Strata Reforms [NSW] Update 4: Information Issues

Better access to strata information is well overdue …

Strata building information is not a precious commodity that needs to be kept safely hidden away and only rationed out in small doses. Strata buildings and their committees and managers have acted as careful gatekeepers to date. But, more free-flowing strata information will bring myriad benefits and opportunities to all strata stakeholders.

Introduction about strata information provisions

NSW Strata laws include a variety of provisions relating to information gathering, retention, and distribution.  They are extensive, apply to a range of stakeholders, and are scattered amongst the legislation; covering the following things:

• things the developer must provide to the strata building when it’s created [SSMA ss 16, 115, 194, 198A, & Sch 1] [SSMR r 5, 6, & 29]

• notices and information owners and others must give to strata building and others [SSMA ss 22, 152, 154, 155, 186, 258, & Sch 1] [SSMR r 10, 11, & 31]

• notices mortgagees must give the strata building [SSMA s 259]

• notices and information the strata building must give about meetings [SSMA ss 22, Sch 1 & Sch 2]  [SSMR r 5, 6 & 7]

• obligations on the secretary about record keeping, document creation, notices and records inspections [SSMA ss 43, 176-183, 196, 202, 228, 243, 244, Sch 1, & Sch 2] [SSMR r 41, & 42]

• obligations on the treasurer about financial record creation and keeping, and issuing certificates [SSMA ss 44, 78, 79 & 184] [SSMR r 18-24]

• obligations on strata managers about record creation, keeping and provision and about disclosures [SSMA ss 55, 58-65 & 71] [SSMR r 22, 23 & 24]

• obligations on building managers about disclosures [SSMA s 71]

• general obligations about financial record creation and keeping, and provision [SSMA ss 78-81, 83 & 91-99]

• disclosure of legal costs [SSMA s 105] 

• notices about by-laws [SSMA s 146]

• regulator powers to require information and secure documents [SSAM ss 221D, & 211H]

• general provisions about service of notices and documents [SSMA  ss. 261-265 & 273] [SSMR r 66]

The 2020 NSW Statutory Review Paper discusses the information issues at questions 92 to 100 which I’ve reproduced at the end of the newsletter.

General comments about information & data management

Outside the strata world there’s plenty of attention on information and data management. 

So, we can use that attention to better define the purpose, structure, challenges, and strategies for information as guidance for strata law reforms.

I’ve summarised key concepts below for brevity.  But, my more detailed distillation of information and data management principles to use for strata buildings and stakeholders is available for paying subscribers.

• Information management is about ensuring that information is available to the right person, in the right format at the right time.

• Information is data that’s combined with other data or is manipulated, to create knowledge.

• Data and information are different since data is information typically stored in binary digital form.

• Information management involves structured people, processes, and technology to control information required for management and business intelligence purposes.

• Information typically exists in electronic and physical information, all of which needs to managed throughout its life.

• Data management is a subset of information management.

Effective information and data management are not easy. Organisations are confronted with many information management problems and issues. In many ways, the growth of electronic information (rather than information on paper) has only worsened these issues over the last decade or two.

Where reform is needed & my suggestions

Information collection, creation, storage, reporting, and generation occupies a significant part of strata operations. 

But, most strata owners and virtually no non-owner strata residents know much about their strata building.  They learn about things mostly through a few infrequent communication events like the following;

• their quarterly levy notices tell them how much to pay,

• general meeting notices, attached annual reports and minutes report a range of information about the last yearly cycle,

• the occasional extraordinary meeting notices and minutes identify one-off urgent issues,

• committee meeting notices and minutes provide vague clues about committee actions,

• randomly issued inspection notices arrive about onsite matters affecting them in the immediate future, and

• notices of breaches and/or other infringements.

Owners can inspect the strata records [for a fee] but very few actually do so after purchasing.  And, typically only some of the strata records are made available for inspection when they do.

When owners ask for information about other owners or residents, they’re usually told it can’t be provided for privacy reasons. 

Publicly available information is limited to what can be searched at the Land Titles Office [strata plans, titles, ownership details, by-laws, and other property encumbrances].  And, sometimes inventive Google search strings can unearth a few other strata documents that have been uploaded to the web.

Outsiders can’t find who to deal with or communicate with at strata buildings by any reliable means.  They’re usually limited to writing to an unnamed secretary at the registered address for service or leaving mail in the [often ignored] secretary’s mailbox at the building.

The history of a strata building is generally lost in its archives if it’s been kept at all.  And, there’s no easy way to identify and see older strata documents or information unless you’re pretty familiar with manager record-keeping practices and are lucky that they’ve been stored in accessible places.

Converting paper communications into electronic formats continues to be a random and unreliable process with variable kinds of scanning/inputting processes, variable scanning formats, mixed naming and storage conventions, and storing them on unreliable media [CDs, USB sticks, etc].  PS - I have personally experienced looking through scanned old strata records where pages in the same document were upside down, mirror-reversed, and out of order.

