceeds are paid to indemnify the owners corporation for a defined insured loss. Where funds are paid pursuant to a settlement or determination (including an AFCA determination), the safest and most legally defensible course is to apply those funds consistently with the scope of works or loss description upon which the settlement was based.
In other words, to strictly comply with legislative and fiduciary obligations, the owners corporation should apply the funds in accordance with the basis on which they were awarded.
While an owners corporation can pass resolutions at a general meeting regarding fund allocations, a resolution cannot override legal obligations attached to insurance monies. If the funds were paid for reinstatement of insured damage, reallocating them for another purpose may expose the scheme to challenge.
If the owners corporation wishes to depart from the original purpose of the payment, the more appropriate pathway would be to seek formal determination or clarification through NSW Fair Trading (i.e. NCAT). That would provide certainty and protection for the committee.
In practical terms, if the funds were applied differently and no owner or interested party challenged the decision, enforcement may
never arise. However, the risk remains that an owner could dispute the decision in future, particularly given committee members’ statutory duties.
Accordingly, the most conservative and legally sound approach is to apply the funds in line with the settlement documentation unless and until a tribunal determines otherwise.
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Every strata community must make decisions about how to fund capital works. How that moment is met matters - not just for the existing owners but for future owners as well.
The options have always been drawing on a capital works (sinking) fund, raising a special levy or the corporation taking out a strata loan. Of the three, the benefits of a strata loan are clear, but not always well understood.
A correctly-structured, straight forward strata loan is typically:
• the lowest cost after tax for most owners,
• the fairest way to share the cost of capital works among current and future owners, and
• an excellent way to spread the cost over the life of the asset.
Taking a Closer Look: The Value of Simplicity and Certainty in Strata Funding
By Paul Morton, CEO, and Gemma Davey, Head of Business Development, Lannock Strata Finance
For the 60–70% of owners who are investors, the levy that repays a strata loan should be 100% tax deductible. Special levies and capital works fund contributions are not.
A strata lender will not ask for personal financial disclosure or guarantees. There is no impact on individual credit profiles or borrowing capacity.
Some strata loan products are incredibly complex. Greater complexity increases risks for owners. Before owners are asked to vote, the committee should have the loan structure reviewed by an independent strata lawyer or accountant with expertise in strata funding. The adviser should be able to identify the risks, the gaps and what the lender has not been upfront about. Pay particular attention to any loan structure that asks owners to commit capital upfront.
Ensure that your strata lender has the strength to support you and your community for the life of the loan. Strata loans can extend for up to 15 years – will your proposed lender last the distance or leave you stranded with no access to funds as happened recently?
Before any committee tables a loan structure, two conversations need to happen. One with the lender and one with a strata-experienced independent adviser:
Ask your strata lender:
Question
Do you pay commissions to strata managers or anyone else?
What you should hear
No - confirmed in writing and verified unambiguously in the loan contract.
Why it matters
The person introducing or recommending a lender should have no financial interest in the outcome. Any commission is a conflict of interest and breach of fiduciary duty.
The only exception is an accredited finance broker.
How long has your company been lending?
Are all fees disclosed upfront - not just the interest rate? And what is the impact of those fees on total costs when converted to an interest rate?
Will you attend our general meeting and answer owner questions directly?
Who is our dedicated contact for the life of the loan?
Years of operation.
Full written schedule: application, establishment, drawdown, administration, early repayment and importantly a comparison rate.
Yes - with state-specific support documentation.
A real person with the required expertise, not a concierge or call centre.
Lenders have entered this market, made some loans, and then left clients with little or no service or support.
The headline interest rate is never the whole story!
Owners need direct answers, not marketing material via a strata managing agent.
Committees change. The relationship with your lender lasts the entire term of the loan.
Ask your accountant, lawyer, and financial adviser:
Question What you should hear
Does this structure comply with strata legislation in your state?
Yes - with relevant state-specific information.
Any grey areas on compliance with strata legislation in your state means greater risk.
Why it matters
If the product is non-compliant, for example relying on journalling levy credits or offsets, then the committee will have to oversee work to remedy the problems which ensue.
