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Effect of new strata laws

15 May 2017


NSW Fair Trading recently held a Strata Schemes Information Seminar to update agents and tenants on the new laws and the effect they have.

This included details on the building defect bond which is being brought in from 1 July 2017. Under this new scheme the developer needs to lodge a 2% defect bond for buildings four stories and over. This money is only to be spent on defect work, with the balance going back to the developer. 

The developer is also required to get a building defect report by a building inspector approved by the owners corporation (OC) within 18 months. 

NSW Fair Trading will arrange for an inspector if the OC and developer can’t agree on one. Other topics covered during the seminar on the new laws included:

Term of appointment for a strata agent

  • If appointed at the first AGM it can be for a maximum of 12 months. Thereafter three years is the maximum (s50(1) Act)
  • There is no automatic rollover, but they can be reappointed at a general meeting (GM) and extended on a three-monthly basis by the Strata Committee (s50(4) Act)
  • The Strata Agent must give written notice to OC of the end of their term at least three months prior to end, or one month prior to end of three monthly extension (s50(6) Act)
  • The appointment can be terminated by general resolution at a GM (s50(3) Act).

Gifts and commissions

  • A person cannot be a Strata Agent if they are the developer or someone connected to the developer, until 10 years after registration (s49 Act)
  • Strata Agents must not accept a gift or benefit unless it is less than $60, money paid by OC, a commission, if in agreement or otherwise approved by OC, a training service if in agreement or approved by OC (s57 Act, $2,200 penalty)
  • A Strata Agent must: report commissions or training services at AGM for previous 12 months; report at AGM of expected commissions or training services for next 12 months; disclose any variation of these to the SC penalty
  • NCAT can order a Strata Agent to pay amounts to OC e.g. for undisclosed commission.

Insurance quotes

  • A Strata Agent must provide three quotes for insurance from different providers for each type of insurance required, or provide a written reason why not (s166 Act)
  • The minimum value of public liability insurance has increased to $20 million (s164 Act and c40 Reg).


Strata Agents must record the exercise of any function immediately after its exercise and provide the OC a copy each year (s55 Act).


Return of records at the end of a compulsory management period

In cases where NCAT has appointed a Strata Agent with full, some or specified powers of OC and officers - the agent must not later than 14 days before end of term, cause a GM to be held; and the books and records are to be handed over at or before this meeting (s237 Act).