And, we now have the problem of electronic communications that are not universally kept, occurring in multiple formats and locations, and ever growing.  Where are all the emails, SMS messages, Whatsapp messages, Snapchats, iMessages, Tick Toks, Signal messages, etc, etc, etc sent to or received by the strata building, its managers, and the committee members?

As you’ll see from my analyses and suggestions below, I generally think that what’s needed is generally not the collection of more information, but rather better guidelines about information retention requirements improved access provisions, and clarification about ownership and use.

There are 6 main areas for change as follows.

1.  Record keeping guidelines

The information that needs to be kept is adequately covered by the existing strata laws since it generally means everything created by and/or received by a strata building or its agents and contractors.

However, whilst all those records can be electronic there’s an assumption that non-document communications or data may not be included.  That should be clarified and extended to include all material and data created as part of a strata record.

Additionally, when managers change or strata buildings use new management or operational software there can be data loss or the loss of access to older software functionality in relation to the data.  Think of trying to run a Microsoft programme on a Mac. This results in strata building archives becoming practically useless.

I don’t think keeping strata records for 7 years is long enough.  Some strata buildings have existed for almost 60 years now and there are lots of things that happened more than 7 years ago in those buildings that may need investigation now.  For instance, the circumstances of making an exclusive use by-law 20 years ago can easily arise in a dispute about its validity or appropriateness now and, without records, that can lead to unfair outcomes.  I’ve personally experienced exactly that situation many times.

Finally, there should be better clarification about the ownership and rights to use the information contained in strata records.  There can be disputes about information created by third parties who claim or retain ownership rights to them. And, strata managers and executives often claim rights to documents they hold beyond legitimate liens.  In all cases, those records should belong to the strata building and where there are legitimate third-party rights, the strata building should have an irrevocable licence to use them for strata operation purposes. 

So, I suggest that the strata laws include an express requirement that records include all kinds of electronic communications and that any data created as part of or relating to those records.

So, I also suggest that the strata laws include an express requirement that when strata records are stored electronically, the strata building is given future access to them for at least 5 years by means [typically software] adequate to access those records.

So, I also suggest that strata records are kept for longer than 7 years.

So, I also suggest that the strata laws include an express statement that all strata records should belong to the strata building, and where there are legitimate third-party rights, the strata building should have an irrevocable licence to use them for strata operation purposes. 

So, I also suggest that the strata laws include an express statement that managers and executives can retain copies [at their own cost] of any strata records they have created for the strata building for their own personal use in connection with that strata building.

2.  Access to records

The ability to inspect and obtain strata records should be extended beyond owners, people authorised by owners and regulators. 

Inspections should automatically cover all the strata records for the current statutory retention period.  And, older records should be made available by special request or an explanation provided about the reason/s for their unavailability.

Ideally, a searchable index of strata records should be created, made available, and from which records can be accessed.

Strata buildings should make electronic records available electronically.

So, I suggest that the strata laws include an express provision permitting tenants and persons authorised by tenants to also inspect strata records

So, I also suggest that the strata laws include a requirement that strata buildings make all the strata records [back to the mandatory statutory retention period – currently 7 years] available at inspections.

So, I also suggest that the strata laws include an obligation on strata buildings that keep records electronically to create and maintain a searchable index of those electronic records [which is itself available for inspection].

So, I also suggest that the strata laws include the right of anyone entitled to inspect strata building records to request copies of electronic records to be provided electronically.

3.  Information certificates

The information certificate provided by the treasurer under section 184 has existed in that general form for a long time. 

The certificate exists as a way to give strata apartment purchasers key information about matters for which they may assume liability if they become owners [like levy arrears, unregistered by-laws, insurance, covers, unregistered dealings, etc].

Generally, the process works well and does not need changing unless any new information is to be created or kept by strata buildings for which incoming owners may become liable. 

The only real problem with information certificates is a timing issue.  Typically, the certificate is issued 1-2 weeks before a strata purchase completes and so states the position as to levies and other matters at that date.  But, many purchasers often seek an ‘update’ of the information on the day before or day of the strata purchase settlement.  That’s a legitimate enquiry but not covered in the strata laws.  And, strictly speaking, the update request could be treated as a second request for an information certificate.  So, a clearer approach is required.

So, I suggest that the strata laws include a specific provision that strata certificate updates or refreshes should be available for a reduced fee on 24-48 hour turnaround. 

4.  Privacy & personal contact information

There is one area of strata record-keeping that needs better guidelines and that’s the personal contact details of strata owners and residents.

Many strata owners and residents provide their email address/es, phone number/s and/or details of their place of work to strata buildings for convenience, at the request of managers or executives, or by accident even though it is not required for the strata roll.  So that information becomes part of the strata records.  But, it is not personal information under Privacy Laws, so even if a strata building has privacy obligations they probably don’t cover those contact details.