Does the loan structure create new risks for owners?
How are levy repayments and levy credits treated under tax law?
If the loan structure involves levy credits (e.g., “hybrid” or “participating” strata loans), does it have an Australian Tax Office (ATO) product ruling?
Does the product comply with the existing ATO product rulings and how are upfront contributors taxed under the ruling?
A clear explanation of all risks for the owners corporation and individual owners.
If the structure creates different classes of owners, those differences and their implications must be fully explained clearly.
How the structure qualifies for tax deductions for eligible owners, on what legislative basis, and with what certainty?
ATO Product ruling PR 2024/2 is the only product ruling currently issued for a loan structures where the owner ‘pays upfront’.
A specific answer, including tax treatment of any upfront remittances by lending owners.
If the strata loan is not straight forward, you need to understand the risks that complexity introduces.
60–70% of owners in most buildings are investors. Tax treatment of the levies is critical.
A product ruling is ATO confirmation of tax treatment and can be obtained quickly. Owners who rely on the claims of others are at risk of non-compliance and a desk audit.
ATO Product ruling PR 2024/2 states that upfront contributors under one structure will be taxed on their interest (even if a levy credit means that they never actually receive the cash).
Owners and advisers should read the ruling itself, not a lender’s summary.
If the answers to any of the questions above fall short, ask why your lender has not been upfront with you. Transparency, stability and long-term service aren’t extras - they’re the baseline.
Take a closer look: Get the advice. Ask the questions. Then decide.
For a full comparison of funding options and tax treatment watch the following webinars:
• The Principles of Corporate Finance and Tax
• Tax Traps for Strata Owners and Committees
This article provides general information only and does not constitute legal, financial, or tax advice.
For more information speak with our expert team:
1300 851 585 lannock.com.au
Can
a neighbourhood association committee exclude owners from committee meetings?
Does the committee of a neighbourhood association have the right to restrict attendance at a committee meeting to the members of the committee only?
The committee may control who addresses the meeting, but it cannot prevent eligible owners or members from being present.
No. In NSW, a neighbourhood association committee cannot limit attendance at a committee meeting to committee members only.
See the Community Land Management Act 2021, Schedule 2, Part 3, Section 11. Non-member owner may attend
An owner or member or, if the owner of a relevant lot is a corporation, any company nominee of that corporation is entitled to attend a meeting but is not entitled to address the meeting unless authorised to do so by the resolution of the association committee.
In practical terms, this means the committee may control who addresses the meeting, but it cannot prevent eligible owners or members from being present. If the committee has adopted a practice of excluding non-committee attendees altogether, that practice would not be consistent with the Act.
If an owner wants to raise an issue, a sensible next step is to write to the secretary or strata manager before the meeting and ask that the matter be tabled, or request permission to address the committee on the item. If access has already been refused, the owner may wish to request a copy of the minutes and seek advice about enforcing their rights under the legislation.
Jana Antelmann | Strata Life jana@thestratalife.com.au
How should small strata schemes manage trip hazards identified in a WHS report?
Do we have to follow a WHS report recommending yellow markings and signage for trip hazards on a small strata driveway?
We are a small strata complex of five villas, about 25 years old, with a shared common driveway leading to our individual garages. All residents are retired or semi retired owner occupiers.
On our strata manager’s advice, we arranged a work health and safety report. We have addressed most items, but one issue remains.
The driveway is stamped decorative concrete, long, and slightly undulating in places that are not always obvious. The report says we must highlight all edges, drains, and non level areas with yellow non slip paint and install a “shared pedestrian zone” sign at the entrance to minimise any potential trip hazards.
All owners agree this would look unsightly, detract from the complex, and feels unnecessary for a small scheme. We have not seen other small strata complexes with this type of driveway marking.
Do we have to implement these specific markings and signs, or can we use a less industrial option, such as a smaller sign and more subtle markings, for example, in light grey instead of bright yellow?
Dealing with safety issues requires consideration of a hierarchy of controls. This methodology prioritises removing a risk rather than relying on human behaviour to address an issue.
