1. Strata Reform Overview
Sean Macfarlane, Senior Lawyer, Landgate

2. Status of the strata reforms
Cabinet has approved drafting of the strata reform legislation package which will include:
Strata Titles Amendment Bill and
Community Titles Bill
Timing of delivery into Parliament?
there has been some great progress on the drafting of the Bills
substantial drafting work is required to complete the Bills
aiming to introduce both Bills to Parliament by mid 2018

3. Why reform? No major reforms to the old Act in 21 years
How we use and develop strata is rapidly evolving
Old Act is causing people in strata major problems
Reforms will improve the way things are done in strata by:
making strata better for owners and occupiers and
introducing new land development options to drive economic growth

4. What are the reforms? Two new types of strata community title
leasehold strata
Flexible staged development
Improved management of schemes
Simplified dispute resolution
Better information for buyers
Safeguards for the
termination of schemes

5. Community title scheme: what is it?
A new type of strata which has:
multiple sub-schemes within umbrella community scheme
each sub-scheme has a strata company
Strata Company
Strata Company

6. Leasehold strata – what is it?
Strata scheme set up for a fixed term (20+ to 99 years)
Buyer (owner) acquires long term lease of lot (strata lease)
Owner of strata lease issued with
Certificate of Title
Strata lease owner:
can transfer lot and strata lease
mortgage the lot
without the lessor’s consent.
Leasehold strata is used in NSW for development at train stations

7. Improve management of schemes
Allow electronic notices, voting and record keeping
Strengthen by-law enforcement
Empower strata companies to improve common property
Easier to get strata company approval for solar panels

8. Strata managers will be regulated
Statutory duties imposed on strata manager:
hold strata company funds in a trust account
inform strata company of a conflict of interest or commission
act honestly, with loyalty and in good faith
have educational qualifications and PI insurance coverage
Strata company may terminate strata manager’s contract if the contract or statutory duty is breached
Strata manager / strata company disputes resolved by SAT

9. Simplify dispute resolution
Currently strata disputes are heard in 4 different forums
Research: SAT effective in resolving strata disputes
SAT will become one-stop shop for strata disputes
Strengthen SAT powers to resolve strata disputes quickly and cheaply

10. Better information for buyers
Buyers will be given more useful information:
full set of by-laws
minutes of the most recent annual general meeting
details of annual levies payable
statement of strata company accounts
Electronic disclosure will be allowed

11. Safeguards for termination of schemes
Sean Macfarlane, Senior Lawyer, Landgate

12. Termination of schemes: current law
Three ways to terminate a strata scheme now
Unanimous resolution of all owners
One owner or one mortgagee can apply to the District Court for an order to terminate a scheme (s31)
One owner can apply to District Court for an order deeming the resolution to terminate was unanimous, if:
a special resolution was reached
the owner applying was part of the majority who voted to terminate
Owners of Argosy Court v Wise District Court order to terminate strata scheme under section 31 Act Majority of owners (UE) opposed

13. Reform: Safeguards for termination
Now
no detailed termination proposal required
no guidance for the District Court on whether to terminate the scheme
Reforms will
introduce safeguards for owners
require a transparent process be properly followed
require a full procedural and fairness review by SAT
enable owners to terminate and receive fair market value before the building becomes unsafe or too expensive to maintain

14. More than just a vote: whole process
There will be whole process that must be followed if you want to terminate a strata scheme.
The vote is only one part of that process.
Termination process:
termination proposal must contain prescribed information
proposal must be served on all owners and mortgagees
all owners must be given at least 3 months before voting
vote must be properly conducted
all ratified proposals must then undergo a fairness and procedure review by the State Administrative Tribunal (SAT)

15. Vote required before SAT review
Schemes of 4 or more lots: 75% of lots in favour
3 lot scheme: 2 lots in favour
2 lot scheme: 1 lot in favour
If the required vote is attained, the proposal must then be reviewed by SAT

16. SAT review of termination
No majority termination without a SAT Order
SAT must be satisfied that:
the termination process was properly followed
each owner will get fair market compensation
proposal is just and equitable
Extensive guidance provided in the Strata Titles Act 1985 to assist SAT in deciding whether the proposal is just and equitable

17. What SAT is to consider
To decide whether the proposal is just and equitable, SAT must consider a range of matters, including:
the views of owners and mortgagees
if there is a more appropriate order, such as the strata company should repair the building instead of terminating
the condition of the buildings and cost to maintain
whether a different vote would have been obtained if votes were cast using unit entitlement
the use of proxies and whether they have been used in the best interest of the owner
the impact of taxes and stamp duty
whether owners have been offered a like-for-like replacement lot in the neighbourhood.

18. Safeguards for vulnerable owners
Person seeking to terminate must provide funding to vulnerable owners to respond to the proposal
Regulations will define who is a vulnerable owner and the funding requirements
Vulnerable owners can use that funding to:
pay for legal advice on the termination proposal
pay for expert reports including valuation of their apartment
SAT will have the power to declare who is a vulnerable owner if there is a dispute.

19. Importance of strata to the WA economy
300,000+ strata lots worth over $170 billion
40-50% of all new land subdivisions in WA are strata
Strata is more than just apartment housing, it is used for:
commercial and retail premises
tourist accommodation
retirement villages and
industrial premises

20. Reform information
Get more information and subscribe to the reform newsletter
Contact the team

21. Questions?

22. Disclaimer
This presentation has been prepared for the purposes of informing stakeholders on the nature and scope of proposed strata reforms to legislation in WA. Every effort has been made to ensure the information presented is accurate at the time of publication. Because it avoids the use of legal language, information about the law may have been summarised or expressed in general statements. This information should not be relied upon as a substitute for professional legal advice or as a reference to current legislation, nor relied on as a guide for future legislation relating to strata title in Western Australia, or in relation to current or future development proposals, commercial transactions or dealings in strata title.
Photographs courtesy of the Metropolitan Redevelopment Authority.