The Community Land Management Act 2021 contains the legislation to help owners when entering the development process of community schemes in NSW. The newly introduced laws have updated the old legislation, which provides more modern processes and improvements that now align more closely with the Strata Schemes Development Act. Find out more about the new legislation in the Community Land Management Act 2021, how it affects community schemes and a summary of the new laws.
Let’s take a closer look.
Reforms To The NSW Community Title LawIn December 2021, significant changes were made to the Community Land Management Act and the Community Land Development Act. The reforms aim to align legislation with the Strata Schemes Management Act and the Strata Schemes Development Act and provide greater consistency between strata and community titles. As well as consistency, the changes intend to modernise and simplify the development process of community schemes in New South Wales. The changes will affect you if you own or live in a community title property.
What Is A Community Scheme?A community scheme is an arrangement for shared use of facilities and association property such as tennis courts, parklands, gymnasium etc., in a subdivision, where a person owns and maintains only buildings on their lot. The most common type of community scheme is the estate style, where a certain number of homes will be located within a gated community with a clubhouse, manicured gardens, swimming pool and gym. Each house owner is responsible for looking after their property, both inside and outside, and contributing financially towards the upkeep of the shared facilities. Facilities managers will help control and manage association property use and undertake maintenance and repair duties. Fair Trading NSW defines precinct, neighbourhood and community schemes as a form of land title that helps with the subdivision of developing land with shared association property. These schemes were managed by legislation covered in the Community Land Management Act 1989 until the NSW legislation was updated in December 2021.
Types Of Community SchemesAs well as community and neighbourhood schemes, there are also precinct schemes. The different types of schemes help planners structure their development. A precinct scheme is used when a development is built in stages and uses a multi-tiered structure for managing the community development lot. A strata scheme often consists of a structure containing multiple units where the owner is only responsible for maintaining the inside of their unit but will also pay a fee towards the upkeep of all communal areas such as stairwells, lifts, driveways etc. Some community and neighbourhood schemes can have a mix of ownership types within one estate, each requiring its own management system/community association. The three types of associations are:
- Community Associations
- Precinct Associations
- Neighbourhood Associations
What Are The Key Changes To The Community Land Management Act?The Community Land Management Act reforms will help improve productivity and reduce time-consuming processes by adding more flexibility and streamlined procedures when dealing with association property. The key changes to the legislation include the following;
- Breaches of the by laws will now incur heavier penalties
- Limits to the number of proxies held by any person
- Limits to when a priority vote can be used
- Improvements to compliance of managing agents with the introduction of liability offences
- A by law is not allowed to be harsh or oppressive and must align with the Strata Schemes Management Act
- Improvements to meetings with greater flexibility regarding meetings, voting and attendance
- Introduction of a tenant representative in the neighbourhood committee
- Notification of by law changes to the Registrar General increased from two to six months
- Introduction of occupancy limits
- Compensation is to be paid to the original owner if developer levy estimates are inaccurate
- Maintenance schedules are to be prepared by the original owner of the property
- Utility service agreements are to be reassessed every three years or expire at the first annual general meeting
- Tenants are to provide an address (email permitted) for correspondence from the neighbourhood association
- Introduction of the new dispute resolution framework
- Extension for convening the first annual general meeting
- Greater flexibility for amendments to the management statement
- Simplified procedure to pass sustainability infrastructure resolutions
- Limits to the term of the facilities manager and the community managing agent
- Right to recover loss for failing to repair association property
What Are The Key Changes To The Community Land Development Act?The amendments to the legislation will help simplify the development process of community schemes within NSW. The following are the key changes to the Community Land Development Act 2021:
- Owners and associations now permit purchasing adjoining land outside the neighbourhood scheme, allowing developers to expand the development by adding new properties.
- Permission to subdivide or transfer association property, as well as using special resolutions to add land to a scheme as long as it is as per a development contract
- Termination of a scheme now permitted via the office of the Registrar General instead of the Supreme Court
- Simplification of amalgamation process of parent community schemes and neighbourhood schemes
- Clarification of the “initial period” to allow it to end once an Occupational Certificate has been issued
- Increased flexibility and transparency of Community Land developments
Key BenefitsAligning community schemes legislation with the strata schemes development act has enabled more consistency between titles. Whilst there are still differences between the two, it makes the process of developing community schemes in NSW much more flexible and easier to manage. Some of the key benefits of the new legislation include the following;
- Simplify and modernise processes
- Provide more flexibility when dealing with association property
- Dispute resolution improvements
- Proxy limitations
- Improvements to transparency and accountability
- Modernisation of communication
- Increased flexibility in decision making
How Do The Changes Affect Community Associations?The new legislation in the Community Land Management Act 2021 helps to lift restrictions and make processes more streamlined and efficient. Community management associations should review their existing management statements and by laws, as they may no longer be enforceable if they are no longer consistent with the updated legislation, Under the previous legislation, any amendments must have been registered within two months. The timing has now been extended to six months. A special or ordinary resolution may be required to amend an association by law. New legislation now allows a community scheme to be terminated through the Registrar General’s office instead of via the Supreme Court.
What Is A Management Statement?A management statement contains the by laws which are required for the efficient operation of the community/neighbourhood schemes. Community schemes legislation allows for a lot of variation, and the statement is the document that can be adjusted and designed to suit individual developments, which makes management of a neighbourhood scheme easier to manage and a more seamless experience for owners. The statement is made up of by laws to assist the efficient operation of the community scheme, such as;
- Garbage collection
- Pet policies
- Noise control
- Access to communal facilities
- Facility restrictions
- Traffic and parking
Changing A Management StatementManagement statements are legal documents which can only be changed by following a particular procedure. Changing the by laws of a community association was a somewhat complex process. Association committee members must approve changes unanimously, and notification of changes must be lodged with the Registrar General within two months. Under the new community title, legislation changes to resolutions have eased the restrictions making decision-making more flexible. By law amendments can now be achieved via a special resolution or an ordinary resolution, which may be a simple majority vote. Notification of a change has been increased to six months.
Terminology AmendmentsAcross both acts, there are several changes in terminology amendments, including;
- “Sinking fund” is now referred to as “capital works fund”, which aligns with the Retirement Villages Act and Strata Schemes Management Act.
- “Committee or the Executive Committee” is now known as “association committees”.
- A “caretaker” is now a “building manager”, which aligns with the Strata Schemes Management Act.