Undulating, uneven, and disjointed driveways are a common occurrence in strata properties, small and large, and also a common cause of tripping/falling incidents across the country. Maintenance and remediation of damaged or irregular surface finishes should be part of any property’s ongoing maintenance budget.
Based on the information you have provided, the advice appears sound. The signage at the complex’s entry would advise residents and visitors to maintain a low speed and reduce the likelihood of an impact incident. It will warn vehicles of the undulating concrete.
However, smaller complexes need to consider that their driveway is not just for vehicles but also serves as the pathway for the property, and therefore, increased maintenance obligations may need to be considered over and above those that would normally be required for vehicles. Dealing with safety issues requires consideration of a hierarchy of controls. This methodology prioritises removing
a risk rather than relying on human behaviour to address an issue. The best way to deal with a hazard is to eliminate it: repair the undulation, repair any uneven drains, and remove any lips that may result in an incident. As an alternative, highlighting the areas would be considered an administrative control designed to change how people act in the area.
Therefore, the recommended highlighting is not to “minimise any potential trip hazards” but to draw attention to them in an effort to avoid potential incidents. Yellow is the preferred colour, as it remains bright, is highly visible to area users, and is actually quite commonly used for this purpose. Alternative colours may be considered so long as they are sufficiently contrasting to the surrounding colours to achieve the same goal. For this reason, grey is not usually a good colour.
Ultimately, any highlighting should be considered a short term option as the long term benefit of the property will be best served by repairing the affected areas.
Craig Welsh | QIA Group info@qiagroup.com.au
Understanding Common Property Rights & Responsibilities
One of the most frequent sources of owner confusion is understanding the difference between what falls under “common property ” versus “lot property.” Misunderstandings in this area can lead to disputes over who is responsible for maintenance or repair, particularly for shared elements such as balconies, windows, roofing, or external walls. Without clarity, minor issues can es calate into disagreements, d elays in necessary works, or frustration among owners and the committee. Clear, consistent communication about the responsibilities of the owners’ corporation / bodies corporate versus individual lot owners helps prevent these disputes, supports smoother day-to-day operations, and ensures maintenance is carried out appropriately and efficiently. Proactive education and documentation make it easier for owners to understand their obligations and for managers to maintain compliance
How QIA Group Can Help
QIA Group provides clear, expert reports that strata managers can use to explain responsibilities and compliance requirements to owners, helping reduce confusion and prevent disputes. Our reports also give committees and managers a reliable, professional reference to support decision-making and ensure consistent communication with owners.
Plans & Diagrams
• Cladding Inspections & Reports
• Building
Assessments
• Plant & Equipment / Asset Registers
Can a strata manager refuse to hold an AGM on site due to WHS concerns?
Can a strata manager refuse to hold an AGM on site and require a teleconference or an alternative venue due to WHS obligations?
Our strata manager has proposed holding our upcoming NSW AGM by teleconference. For the past 30 years, we have held AGMs on-site, after business hours, and in person.
The strata manager said the meeting venue must comply with NSW WHS requirements and that both the owners corporation and their employer have a duty of care to provide a safe working environment for strata managers. They said they will attend a face to face meeting if we arrange a “safe” venue such as a quiet cafe or club. They also offered their office or a teleconference as an alternative.
Is there any industry-wide change that discourages or prevents on-site AGMs, and can owners still require an on-site, in-person AGM if that has been the usual practice?
While strata managers and their employers do have work health and safety obligations, these duties do not automatically mean meetings cannot occur within the building.
Generally speaking, no, a strata manager cannot require that an AGM be held off-site, and there have been no recent laws introduced in NSW that prevent owners corporations from holding meetings on-site.
While strata managers and their employers do have work health and safety obligations, these duties do not automatically mean meetings cannot occur within the building. WHS responsibilities require that any meeting location, whether on-site or elsewhere, be reasonably safe and suitable.
In practice, this means that some locations within a building, such as poorly ventilated garages or areas with obvious hazards, may not be appropriate. However, many on-site spaces, such as foyers, common rooms, or meeting areas, can
be used safely and compliantly. The owners corporation’s public liability insurance will generally extend to meetings held on common property, although it is always sensible to confirm this with the scheme’s insurer.
