29 January 2020
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On 21 December 1989, only four days before Christmas, the Community Land Management Act 1989 (NSW) (Management Act) and the Community Land Development Act 1989 (NSW) (Development Act) received assent from the NSW Government.
To celebrate the 30th anniversary of this, the NSW Government announced that it was rewriting the Management Act and the Development Act with the aim of providing more flexibility both to the developers who create community schemes and the people who live within them.
With this announcement the NSW Government released two new bills titled the Community Land Development Bill 2019 (NSW) (New Development Act) and the Community Land Management Bill 2019 (NSW) (New Management Act). Once enacted these two new bills will replace the existing legislative framework.
What’s proposed?
The end to an era of unanimous resolutions
One of key criticisms of the Development Act has been its reliance on unanimous resolutions. Currently under the Development Act you need a unanimous resolution to undertake any of the following:
The New Development Act has reduced the level of resolution required for these matters to a special resolution. This means that one owner can no longer hold up development within a scheme.
Ability to terminate a community scheme or precinct scheme by the Registrar General
Currently the only way you can terminate a community scheme or precinct scheme is to obtain an order from the Supreme Court. The New Development Act will allow termination of these schemes through the Registrar General’s office. This will bring community schemes and precinct schemes in line with neighbourhood and strata schemes.
Ability to add land to a community scheme and reduce association property
The New Development Act will allow land to be added to the community parcel. This will provide developers with the flexibility to incorporate neighbouring properties into the community parcel when and if this becomes desirable as the development progresses.
The New Development Act will also allow association property to be subdivided and transferred.
Development contracts for community schemes and precinct schemes
The New Development Act will allow developers to utilise development contracts when developing community or precinct schemes. These development contracts will be similar to the current contracts used when undertaking staged strata and will, at this stage, be subject to the same 10 year maximum time constraint. We are hoping however that the NSW Government consider increasing this after undertaking public consultation.
A change to the definition of “initial period”
The expiry of the initial period for a community scheme is currently linked to the expiry of initial periods of subsidiary schemes. This has been problematic for community schemes that have no subsidiary schemes as the initial period never expires.
The New Management Act attempts to correct this issue by giving schemes the option of linking the expiry of the initial period of the community scheme to receipt of an occupation certificate for 1/3 of development lots within the community scheme. This is problematic for a number of reasons including:
Adoption of the “harsh” by-law test
The New Management Act will include a condition that a by-law cannot be “harsh, unconscionable or oppressive”. The same wording was included in the Strata Schemes Management Act 2015 (NSW) when it commenced on 30 November 2016.
The New South Wales Civil and Administrative Tribunal (NCAT) has considered this test in the context of strata by-laws on a handful of occasions including the recent decision of Roden v The Owners-Strata Plan No 55773 [2019] NSWCATCD 61. Click here for a link to our previous article on this decision. It is likely that NCAT will take a similar approach when applying this test to community schemes. This will mean that prohibitive by-laws (e.g. by-laws that entirely prohibit pets) are likely to be held unenforceable if the New Management Act is adopted in its current form.
Savings and transitions arrangements
It is unclear at this stage whether the proposed changes, including those to the initial period, will apply retrospectively or whether they will only apply to community schemes registered after the commencement of the new regime. We hope to get further feedback from the NSW Government shortly in this regard.
Authors: Vanya Lozzi & Elly Ashley
Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.
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