How the 2025 Strata Law Reforms in NSW Impact the Governance of Community Schemes

Introduction

In 2025, New South Wales is introducing significant reforms to strata and community land laws, aiming to enhance transparency, accountability, and governance. These extensive law changes, rolling out in stages, will affect everyone involved in a scheme, from owners and developers to the strata committee and managers, creating a fairer and more sustainable environment for all stakeholders.

Given the complexity of these updates, which align community land laws more closely with existing NSW strata legislation, understanding the new obligations is essential for ensuring compliance. This guide provides a detailed overview of the 2025 strata law reforms, comparing how they impact both strata and community schemes and highlighting why consulting a strata lawyer is crucial for interpreting these new responsibilities.

New Duties for Strata Committees & Association Committees

Mandatory Training for Committee Members

The 2025 strata law reforms in NSW will introduce mandatory training for members of both strata and association committees. This requirement, expected to start in 2026, is designed to ensure that committee members fully understand their legal responsibilities and duties.

Failure to complete the prescribed training will have significant consequences. Any committee member who does not fulfil this obligation will automatically cease to be a member of the committee. This ensures that all serving members are adequately informed about their roles.

Acting with Honesty & Fairness in Community Schemes

As of 1 July 2025, new statutory duties have been imposed on committee members in both strata and community schemes, holding them to a higher standard of accountability. These responsibilities require members to act with a degree of care similar to that of company directors and to prioritise the best interests of all owners.

The new duties for strata and association committee members include the obligation to:

• Act with honesty, fairness, and due care and diligence when carrying out their functions.
• Perform their duties for the benefit of the owners corporation or association.
• Avoid behaving in a way that would unreasonably affect another person’s use or enjoyment of their property or the common property.
• Comply with all obligations under the relevant strata and community land laws.
• Use or disclose information obtained as a committee member only when authorised by law or as a necessary part of their role.

Managing Financial Hardship & Overdue Levies

Standardising Payment Plans for Overdue Contributions

Under the 2025 strata law reforms in NSW, a standardised process has been introduced for owners in both strata and community schemes who need to arrange a payment plan for overdue levies. Owners must now use a standard form to make this request to their owners corporation or association committee.

These payment plans are limited to a 12-month period. However, a new plan can be agreed upon once the previous one concludes. Importantly, a payment plan cannot be used to cover future contributions.

The law changes also establish clear rules for how committees must handle these requests. Specifically:

• Committees are required to consider every request for a payment plan.
• Blanket resolutions to refuse all payment plans are not permitted.
• No fee can be charged to an owner for requesting or entering into a plan.
• A written response must be provided to the owner within 28 days of the request.
• If a request is denied, the committee must provide written reasons explaining the refusal.

A committee may only reasonably refuse a request if approving the plan would leave the scheme’s administrative or capital works fund with insufficient money. This could occur if the fund would fall into a deficit or if there would not be enough money to meet essential repair obligations or comply with orders from a court or NSW Fair Trading.

Requirements for Financial Hardship Information Statements

To ensure owners are aware of the support available to them, the reforms in NSW mandate that all levy notices include new information. Both strata and community schemes must now provide a Financial Hardship Information Statement with every levy notice sent to owners.

Alternatively, the information from the statement can be directly included in the notice itself. This statement contains crucial details, such as:

• The contact information for the National Debt Helpline
• Information about the free, confidential, and independent financial counselling service available to assist owners who are experiencing financial difficulties

Enhanced Accountability for Strata Managers & Facilities Managers

Clarifying the Role & Duties of Facilities Managers

The 2025 strata law reforms in NSW introduce new statutory duties for facilities managers in community schemes, aligning their responsibilities more closely with those of building managers in strata schemes. These changes clarify who qualifies as a facilities manager, specifically excluding service providers such as electricians or gardeners who are engaged only for specific repair or maintenance tasks.