Importantly, the decision about where to hold meetings ultimately rests with the owners corporation. The strata manager acts as the agent of the owners corporation (who is the principal) and should follow reasonable directions about meeting arrangements, provided the chosen venue is safe and practical. What should be your next practical steps?
If your scheme wishes to continue holding AGMs on site, the committee should first identify a suitable, safe location within the building, accessible and free from obvious hazards. Simple measures such as ensuring adequate lighting, seating, ventilation and safe access can satisfy WHS expectations. It can also be helpful to confirm with your insurer that meetings held on common property are covered under the scheme’s public liability policy. This reassurance often resolves concerns raised by managing agents.
Next, the owners corporation can formally resolve the preferred meeting format and venue at a general meeting or instruct the strata manager accordingly. Clear written direction helps avoid ongoing uncertainty.
Finally, many schemes now adopt a flexible approach by allowing hybrid meetings, combining in-person attendance with teleconference access. This supports both safety considerations and broader owner participation.
Meeting format and location can significantly affect participation and transparency. A practical, cooperative approach usually leads to the best outcome, ensuring meetings remain safe, compliant and accessible to all owners.
Leanne Habib | Premium Strata info@premiumstrata.com.au READ MORE HERE
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Can owners require the committee to raise funds for urgent common property repairs?
Can owners require the committee to repair common property and raise funds now rather than delay?
Our strata plan shows my villa decking as common property, and all owners accept this. The decking has reached the end of its serviceable life. The safety railing is not BCA compliant, and the decking need to be replaced. Quotes are around $17,000, which would significantly reduce the capital works fund
A few other villas have similar railings that also need to be made BCA compliant. The strata manager suggested some quick maintenance until next year’s levies are raised. I sent an email around a month ago to all owners, the committee, and the strata manager, suggesting we take out a strata loan and complete all the works at once. I’ve not received a response. Is the committee required to address this common property safety issue? How do I prompt the owners to consider funding options now rather than delay and risk higher costs?
The OC generally has an obligation to maintain and replace common property when it reaches end of life.
Where decking and balustrades are common property (as shown on the strata plan and any relevant by-laws), the owners corporation (OC) generally has an obligation to maintain and renew/ replace common property when it reaches the end of its life. If there is also a safety/compliance issue (for example, a balustrade that is not compliant with the NCC/BCA requirements), it’s worth treating the matter as a higher priority because delaying can increase risk.
Why “patch now, levy later” can be risky
A short-term repair (e.g., replacing some decking planks) can sometimes be appropriate as a temporary measure, but it may not resolve:
• the structural end-of-life issue, and/or
• the compliance requirements for the railing.
If the safety element remains unresolved, the scheme may be exposed to a higher risk should an incident occur.
Confirming what “compliant” work looks like
Because compliance requirements can be technical and site-specific, it can be helpful to:
• obtain an opinion from a suitably qualified building professional/certifier, and
• ensure quotes clearly state what is included to meet relevant NCC/BCA requirements (e.g., height, load, openings, fixings).
This also helps owners compare quotes on a “like for like” basis.
Consider bundling similar works
across lots
If multiple villas have similar compliance issues, combining works can:
• improve consistency of outcomes,
• reduce repeated mobilisation costs, and
• help the scheme plan the overall capital works program more effectively.
Common funding options in NSW (high level) Schemes typically choose one (or a combination) of the following:
• Capital works fund (if adequate, noting it may reduce capacity for other planned works),
• Special levy (one-off or staged), and/or
• Strata finance to spread repayments over time via levies (subject to owners approval at a general meeting).
The “best” choice usually comes down to: urgency/ safety, fund balance, owners’ capacity to pay upfront, and the broader capital works plan.
If you’re not getting a response
In NSW, owners can ask their strata manager to place motions on the agenda for a general meeting so the OC can decide:
• the scope of works (based on quotes/advice), and
• the funding approach.
If the issue is urgent but not progressing, owners may also consider the usual NSW dispute pathways (e.g., mediation, and if needed, NCAT) for guidance on process and timeliness.
