Fair Trading NSW has recently made available two draft bills for feedback from the general public, namely the draft Community Land Management Bill 2019 and draft Community Land Development Bill 2019.
Broadly speaking the bills seek to align the law of community schemes as far as is possible with that of strata schemes and provide more flexibility with respect to the development (and further development) of community schemes. Many of the reforms address issues of concern that have been known about with respect to community schemes for many years.
What are community schemes and how are they governed?
Community schemes are a type of land title in New South Wales that is currently governed by the Community Land Development Act 1989 and the Community Land Management Act 1989.
The two acts facilitate the administration of subdividing, registering, changing and managing of community schemes.
How is a community scheme different to a strata scheme?
Strata schemes are generally characterised as vertical developments—with units stacked on top of each other—whereas community schemes are essentially horizontal in nature. Community schemes are more akin to private suburbs, where houses, apartment buildings, parks, roads and other land are all brought together under one (or a series) of layout plans.
Community schemes legislation permits flexible, multi-tiered management structures incorporating the following:
- community schemes;
- precinct schemes;
- neighbourhood schemes;
- development lots;
- strata schemes; and
- single dwelling lots.
In New South Wales, there were 937 community schemes, 63 precinct schemes and 1,754 neighbourhood schemes as at June 2019.
Why the change?
The legislation currently governing community title is over 30 years old. Since the inception of those laws, strata schemes legislation has been overhauled twice—once in 1997 and once in 2016. The current changes reflect a need to modernise the community scheme laws and ensure they are current and consistent with existing and very similar strata scheme legislation.
There are also a variety of provisions in the existing legislation that have continuously caused frustrations for developers of community schemes and owners within them over the years, notably concerning staged development and the subsequent adjustment of schemes (through the addition or removal of land) once they are in place.
The proposed changes to the community schemes legislation largely reflects the Community Schemes Law Reform Position Paper published in 2014. The below comprises a summary of the proposed changes in both the development and management Acts.
Changes to the Community Land Development Act will:
- Remodel staged development provisions in development contracts to align with strata legislation, so that land can be added to a scheme; allow for schedules of contributions; allow for additional association property to be created; and require meetings to authorise items identified in a development contract as “development concerns”.
- Change the definition of “developer” in a community or precinct scheme to be the original owner, or the owner of a development lot, who is bound to perform a development contract.
- Extend the ability to lodge revised schedules of unit entitlement on conclusion of a development to subsidiary schemes.
- Allow the amalgamation of subsidiary schemes with the community scheme (but not subsidiary strata schemes, which are fundamentally different).
- Allow a neighbourhood scheme or strata scheme within a community scheme to approve subdivisions of property with a special resolution.
- Allow land to be added as association property or as a lot in the scheme by special resolution.
- Allow associations to lease additional property.
- Allow a community plan of subdivision to subdivide or create association property by special resolution.
Changes to the Community Land Management Act will:
- Redefine the “initial period” for community and precinct schemes to ensure it expires at an appropriate time rather than potentially continuing indefinitely in developments where development lots are not further subdivided.
- The introduction of a statutory cause of action for owners against an association in breach of its maintenance duties.
- Introduce various probity reforms for community scheme managers mirroring those in strata legislation, concerning matters such as commissions and benefits, maximum terms for agency agreements, and agents voting for their own appointment.
- Prevent developers from locking in neighbourhood associations into long-term contracts for the supply of utilities (a reform recently enacted in strata schemes).
- Provide a new power for associations to recover their costs as well as unpaid contributions (a power previously only granted to strata schemes).
- Carry over reforms from strata legislation giving flexibility for electronic meeting attendance and voting, as well as secret ballots.
- Provide the chairperson with a power to declare a quorum at a meeting after 30 minutes (a reform previously introduced for strata schemes).
- The abolition of community schemes adjudicators and the adoption of a regime for the mediation and the making of orders by the NSW Civil and Administrative Tribunal that largely reflects the similar regime now in force for strata schemes.
- Restrictions of developers’ rights in voting on matters relating to building defects and requiring they set realistic levies during initial periods and for the first year after the initial period ends.
- Restrictions on provisions in sale contracts and related contracts requiring owners to vote at the direction of the developer (a reform introduced in strata schemes previously).
- More flexibility to control parking within schemes.
- Flexibility for payment and increase generally in penalties.
- Limiting proxies and matters for priority voting.
How can you have your say?
Feedback on the new laws can be provided to the Department of Customer Service until Friday, 28 February 2020 and can be accessed at the NSW Government’s Have Your Say Portal at the link provided here.
If you would like further advice on how this may affect the community scheme to which you are a part, please don’t hesitate to contact us directly here.