For community schemes, a facilities manager now has a legal duty to act in the association’s best interest. This involves several key obligations, including:

• Acting promptly and with due diligence to identify and report any maintenance, repair, or safety issues concerning association property.
• Proposing solutions to the association for any problems that arise.
• Providing written notice if they will receive a benefit from a suggested contract or if the contractor is connected to them.
• Disclosing any financial interests in the scheme or connections with the original developer or suppliers of goods and services.

Similarly, building managers in strata schemes must adhere to almost identical duties, ensuring they act in the best interest of the owners corporation.

A person seeking appointment as a facilities or building manager must also disclose any benefits they may receive that could affect their proposed fees.

These reforms give both associations and owners corporations grounds to apply to the Tribunal to end a management agreement if the manager acts unlawfully.

Banning Unfair Contract Terms in Management Agreements

As of 1 July 2025, the law prohibits unfair terms in standard form contracts for goods or services supplied to both strata and community schemes. This change applies to new agreements and any existing contracts that are renewed or varied after this date:

Aspect of Unfair Contract Terms	Description & Examples
Affected Agreements	The ban on unfair terms applies to new, renewed, or varied standard form contracts for services such as strata management, facilities management, cleaning, and gardening.
Criteria for Unfairness	A contract term is considered unfair if it causes a significant imbalance in the parties’ rights, is not reasonably necessary to protect the advantaged party, and would cause a financial or other loss if applied.
Examples of Unfair Terms	Terms that allow one party (but not the other) to limit responsibilities or terminate the contract, unfairly penalise one party for a breach, or permit one party to change the contract’s terms without the other’s consent.

Specifically for strata management agreements, terms that require an owners corporation to pay for the agent’s professional indemnity liabilities or limit the agent’s liability are now banned.

Given these changes, it is important for a strata committee or association committee to consult a strata lawyer to review management agreements and ensure compliance with the 2025 law changes.

Strengthening Developer Accountability & Maintenance Planning

Independent Review of the Initial Maintenance Schedule

The 2025 strata law reforms in NSW introduce significant new obligations for developers to ensure greater accountability in maintenance planning. From 1 April 2026, developers of new strata and community schemes must prepare the initial maintenance schedule (IMS) using a new standard form. This change is designed to provide owners with clearer and more consistent information from the outset.

For new multi-storey schemes—defined as buildings with more than two storeys above ground level—the reforms in NSW impose even stricter requirements. In these cases:

• The developer must engage an independent surveyor to review and certify both the IMS and the initial levy estimates.
• This certification confirms that the levy estimates are reasonable for the year following the first Annual General Meeting (AGM).

To ensure impartiality, an independent surveyor must meet specific criteria:

• They cannot be connected to the original owner or developer.
• They must be a member of the Australian Institute of Quantity Surveyors with the designation of Certified Quantity Surveyor, or
• A member of the Royal Institution of Chartered Surveyors and a Chartered Quantity Surveyor.

These requirements apply equally to both strata and community schemes. This reflects the broader goal of the 2025 strata law changes to align community land laws with existing NSW strata legislation.

Developers face substantial penalties if they fail to provide this certified documentation to the owners corporation or association before the first AGM.

Reforms to Common Property & Association Property Repairs

As part of the law changes that started on 1 July 2025, owners corporations and associations now have a stricter duty to repair and maintain their property. A key reform prevents a scheme from delaying repairs to common or association property if the delay would affect:

• A person’s safety,
• Access, or
• Use of their lot or the shared property.

This rule applies even if the scheme has taken legal action against the person responsible for the damage.

For instance, if a resident damages a common property staircase, the owners corporation cannot postpone the repair while pursuing legal action, as the damage affects access for other residents. This ensures that essential repairs are not held up by legal proceedings, protecting the safety and amenity of all owners in both strata and community schemes.

Furthermore, the 2025 strata reforms have extended the time limit for an owner to bring a damages claim against their scheme for a failure to repair common property, which may arise from a strata building defect. The limitation period has increased from two years to six years from when the owner first becomes aware of the loss.