Andrew Boss | Firstrata Finance aboss@firstratafinance.com.au
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Can a chairperson run a strata committee election by asking owners to vote against candidates rather than for them?
I have two questions about strata committee vacancies and election procedures.
First, is there any reason a strata manager would advise a strata committee not to fill a vacancy after a committee member resigns, where the next AGM is not imminent?
Second, at a recent AGM, we had seven candidates for five strata committee positions. The chairperson asked owners to vote for the candidates they did not want on the committee rather than for the ones they did. Is this a valid or normal voting procedure for electing the strata committee? Is
Negative voting is not expressly prohibited. However, it would not be the conventional method for electing a strata committee.
A strata committee may appoint an eligible person as a member to fill a vacancy. The keyword is ‘may’, not must. The legislation allows the strata committee to fill the position, but does not require it to do so. If the committee can function, it may continue operating with fewer members.
Practical reasons that a position may not be filled would include the remaining committee still has quorum capacity, avoiding the administrative burden and cost and a need to maintain functional stability.
The Act doesn’t prescribe a voting method. It refers to the majority of votes cast in an election, which might suggest that a positive voting system is in place, where candidates receiving the highest number of votes are elected. Negative voting is not expressly prohibited. However, it would not be the conventional method used to elect a strata committee.
Mark Louis | Vital Strata Management mark@vitalstrata.com.au
READ MORE HERE
Strata insurance commissions and related entities, what must be disclosed?
Is it a conflict of interest for an NSW strata manager to direct a scheme to use an insurance representative company they control? What disclosure is required?
I am in NSW and have noticed that several strata managers have set up new companies in 2025 that operate as accredited representatives of insurance brokers. These accredited representatives receive a commission from the broker on our strata insurance.
The strata managers tell the strata committee that these companies are only “indirectly related” to the strata management business. However, the accredited representative companies often have the same directors as the strata manager, or are controlled by relatives, such as a cousin, an uncle, or a child. The websites for these companies are very basic, sometimes with no phone number and contact only via email.
When we question this arrangement, the strata manager says using their accredited representative is in the scheme’s best interests, but they provide no independent analysis or comparison. If the committee asks to deal with a different accredited representative that is not related to the strata manager, we are told no, or told we would need to change insurance brokers altogether.
Is this arrangement normal in NSW strata, and how should it be handled under conflict of interest and disclosure requirements for strata managing agents? What is the difference between being “directly related” and “indirectly related” where the same people, or their relatives, control both the strata management business and the accredited representative?
Arrangements of this type are not automatically prohibited, but they carry a high ethical risk.
The situation described does involve a conflict of interest. In strata management, a conflict of interest in itself is not prohibited, and the existence of a conflict does not automatically mean that a strata manager has acted improperly. What matters is how that conflict is disclosed, managed and whether the strata manager continues to act in the best interests of the owners corporation.
The Strata Community Association (SCA) National Code of Ethics (June 2025) is very clear on this point. It recognises that conflicts can arise, but requires strata managers to avoid unmanaged or undisclosed conflicts, to fully and proactively disclose all relevant interests (including commissions, referral arrangements, and related business entities), and to obtain informed consent from the strata community before proceeding. Disclosure must be meaningful and provided in advance of any decision, not after the fact.
Where a strata manager directs a scheme to use a representative that the manager controls, shares directors with the management business, or is controlled by close relatives, that is a related-party relationship for ethical purposes, regardless of whether it is described as “direct” or “indirect”. The Code focuses on control, influence and financial benefit, not on corporate labels. If commission income is being received as a result of that arrangement, it must be clearly disclosed and expressly approved by the owners corporation.
The Code also requires that procurement decisions be based on merit and value, with transparency and committee involvement. If a strata manager insists that the scheme must
use their related accredited representative, refuses to deal with an independent representative, or effectively forces the committee to accept the arrangement by saying the broker relationship cannot continue otherwise, that raises serious concerns. Such conduct may indicate preferential treatment, undue influence and a failure to facilitate an impartial decision-making process, all of which are inconsistent with the ethical standards set out in the Code.
