Your responsibilities as an owner in a community, neighbourhood or precinct scheme
When you purchase a property as part of a community, neighbourhood or precinct scheme, there are responsibilities and obligations you need to be aware of. This page provides an outline of these responsibilities and obligations.
Your role as part of an association
When you buy a property as part of a community, precinct or neighbourhood scheme you become a member of the scheme’s association. Associations are usually set up by the builder or developer.
Purpose of scheme association
The purpose of the scheme association is to ensure association property, including the cost of maintaining it, is looked after.
Your association may also set rules about what you can and can’t do while living in the scheme.
Requirements to be a member of the association
As a member of the association, you have the right to attend general meetings including the annual general meeting (AGM) and vote on motions considered at or before those meetings.
General meetings can be held when necessary, for example, to change, cancel or make by-laws, change the management statement, or raise additional funds to cover unexpected works.
Decisions are made at general meetings on the basis of voting by persons who are eligible to vote.
Voting may be done in person or by using electronic means specified in the notice for a meeting. However, pre-meeting electronic voting can only be used if it is allowed by a resolution of the association and it cannot be used for an election of the association committee.
If you can’t attend a meeting but would like to be represented, you may appoint a proxy to attend on your behalf.
Visit the meetings and voting page for more information.
You may also wish to be part of the association committee.
Financial obligations as part of a scheme
Associations need funds so they can maintain communal facilities and run the scheme. These funds are contributed by association members.
Financial contributions
As part of the association, you will need to contribute financially to the scheme. Contributions made by members are not refundable when a member leaves the scheme, even if the money has not yet been spent.
Contributions may include:
- Contribution levy: A contribution levy is set by the association and is based on a budget that shows the existing financial situation and an estimate of payments to be made and received. Contributions can be paid by instalments, and the payment amounts and due dates can be varied.
- Special levy: Associations can vote to introduce a ‘special levy’ when there are insufficient funds to cover expenses, such as large capital works or unforeseen works. Special levies are calculated according to the unit entitlement of each association member.
- Administrative fund: The administrative fund is used for the day-to-day expenses of running the scheme, such as maintaining and repairing association property, recurring expenses, and insurance.
- Capital works fund: The capital works fund enables major work to be undertaken to association property.
Unpaid financial contributions
If financial contributions are not paid by one month after the due date, they may attract a simple interest rate of 10% per year.
You may request a payment plan with the association so you can pay off your overdue contributions in periodic instalments. Consider how long your payment plan should go for, since you will need to pay the instalments on time. Payment plans can be for a maximum of 12 months.
Complete the standard payment plan request form and submit the request for review.
Your scheme cannot request additional information other than what is in the payment plan request form.
The payment plan request form also allows you to request that interest be waived on your overdue levies. Having interest waived will reduce the overall amount you will need to pay.
The association or your association committee will make a decision on your payment plan request at a meeting of the association or association committee. This cannot be delegated to the managing agent.
Approval by the association or association committee will require a simple majority vote. Their decision-making will consider whether starting the payment plan will result in the association’s capital works fund or administrative fund having insufficient funds.
If you have requested for interest to be waived on your overdue levies as part of your payment plan request, the association may make a separate decision at the meeting on your request for interest to be waived. Approval to waive interest will also require a majority vote. Association committees cannot be delegated the decision to waive interest, so this decision must be made at an association meeting.
You must receive a response from the association or association committee within 28 days of submitting your request. You may need to negotiate adjustments to the plan in order for it to be approved.
If your payment plan is approved, you must receive a payment plan statement. This must include:
- the lot owner’s name, address and lot number
- the levies owing
- the amount of any interest payable for the overdue levies and the way in which it is calculated
- payment schedule and information about payment methods
- what amount (if any) has been paid to date
- managing agent or association committee contact details
- statement about the lot owner’s right to request to extend the payment plan – although the association doesn’t have to agree to this
- the date the payment plan was agreed to.
Begin your payments as per the agreed arrangement in the plan. Make sure you receive payment statements for each payment you make.
You must also continue to pay your ongoing strata levies as they come through the regular levy notices.
Repayments made under a payment plan must be applied first to overdue levies (old to new), then to any interest repayments due, then to any costs for recovering the overdue contributions. This requirement applies unless a Court or Tribunal order, or you as an owner, specifies how payments must apply.
Action cannot be taken to recover overdue levies where there is a payment plan in place for those levies, and the plan is being followed properly.
If your request is refused, the written response that is provided to you must include reasons for the refusal and how they apply to your request.
A payment plan request may be reasonably refused if starting the payment plan would result in the association’s capital works fund or administrative fund having insufficient funds.
