The Australian Apartment Advocacy has publicly commented on the Strata Act Review as one of the formal stakeholders in the process.
The Strata Act reforms were initially introduced five years ago and now open for review, with public comment until 31 October.
AAA is asking for the following amendments:
Consumer protection
1. That a Strata Commissioner is appointed. The current Consumer Affairs department is under resourced and apartment owners are having to wait 12-18 months before any action, if at all is taken. A Strata Commissioner has been appointed in NSW and charged with the authority to take swift action in relation to misconduct and unethical behaviour. This level of customer service needs to be offered to WA apartment owners.
2. That the sales contract does not permit the clause which allows for the delegation of the voting proxy from the buyer to the seller. This means that buyers who sign these contracts effectively sign over the rights to vote on matters in the apartment complex to the developer. We have seen this situation be abused with developers using these proxies to convert cafes at the base of the building to liquor license premises. In another case the developer used the power to put the loan for the roof replacement onto the lot owners ie Strata Company. Even though these owners had paid for their apartments they are now required to pay another $280,000 on top while the developer walks away debt free. This delegation of the proxy also means that the developer can delay the first EGM until after 12 months when the Defect Liability Period expires, releasing them from any rectification responsibility.
3. That the number of proxies that any one owner can hold is limited to five. Proxy harvesting is a common practice by developers and some Committee members to ensure a guaranteed outcome. A former Strata Community Association President used 39 proxies to outvote other owners to install an embedded energy network without sourcing alternative quotes. Due to the relationship of the strata manager and embedded network company this was seen as a clear conflict of interest.
4. Sales contract sunset clauses need to be limited to two years. Many buyers have been caught out with builder issues and are signed into the development for five years. With lengthy delays buyers cannot exit from the contract and in most instances have to pay stamp duty, even though they have not moved into their apartment.
Professionalism in the sector
5. That strata managers need to be licensed as per real estate agents. Currently any person can set up a strata management company. This leads to clear opportunities to take advantage of Strata Companies. Especially as there is zero regulation in WA. This licensing system would allow for revoking of licences if the Strata Management firm is a repeat offender.
Governance
6. That the trust accounts for Strata Companies are audited. This is currently the case for real estate agents. In WA every Strata Company should have their own bank account to ensure they can be reconciled and monitored. However, AAA is aware that some strata management companies are amalgamating Strata Companies finances into one Trust account. This cannot provide transparency for Strata Companies or their committees and permits for abuse of funds. AAA is aware of cases where funds have been illegally removed from Strata Company trust funds and this has been hard to demonstrate/track when the accounts are amalgamated.
7. That the contract between the Developer and the Strata Manager is only for an initial six months. In some instances, AAA has seen contracts of four years in duration signed by the Developer with the Strata Manager (which is against the Act). It is clear that the Strata Manager is working for the developer and not the lot owners. As such they do not escalate defects during the 12 month defect liability period. The Strata Manager works for the Strata Company and not the developer and hence their extension of the contract should be based on their performance.
8. That the Developer cannot sit on the Strata Council. AAA recently witnessed a Developer at the EGM nominate himself (even though he was not a lot owner) and two investors to the Strata Council. When the lot owners complained they were threatened with defamation. When AAA became involved and called an EGM there was the appointment of seven lot owners (owner occupiers) to the Strata Company with the developer resigning prior to the meeting.
9. That any suppliers to the Strata Company must declare if there is a conflict of interest to the developer/strata manager. AAA has seen Developers charge Strata Companies for services that are linked to their subsidiary companies e.g. building management, landscaping etc NSW has now introduced legislation that forces declaration of these vested interests otherwise there is a penalty fine.
If you would like to have public comment on your own strata issues then please complete the feedback form located at https://www.landgate.wa.gov.au/strata-and-community-titles/strata-titles/strata-law-and-reform/five-year-review-of-was-strata-law/ or email Minister Carey at Minister.Carey@dpc.wa.gov.au. It is recommended that this is actioned ASAP for consideration before public comment in May 2025.
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