In addition to the Code of Ethics, strata managing agents in NSW owe a fiduciary duty to act in the best interests of the owners corporation. A fiduciary must be cautious not to place themselves in a position of conflict between their own interests and their duty to the owners corporation. Although disclosure and informed consent are relevant and may mitigate risk, they do not eliminate the underlying obligation to act solely in the client’s best interests. Using delegated authority to steer business toward a related entity, particularly where independent choice is restricted, risks breaching that fiduciary obligation.
In summary, arrangements of this type are not automatically prohibited, but they carry a high ethical risk. To comply with professional and fiduciary obligations, strata managers must be transparent, allow genuine choice, demonstrate that the arrangement is in the scheme’s best interests and ensure the owners corporation has given informed consent. Where those elements are missing, the conduct may breach both the SCA
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What financial information should strata managers provide to owners?
What financial information should a strata manager provide to owners, and how are large repair costs funded?
I am new to strata, and I want to understand what financial information owners should receive from the strata manager. For example, should owners be told the annual insurance premium, the annual cost of services like gardening, and how the scheme’s funds are tracked and reported?
I also want to know what happens to money not spent during the year. If the cost of major repairs, such as replacing deteriorated balconies, exceeds the annual levies, can the owners corporation use accumulated funds from previous years, or do owners need to contribute additional levies?
Owners are not automatically sent every invoice or contract during the year. However, they have the legal right to inspect the strata records and see detailed financial information upon request.
In NSW strata schemes, financial transparency is governed by the Strata Schemes Management Act 2015 (NSW).
1. Responsibility for providing financial information
The owners corporation is responsible for keeping financial records. In practice, this function is often carried out by the strata manager if it has been delegated to them under their agency agreement. Financial records must be maintained for at least seven years, and must include items such as invoices, receipts, bank statements and levy records.
Owners are entitled to inspect the records of the owners corporation, including financial records, by making a request through the strata manager or the secretary of the owners corporation.
In addition, financial statements are circulated to all owners with the notice of each Annual General Meeting (AGM). These statements summarise income, expenditure and balances in the scheme’s funds. Depending on the size of the scheme or whether the owners choose to, an audit of past years’ financial statements may also be required.
This means information such as:
• annual insurance premiums
• gardening or maintenance contracts
• invoices and payments made by the scheme are all part of the strata records and can be inspected by an owner.
2. What happens to money that is not spent during the year?
Strata schemes operate two main funds:
• Administrative fund – for day-to-day expenses (cleaning, gardening, insurance, electricity, etc.).
• Capital works fund – for major repairs and long-term building works (roof replacement, balconies, lifts, etc.).
If money is not spent during the year, it remains in the relevant fund and is carried forward into the next financial period. It does not disappear or get returned to owners.
3. What happens if a major repair costs more than the annual levies?
If the cost of major works (for example, replacing deteriorated balconies) exceeds the funds available, the owners corporation generally has the following options:
1. Use accumulated funds in the capital works fund from previous years.
2. Raise a special levy on owners to cover the additional cost.
3. Borrow funds (less common but possible with approval).
If sufficient funds have accumulated from previous levies, they can absolutely be used for the work. If there is a shortfall, owners must contribute through a special levy approved at a general meeting.
4. Key point for new owners
Owners are not automatically sent every invoice or contract during the year. However, they have the legal right to inspect the strata records and see detailed financial information upon request.
Sean Bermingham | The Strata Collective info@thestratacollective.com.au
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What does section 55 require strata managers to provide to owners?
What does section 55 of the Act require a strata manager to provide, and does an online portal satisfy this?
What are the reporting requirements under the Strata Schemes Management Act 2015 to satisfy section 55? Our strata manager uploads the report to an online portal, but also charges to print and distribute a physical report.
The strata manager stated that simply making the section 55 report available on the portal does not satisfy the obligation to “provide” the report. Is that correct?
In addition, our strata manager sends owners a monthly status report that is also available on the portal. I cannot find any requirement to send this report. If the report/s are only required to be accessible on the portal, can the owners corporation instruct the strata manager to stop supplying, distributing and charging us for physical copies?