These funds may have insufficient funds if:
- the fund would fall into deficit, or
- there would not be enough money in the capital works fund for the association to meet its duty to repair and maintain the association property, or
- there would not be enough money in the administrative fund to pay for expenses, or
- there would not be enough money to comply with:
- an enforceable undertaking entered into with Fair Trading, or
- a compliance notice issued by Fair Trading, or
- another order issued under another Act such as Tribunal order.
If you believe the refusal of your request was not reasonable, you may follow these steps:
- You can apply to NSW Fair Trading for mediation on the refusal.
- You can apply to the Tribunal for an order that the refusal was unreasonable.
- If the Tribunal makes the order, the association must agree to your request for a payment plan.
If required, the association can apply to the NSW Civil and Administrative Tribunal (the Tribunal) for an order to require you to pay the outstanding contributions, any interest and/or any expenses incurred in recovering the unpaid contributions. If action will be taken against you, the association must provide at least 30 days’ notice.
Rules for living in the scheme
Each association has its own by-laws, which are a set of rules that owners, tenants and, in some cases, visitors must follow.
By-laws cover the behaviour of residents and the use of association property.
How to know what are the rules for my scheme
The rules for your scheme are set out in the association’s by-laws which can be found in the association’s management statement.
It’s important you know and understand your scheme’s by-laws, as they vary from scheme to scheme.
The by-laws apply to everyone living and working in the scheme and can cover items such as:
- the use, management and maintenance of communal property such as roads, parks or pools
- storage and collection of garbage
- maintenance of water, sewerage, drainage, gas, electricity, telephone and other services
- insurance requirements
- occupancy limits
- architectural, building or landscaping styles.
If your scheme is in its initial period, additional restrictions may apply.
Breach of your scheme’s by-laws
If you breach your scheme’s by-laws, the association may pass a resolution to issue a notice that requires you to comply with a specified by-law. The notice must be given in the applicable form approved by NSW Fair Trading.
If you continue to breach association by-laws, the association may apply to the tribunal and a monetary penalty may be issued.
Maintenance and repairs
Associations have a duty under the law to properly maintain the condition of association property and personal property vested in the association, including any open or private access ways.
Repairs responsibility
The association is responsible for repairs and maintenance of communal property and any personal property that is vested in the association unless otherwise excluded by a special resolution.
Prior to the first AGM, an initial maintenance schedule must be provided by the developer which outlines when routine maintenance and inspections should take place.
Members are responsible for any maintenance and repairs within their own lot. This includes the removal of goods from your lot when you leave. Any goods left behind or abandoned at the end of a rental agreement or left on association property can be disposed of under the Uncollected Goods Act 1995.
Reporting issues with the association property
If association property needs maintenance or repair, you should speak to the association secretary or the managing agent.
Repairs or maintenance may need to be approved by the association at a general meeting before being carried out.
NSW Fair Trading has investigative and enforcement powers to help ensure owners corporations meet their legal duty to repair and maintain common property.
Fair Trading can use these powers to investigate potential breaches of this duty, including being able to require documents and information, and enter premises.
Where a breach is found, Fair Trading can use a range of enforcement actions available to it, including:
- seeking an enforceable undertaking – this is a formal, voluntary written commitment made by an owners corporation to address a breach of its duty to maintain and repair common property.
- issuing a compliance notice – this would require an owners corporation to do specific actions such as fix damage, meet particular standards, or use licensed professionals.
- issuing a penalty infringement notice – this is a monetary penalty (fine) for a breach of the law.
- applying to the Tribunal for an order – an order can require an owners corporation to stop or fix a breach of its duties, or could be for the compulsory appointment of a strata managing agent to take over management of the scheme.
- initiating prosecution action – NSW Fair Trading may take an offender to Court, where it is necessary to serve the public interest.
See the Strata Repairs and Maintenance Compliance and Enforcement Policy to find out more about Fair Trading’s new powers. These powers also apply to community land schemes.
What if a member suffers damage to their lot as a result of the association delaying repairs to association property?
Members may take legal action against an association for any loss suffered where the association failed to meet their duty to maintain and repair the association property. Action must be taken within six years of the member first becoming aware of the loss.
Resolving disputes
Most disputes can be resolved quickly in the early stages if they are discussed openly. Associations can set up their own internal dispute resolution processes to deal with minor disputes.
Reporting issues
Most issues, including breaches of by-laws or complaints about the managing agent or facilities manager, can be addressed by the association.
If you have a complaint about repairs or maintenance of association property, you will need to speak to the association secretary or the managing agent.
NSW Fair Trading offers a free mediation service for community lands. Having first attempted to resolve the dispute through mediation is required before an application to resolve most types of disputes can be lodged with the NSW Civil and Administrative Tribunal.