However, most owners/residents, executives and managers resist providing that contact information to owners or residents who request it even though the executives and managers use that contact information themselves for strata operations [like to collect levies or enforce by-laws].  Presumably, it’s not provided to limit the ability of others to contact owners or residents in the building. 

There are good reasons for both positions [of those seeking it and those keeping it private], but this dilemma needs clarifying; probably in favour of making the information available.

Similarly, even though the application of Privacy Laws to strata buildings is a pretty well-settled matter, it would be good for the regulator to clarify it since it’s a constant source of debate.

So, I suggest that the strata laws include the following new provisions:

• that extra information provided by owners and tenants to the strata building covering personal contact information [including multiple sets] becomes part of the strata roll [as additional optional information],

• if that information is provided and recorded on the strata roll, it is available to anyone entitled to inspect the strata records, and

• an owner or tenant can ask that this additional personal contact information is removed from the strata roll in which case it must be deleted

So, I suggest that NSW Fair Trading issue public guidance information about the application of privacy laws in strata buildings.

5.  Public access to key strata building information

As I’ve already noted, strangers to a strata building have very limited ways of communicating with it and virtually no formal channels to identify the manager, committee members, or executives.  That includes government agencies and local councils.

Apart from writing to the secretary via the address for service or the strata building letterbox, they need to rely on informal approaches like getting inside to look at the notice board, asking people entering or leaving the building, etc.

For example, in a strata dispute at NCAT, NCAT relies on the details provided by the applicant to identify and notify the strata building of the application.

That’s not really good enough. 

There are many people who for good and not so good reasons need to liaise with a strata building.

Basic information about the strata building should be available for public search covering at least:

• the building entity details [strata plan, date of registration, etc],

• current strata manager details,

• current office bearer details, and

• contact details [postal, email, etc].

That could be individually supplied and available at the building, via a publicly accessible system, or, via a regulator managed system [voluntary or mandatory].

After all Australian corporate entities that are companies have to provide an update [at least annually] key corporate information about themselves to ASIC which is publicly searchable. 

So, I suggest that the strata laws include an obligation on strata buildings for key building information to be kept and updated.

So, I also suggest that the strata laws include an obligation on strata buildings to make that key building information available publicly by display at the building and/or publishing it in an electronically searchable way.

So, I also suggest that the NSW Fair Trading explore [with public consultation] a regulator administered public register of key strata building information.

6.  Data sharing between strata buildings

Let’s take strata information and data a bit further.

Whilst better information retention and use by a strata building is valuable to it, the use of information from multiple strata buildings could be even more useful.

Pooled strata building data would allow better analysis of building behaviours, trends, gaps, and anomalies, etc on the basis of geographic, demographic, building size or turnover, and criteria.  It also allows benchmarking of one or more buildings’ performance against others.

That kind of analysis would assist managers and could be used to improve decisions.

So, it would be good to be able to pool strata building data.

Conversely, strata building data is commercially valuable to businesses and organisations that provide goods and services to strata buildings as well as to the owners and residents of those buildings, their managers, and the other service providers.  Creating opportunities for business to consumer and business to business transactions.

So, controlling access to strata building data and its commercialisation is also necessary.  Think Facebook using your data to sell targeted advertising to you.

The clever connection and leveraging of strata building information and data by those buildings could open up fascinating new service and commercial options that benefit everyone.

So, I also suggest that the strata laws include the following provisions:

• an express statement that all strata records should belong to the strata building,  

• where there are legitimate third-party rights to information, the strata building should have an irrevocable licence to use them for strata operation purposes, and

• the right of strata buildings to share its information [including for a fee or other benefit].

Feb 08, 2021

Francesco ...

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NSW STRATA LAW REFORM DISCUSSION PAPER QUESTIONS ABOUT INFORMATION MATTERS

92. How has record keeping been working? Are any changes needed and if so, why?

93. Should keeping electronic records be made compulsory? Why/why not?

94. How is inspection of strata records working? Are any changes needed and if so, why?

95. How are the strata information certificate provisions working? Are any changes needed and if so, why?

96. A landlord must provide a tenant with a copy of the by-laws and the strata management statement if there is one. How is this working? Please describe and suggest what changes might be needed.

97. If a lot owner leases their apartment to tenants, the lot owner must provide the owners corporation with information about the tenants living in their lot within 14 days. Is this notice working? Could this be improved? If so, how?

98. The law sets out how notices and other documents can be served on or by an owners corporation. How is this working? Please describe and tell us if this can be simplified in any way.

99.  COVID-19 emergency laws, passed in May 2020, allowed owners corporations to approve official documents with the witnessed signatures of two authorised people, instead of affixing the common seal. If this was permanently included in strata laws, is there anything else that should be included?

100.  To verify that documents are properly executed, should the details of strata committees and strata managing agents be required to be lodged and made available on a publicly searchable register similar to the ASIC company register? Please tell us why.