There are new rules an owners corporation must follow before appointing a lawyer or taking legal action (legal services).
If legal services:
- will not cost more than $3,000, or
- are urgent and will not cost more than $15,000, or
- relate to obtaining legal advice before taking legal action, or
- concern the collection of overdue levies,
the strata committee is able to approve those legal services: see section 103 Strata Schemes Management Act 2015 and cl 26 Strata Schemes Management Regulation 2016.
If the above applies, there is no need for an owners corporation or strata manager to send a lawyer’s costs agreement or costs disclosure to owners and committee members under section 105 Strata Schemes Management Act 2015.
The above assumes the power of the strata committee to obtain legal services or spend money has not been restricted at a general meeting and owners who hold 1/3 of the unit entitlements do not block a proposed decision of a strata committee to obtain legal services.
In all other cases, the owners corporation must approve of the legal services by passing a resolution at a general meeting in accordance with s 103(1) Strata Schemes Management Act 2015.
The new rules will reduce the scope for a strata committee to approve legal services as a result of the threshold amount to avoid general meeting approval reducing from $12,500 to $3,000 in most cases.
For NSW strata legal or levy collection advice please contact us here or call 02 9562 1266, we’re happy to assist.