Given these heightened responsibilities and the extended liability period, it is crucial for a strata committee or association committee to consult a strata lawyer to fully understand their obligations and ensure compliance.

Reforms Regarding Sustainability Infrastructure & Utility Contracts

Changes to Embedded Network Contracts & Disclosures

The 2025 strata law reforms in NSW introduce new regulations for utility agreements in both strata and community schemes. As of 1 July 2025:

• Contracts for the supply of electricity through an exclusive supply network, often called an embedded network, are now subject to new term limits. These agreements will expire either at the first AGM if the contract was made before that meeting, or after three years from the agreement’s start date.
• This three-year limit applies broadly to all utility agreements entered into by an owners corporation or association. It covers contracts for services such as:
  • waste removal,
  • air conditioning,
  • stormwater management, and
  • electric vehicle charging.

Furthermore, from 1 April 2026, new disclosure requirements will take effect to increase transparency for potential buyers. Both strata information certificates and community land information certificates must:

• State whether the scheme includes an embedded network, and
• Detail the nature of the services provided.

Removing Barriers to Installing Sustainability Infrastructure

To encourage environmentally friendly upgrades, the reforms in NSW have removed significant barriers to installing sustainability infrastructure. As of 1 July 2025:

• By-laws that prohibit the installation of items like solar panels or electric vehicle charging stations based solely on their external appearance are no longer valid.
• This change applies equally to strata and community schemes, although an exception exists for properties that are heritage-listed or within a heritage conservation area.

In addition, the law changes mandate that sustainability must be a key consideration in the ongoing management of a scheme. Both owners corporations and associations are now required to:

• Include an item on every AGM agenda to consider environmental sustainability, which involves reviewing the annual energy and water consumption and expenditure for common or association property.

When preparing annual estimates for the capital works fund, schemes must also factor in costs associated with sustainability infrastructure. This includes budgeting for:

• The installation, repair, or replacement of solar panels and electricity meters,
• The use of sustainable building materials in maintenance projects, and
• Any other fixtures or fittings related to sustainability upgrades.

The Importance of Consulting a Strata Lawyer for Your Scheme

Why Your Strata Committee Needs Legal Guidance

The 2025 strata law reforms in NSW introduce new statutory duties for committee members in both strata and community schemes, significantly increasing their legal responsibilities. Members are now required to:

• Act with honesty and fairness
• Exercise the due care and diligence expected of company directors

Because of these heightened obligations, it is essential for committee members to fully understand their new responsibilities in order to avoid personal liability.

Given these complex law changes, a strata lawyer can provide crucial guidance to a strata committee or association committee. Legal advice helps members:

• Interpret their new responsibilities under the updated strata law and community land laws
• Ensure their decisions are made in the best interests of all owners
• Maintain full compliance with the legislation that started from 1 July 2025

Ensuring Compliance with the 2025 Strata Law Changes

A key role for a legal professional is to review a scheme’s existing contracts, by-laws, and management statements to ensure they align with the 2025 strata reforms. For instance, the reforms in NSW ban unfair terms in management agreements, making it vital to have a lawyer examine these documents for compliance.

Furthermore, a strata lawyer can assist in updating by-laws to reflect new rules regarding:

• Sustainability infrastructure
• Accessibility modifications

With the limitation period for owners to claim damages for a failure to repair common property extended from two to six years, legal counsel is invaluable for helping a scheme:

• Manage its increased liability
• Maintain compliance with all new requirements

Conclusion

The 2025 strata law reforms in NSW introduce extensive law changes affecting committee duties, financial management, and developer accountability for both strata and community schemes. These updates also address sustainability, unfair contracts, and the responsibilities of strata managers, requiring all stakeholders to adapt to new standards of governance.

To ensure your scheme complies with these complex strata law changes, contact the expert strata lawyers at PBL Law Group today. Our specialised services as a leading Strata Law Firm in NSW and Sydney are tailored to help your strata or community scheme understand and implement the 2025 reforms, ensuring full compliance and protecting the interests of all owners.

Frequently Asked Questions