I
would email the section 55 report
(or,
if
there is no email address for service, send it) to all lot owners every six months.
Section 55, as a refresher, requires a strata managing agent who exercises either a function of the owners corporation or of the chairperson, secretary or treasurer of the owners corporation to make a record of the function that was exercised and how it was exercised. The strata manager must do this immediately after exercising the function.
You are correct. There is a statutory requirement that the strata manager, every six months, provide the owners corporation with
a copy of the records setting out any exercise of a function during the past six months. There is no need for a report to be sent for section 55 purposes every month.
The Macquarie Dictionary has this definition for the word provide when it is a verb: “1 to furnish or supply.” I’m going to assume the report is available for all lot owners, not just the strata committee, to review. The question then is whether putting a document on a portal is to furnish or supply when not all lot owners may want to or even be able to access the portal. The Strata Schemes Management Act 2015 allows the use of technology for meetings, requiring that, if there is to be an electronic meeting, the owners corporation takes reasonable steps to ensure a person can attend. It is not a big step to stretch this reasonable allowance requirement to requiring documents to be provided through an online portal. If it were my practising certificate on the line, I would email the section 55 report (or, if there is no email address for service, send it) to all lot owners every six months, rather than relying on lot owners being able to access it.
The second consideration goes to frequency and charged costs. For this, you need to look at your management agreement with your strata manager. Did the owners corporation agree to monthly reports and the fees? If so, your strata manager has the obligation under the agreement to send the report each month and the right to charge the fees specified. Any variation of the management agreement will need to be the subject of an ordinary resolution at a general meeting and be agreed to by your manager.
Do strata committees need formal meetings to make binding decisions?
Are strata committee decisions valid if no formal meetings or minutes exist?
In a newsletter to owners, our strata committee made the following comment:
On Communication, Transparency & Meeting Structure
There were some comments during the meet about visibility of committee activity and the sharing of documents and minutes. We want to clarify:
• All strata committee discussions to date have been informal and ad hoc — via WhatsApp, walk-throughs, building chats, meet-and-greets, and fact-finding sessions with the building manager, contractors or strata management.
• No formal committee meetings with quorum or decisions requiring distribution under the Strata Schemes Management Act have yet taken place.
• No formal minutes were required, and no information has been withheld.”
Given there have been no formal meetings and no formal record of the committee decisions, but visible actions are being taken by the committee, such as by law enforcement, signing new contracts, and determining agendas of owners corporations meetings, are the actions they have taken consistent with the NSW Act and thus legal and enforceable?
Committee members expose themselves to personal liability for decisions not properly made if found not to be acting in good faith.
A strata committee (and owners corporation for that matter), can only make decisions in a validly convened meeting. Any informal decisions made other than by a properly convened meeting and/or not ratified at a subsequent meeting are contrary to the legislation and could be invalidated by application to NCAT.
Further, the strata committee members expose themselves to personal liability for decisions not properly made if found not to be acting in good faith.
Please note that the committee does not need to convene a meeting to set agendas for strata committee meetings or for meetings of the owners corporation.
Matthew Jenkins | Bannermans Lawyers enquiries@bannermans.com.au
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What happens if one owner abstains from a levy vote in a duplex strata scheme?
What happens when one owner in a duplex abstains from voting on motions regarding the admin and capital works fund levies at an AGM? The other owner voted “Yes”.
An abstention is not counted as a vote against. If one owner votes in favour and the other abstains, there are no votes against, and the motion passes.
In a two-lot strata scheme (commonly referred to as a duplex), voting outcomes often feel amplified because the ownership structure is concentrated. In many cases, each lot has an equal unit entitlement and therefore an equal voting weight. However, this is not always the case, particularly where one lot owner is the original owner (developer) who has retained one lot after registration.
When considering levy motions for the administrative fund or capital works fund at an AGM, the starting point remains sections 81 and 82 of the Strata Schemes Management Act 2015 (NSW) (the Act). These levies are determined by ordinary resolution. Under Schedule 1, clause 14 of the Act, an ordinary resolution is passed if the value of votes cast in favour exceeds the value of votes cast against. An abstention is not counted as a vote against.
