STRATATITLESAMENDMENTSACT2018

P R E S E N T E D B Y P R O A C T I V ES T R A T A M A N A G E M E N T

Pro-Active Strata Management have produced this information booklet for the Council of Owners. This booklet doesnot outline all the changes in the Strata Titles Amendment Act 2018. It will give you an indication of some of thechanges that are relevant regarding your Strata Company’s obligations, and your obligations as a member of theCouncil of Owners.  We encourage you to review the information and ask us any queries that you may have in relation to this informationor any of the other changes. We may not have all the answers, but we will endeavour toobtain the information for you. Council of Owner members volunteer their time to ensure that all owner’s investments are maintained to the best oftheir ability. Its sometimes a thankless task. However, a well-functioning Council of Owners is imperative to theoperation of a strong Strata Company. The Council are the owners have the most contact with the Strata Manager, and are responsible for the maintenance,financial position, and governance of the Strata.  Trying to please all owners is often difficult as well as making surethe Strata Company carries out its function as outlined in the Strata Titles Amendment Act. We are here to help you have a strong Strata Company and community that you are excited to be a part of.

OVERVIEW

NEWOBLIGATIONSANDLIMITATIONS ONTHE COUNCIL

act honestly, with loyalty and in good faith in the performance of their functionsexercise due care and diligence in the performance of their functionsensure they do not make improper use of their position as a member to gain a direct or indirect advantage for themselves or for any other person or tocause detriment to the Strata Companyinform the council in writing of any conflict of interest as soon as is practicable after they become aware of the conflict

A COO member may be removed from the council if they breach any of the statutory duties listed above.One of the members of the council MUST hold the office as chairperson of the Strata Company.Council election votes, if demanded/requested, can now be counted via unit entitlement of lots.Owners of the lots have the power to perform functions of the council if there is no council or an insufficient number of members.Council members should not vote on any matter in which they have an interest. (EG a council member is the owner of a company that carries out the fireservices with a contract of $50k)Any conflict of interest must be disclosed in writing to the Strata Company.

Currently, there is no legislation that requires council members to act in the best interests of the strata company. Under the amended Act this will beclarified. The amended act will introduce new directions and limitations, including new statutory duties. Once the act comes into effect, members of the council willhave the following statutory duties imposed upon them:   

They have also introduced safeguards for the council members so that they cannot be held liable in any civil proceedings for an act that they do in goodfaith. The STAA 2018 also states that.

More information regarding the council of owner’s constitution and functions can be found in Part 8, Division 4, Sections 135 – 142 of the act.

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NEWOBLIGATIONSREGARDINGINSURANCE

A Strata Company must ensure all insurable assets of the scheme must be insured against fire, storm and tempest (excluding damage by sea, flood orerosion), lightning, explosion and earthquake to replacement value.  (Insurable assets mean the common property and scheme including fixtures andimprovements on the common property) A Strata Company must be insured against damage to property, death, bodily injury or illness for which they could become liable. The minimum insuredamount for Public Liability has been increased from $5 million to $10 million.Fees for non-compliance of this clause have increased to $3,000     A 12-month grace period will apply from the proclamation of the Act

Most Western Australian strata insurance companies do not offer public liability cover for less than $10 million. Most managed schemes already have at least $20 million cover.   $5 million is no longer considered enough to cover potential liabilities in the case of damage, injury or death claims.

If a strata company has taken all reasonably practical steps but no insurer is willing to enter a contract with them on reasonable terms that meet therequirements, the strata company must obtain whatever insurance it can

Once proclaimed, the amended STAA will introduce new regulations surrounding insurance.

 Why will the minimum insurance amount increase?

 What if I cannot obtain the required insurance

More information can be found in the following sections of the act; Part 8, Division 1, Section 97 and Schedule 2A, Part 5, Section 53

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IMPROVEMENTSTO COMMONPROPERTY &SUSTAINABILITY

LED lighting upgrades & lighting sensorsenergy saving controls for fans and pumps  water & energy meters and monitoring     solar panels    installation of bike racks or clotheslines     increasing the green spaces i.e. gardens, veggie patch      wastewater recycling      rainwater tanks