That principle is straightforward in a standard two-lot scheme with equal unit entitlements. If one owner votes in favour and the other abstains, there are no votes against, and the motion passes. However, the position becomes more nuanced where the scheme involves an original owner who holds more than half of the total unit entitlement – see Section 5(2A).
The Original Owner Voting Adjustment
Section 5(2A) of the SSMA introduces a specific modification for two-lot schemes where one owner remains the original owner and holds
more than 50% of the unit entitlement. In such circumstances, for voting purposes only, that original owner’s unit entitlement is reduced by two-thirds.
This does not alter levy liability. It does not permanently amend the unit entitlement recorded on the strata plan. It is a temporary statutory adjustment that applies solely to the calculation of voting power.
The legislative intent is clear: to prevent a developer who has sold one lot but retained the other from effectively controlling the scheme through majority unit entitlement
To illustrate how this operates in principle, consider a two-lot scheme where the original owner holds a larger allocation of unit entitlement than the purchaser of the other lot. Because that allocation exceeds half of the total entitlement, section 5(2A) requires that the original owner’s voting value be reduced by two-thirds when calculating the outcome of resolutions.
The practical effect is that the purchaser’s voting weight becomes comparatively stronger for the purpose of determining whether a motion passes.
How This Affects Abstentions
The underlying rule for ordinary resolutions remains the same: only votes cast are counted.
If, after applying the section 5(2A) adjustment:
• The original owner votes in favour, and
• The other owner abstains, the motion passes, because there are no votes against.
However, if:
• The original owner votes in favour, and
• The other owner votes against, the adjusted voting values must be compared. In some circumstances, the reduced voting power of the original owner may mean that the motion fails, even though the original unit entitlement recorded on the strata plan suggests otherwise.
This is where many owners and occasionally advisers misunderstand the mechanics.
When Does This Provision Stop Applying?
The voting reduction applies only while a person remains the “original owner” as defined under the Act. Once subsequent purchasers own
both lots and the developer no longer holds an interest, section 5(2A) ceases to operate. At that point, voting power reverts entirely to the recorded unit entitlements.
Governance Considerations in Practice
From a management perspective, I always check three things in two-lot schemes:
1. The registered schedule of unit entitlements
2. Whether one owner is still legally the original owner.
3. Whether that owner’s entitlement exceeds half of the total.
Failing to identify this early can lead to incorrect voting calculations and potentially invalid resolutions.
In my experience, disputes in duplexes are rarely about mathematics alone. They are often about the perception of fairness. The Act provides a balancing mechanism through section 5(2A) precisely to prevent dominance during the early life of a scheme. But once the developer has exited, the scheme operates strictly in accordance with unit entitlement.
In Summary
In a two-lot scheme:
• Levy motions are determined by ordinary resolution under the SSMA.
• Abstentions are not votes against.
• A motion passes if the value of votes cast in favour exceeds those against.
• Where one owner is the original owner and holds more than half of the unit entitlement, their voting power is reduced by two-thirds for the purpose of calculating resolutions.
Understanding this adjustment is critical in small schemes, particularly where ownership is transitioning from developer to private owners.
The legislation provides the structure. Sound governance and clear communication before meetings ensure that the structure operates fairly and transparently.
Are there industry benchmarks for strata manager performance?
Are there government and/ or industry performance indicators or standards to assist owners in assessing their strata management agency’s performance?
There are no government and/or industry performance indicators or standards published for strata management.
Unfortunately, no. There are no government and/or industry performance indicators or standards published for strata management.
Notwithstanding this, most companies will have some form of an in-house customer service charter, which would provide
insight into assessing their performance. This information could be available on their websites, form part of your managing agency agreement with them, or be provided upon request by the senior management team/branch manager.
We recommend discussing your concerns holistically with your strata committee members. If they agree, come up with a list of pain points to raise constructively with either the direct strata manager or, if there is discomfort or a breakdown in the relationship, the senior management team and/or branch manager, so the company can respond and attempt a resolution.