Previously Strata Companies were restricted when altering or improving common property. They were only allowed to use stratafunds to maintain, repair, renew or replace. Once the act is proclaimed, Strata Company’s will be empowered to improve the common property. If a Strata Company would like to improve the common property, and the cost is greater than $500.00 per lot (as per draftSTR) then it must be approved by Special Resolution. The exception of this is if it is for sustainability infrastructure which is authorised via anordinary resolution. Sustainability infrastructure  If owners want to install sustainability infrastructure, such as solar panels, onto common property, approval will begranted through an ordinary resolution. Sustainability infrastructure means infrastructure that is designed or is likely to avoid, remedy ormitigate adverse effects on the environment. Examples are:  

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RESERVE /SINKING FUNDS

Painting of the building    New lifts or lift upgrade      Re-roofing     Resurfacing the driveway    Replacing common property i.e. new gutters and downpipes, replacement of flooring   Fence replacementsImprovements to the common property

As part of the STAAct changes due to come into effect, all Designated Strata Companies (10+ lots or building replacement cost of$5,000,000+) will need to have a reserve fund. A reserve fund is a separate fund created for major capital expenditure or unexpected items that arise. The 10 year maintenance plan (also compulsory for designated strata companies under STAA 2018) can assist strata companies budget for the reservefund however The amount in the reserve fund is self-regulated by the Strata Companies not an external body Examples of items which the Reserve Fund may cover (depending on the boundaries of the strata plan) are   

  You can create a Reserve Fund Plan or Forecast to assist in allocating funds to the reserve fund. A Reserve Fund Forecast, also known as a Lifecycle Report,is a document that estimates likely capital works around the strata complex, within a specific time frame, and then calculates how much to collect from lotowners to fund the works. You can request this to be undertaken in your 10-year maintenance plan.

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COMMUNICATION

Once the amended STAA legislation comes into effect, all strata records may be stored electronically. This means Strata Companies and strata management companies will be required to develop a streamline process toexecute documents both electronically and in hard copy form when required. Strata Companies must also ensure an electronic mechanism (suchas email) is reasonably available so they can communicate with strata members and owners. No more minute books and less paper are a step inthe right direction for the environment too! Common sealed documents may also be provided in electronic form. This means we will be able to email or fax by-law changes to Landgate onbehalf of the strata companies instead of posting original copies in the mail. A further benefit of this is that when owners submit a request to view the records of the strata company, these documents will be providedelectronically. Records and Correspondence is Part 8 Strata Company Division 1 Functions, Subdivision 5 Records & Correspondence Sections 104- 106

COMMUNICATION

MEETINGS

Every AGM must include the following matters as an item of business:Election of council members   Consideration of Accounts    Presentation of insurance certificates and schedules (Anything else is considered special business)  The reforms may impose limitations on a strata manager being appointed as a proxy holder (Section 124.5)    The notice period to notify the owners of an upcoming meeting has not changed and remains at a minimum of 14 days.     The council of owners can now pass resolutions outside of general meetings.

Once the amended STAA legislation comes into effect, it has introduced new rules for strata meetings which will affect proxy voting, remoteattendance and meeting quorum. PROXY VOTESWhen a lot owner and a proxy are present in the same strata meeting, the vote must be cast by the owner rather than the proxy.This clause has been introduced in Section 125 of the amendment act.   REMOTE ATTENDANCEIndividuals or a proxy will now be able to attend strata meetings remotely. It will now be considered acceptable for members to attend via telephone,video link, internet connection or by similar means of remote communication if it does not place an unreasonable burden on the Strata Company. QUORUMPreviously, general strata meetings would adjourn in 7 days if the meeting quorum were not met. The reforms will now allow for general meetings toproceed after 30 minutes from the appointed time of the meeting, with the owners in attendance constituting a quorum. More information

 Part 8 Strata Company Division 3 Procedures, Subdivision 2 Meetings of Strata Company Sections 127 – 134.

MEETINGS

The above may be a bit daunting, but the Amendments to the Act are working to ensure that all owners investments are protectedfor the benefit of all.  To make communication clear and concise, the Amendments will require that a Chairperson be appointed fromthe elected members to act as the spokesperson for the Strata Company. As always, Pro-Active Strata Management will be here to guide the Council of Owners through the new changes and be your adviserwhere possible on all things Strata related! Further Information can be found at:

https://www.strata.wa.gov.au/ https://www.proactivestrata.com.au/http://wa.strata.community/

GET INTOUCH WITH US

MAILING ADDRESS

PO Box 7032 Shenton Park WA 6008

PHONE NUMBER

08 9382 8313

EMAIL ADDRESS

reception@proactivestrata.com.au