What Are Unit Entitlements and Why Do They Matter?

The unit entitlements of the lots in a strata building determine the amount of levies that are payable by owners and the owners’ interests in the common property. The unit entitlements are meant to reflect the market values of the lots at the time the strata plan for the building was registered. Occasionally they do not. In those circumstances, does the owners corporation of the building owe a duty to owners to change the unit entitlements? A recent NCAT case provides the answer to that question.

NCAT Decision: No Duty to Change Unit Entitlements

In Sydney Gold Bullion Exchange Pty Ltd v The Owners – Strata Plan 34794 [2026] NSWCATAP 75, NCAT’s Appeal Panel upheld an earlier decision of NCAT in finding that an owners corporation does not owe a duty to change the unit entitlements of the lots in the building. This is the case even where the owners corporation had previously passed resolutions to change the unit entitlements or some of them.

The Appeal Panel confirmed that there is nothing in the Strata Schemes Management Act 2015 or the general law that requires an owners corporation to apply to NCAT for an order to change the unit entitlement and that would be the case even if the owners corporation considers that the unit entitlements are wrong. This is partly because individual owners are entitled to apply to NCAT for an order to change the unit entitlements themselves.

No Duty of Care and No Right to Compensation

It is also because there is no recognised duty of care at law that requires an owners corporation to take reasonable steps to ensure that the unit entitlements of the lots in its building are correct and to reallocate those unit entitlements if they are wrong.

The Appeal Panel also concluded that this meant that an owner was not entitled to be awarded compensation against the owners corporation owing to the owners corporation’s failure to change the unit entitlements or apply to NCAT for an order that would have that effect. So this means that an owner who claims that he or she has overpaid levies due to excessive unit entitlements cannot recover the overpayments from the owners corporation on the basis that the owners corporation did nothing to change the unit entitlements.

Key Takeaway

The Gold Bullion case confirms that even where the unit entitlements of lots in a strata building are wrong, the owners corporation of the building does not owe a duty to the owners to apply to NCAT to change the unit entitlements and cannot be held liable in damages to owners for failing to do so. The Gold Bullion case followed the earlier decision of the Appeal Panel in Trentelman v The Owners – Strata Plan 76700 [2021] NSWCATAP 222.

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, disputes, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

In 2026, proactive levy recovery is the primary mechanism for protecting your scheme’s financial stability. Recent NSW reforms have introduced stricter notice requirements and mandatory payment plan protocols that demand 100% compliance. JS Mueller & Co Lawyers provides the specialist legal oversight required to ensure Owners Corporations recover arrears while remaining strictly compliant of the Strata Schemes Management Act.

The 2026 Reality: Low Bankruptcies’ vs. Growing Shortfalls

Recent data from SCA Australasia suggests a significant contradiction, while strata bankruptcies remain statistically low (approx. 0.022%*), funding shortfalls are reaching* critical levels.

For a strata committee or strata manager, the takeaway is clear: owners are fighting to keep their keys, but buildings are struggling to keep their funds. When an owner cannot pay, the financial weight doesn’t disappear – it shifts to the remaining owners. A scheme with a funding shortfall is a scheme at risk.

Why Cash Flow is Your Building’s Lifeblood

• For Committees: Cash flow is what keeps the lights on and property values high.
• For Strata Managers: It is the resource required to execute essential decisions.
• The “Savvy” Buyer: Due diligence is peaking. Sophisticated buyers and banks now scrutinize “ageing arrears” reports. High debt levels signal poor management and can directly devalue every lot in the scheme.

Stricter Compliance: The New Procedural Fairness Model

The legal landscape has shifted. If your scheme does not follow the new playbook to the letter, recovery efforts can be set aside or invalidated before they reach a courtroom.

The Cost of a Wait and See Approach

Delaying recovery action creates a “legal liability” for the owners corporation and an administrative nightmare for the strata manager:

1. Section 106 Obligations: The duty to repair common property is absolute. A lack of funds is not a legal defence.
2. Extended Liability: Owners now have 6 years (up from 2) to sue an owners corporation for damages resulting from neglected maintenance.

3. The Rising Bankruptcy Threshold: With industry calls to increase the bankruptcy threshold from $10,000 to $20,000, statutory recovery options are becoming more restricted. As a greater portion of arrears may soon fall below the limit required for insolvency proceedings, proactive, early-stage collection is now more critical than ever to protect your scheme’s cash flow.

The Muellers Advantage: Results-Driven Specialisation

At JS Mueller & Co strata Lawyers, we provide a no-nonsense service backed by 45+ years of strata expertise. We act as a partner to strata managers and an advocate for committee financial health.

 Frequently Asked Questions (FAQ)

Can an Owners Corporation refuse a payment plan?

A scheme cannot pass a blanket resolution to refuse all plans. Each request must be considered on its merits. Refusals must be reasonable and provided in writing within 28 days.

Are legal costs always recoverable?

In most cases, yes, especially where the owners corporation has followed the correct statutory procedures (including the 30-day notice and payment plan offer) and costs have been ordered to be paid or the defaulting owner pays or agrees to pay the costs.  

Secure Your Scheme’s Financial Future

Don’t let a deficit compromise your building’s safety or long-term stability. Ensure your recovery process is compliant, persistent, and legally sound.

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Get Specialist Levy Debt Recovery Advice Today

Contact Us

For all strata law advice including by-laws, disputes, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist. 

As the festive season approaches, the excitement of gift-giving means more than just parcels under the tree—it means an influx of new electronic devices particularly e-micromobility devices such as e-bikes, e-scooters, e-skateboards and e-hoverboards. Also, related components that pose the fire risk lithium-ion batteries, power supplies and chargers.

For the strata industry, this period of cheer brings with it an elevated risk, underpinned by the growing safety concerns surrounding lithium-ion batteries and the need for clear, enforceable management rules.

The New Lithium-ion Battery Safety Standards: A Strata Imperative

The NSW Government has recently taken decisive action to address the escalating fire risk posed by substandard lithium-ion batteries. As confirmed by NSW Fair Trading, e-micromobility devices and their batteries are now ‘declared electrical articles’ under the Gas and Electricity (Consumer Safety) Act 2017.

Key regulatory dates and requirements include:

• Mandatory Information: Enforcement of requirements to provide clear safety information (safe use, charging, storage, fire prevention) came into effect in August 2025.
• Mandatory Certification: From February 2026, devices and their batteries sold in NSW must be independently tested, certified, and marked as compliant.

These changes are critical because they officially recognise that lithium-ion battery technology, while convenient, presents a significant and specific fire risk—a risk that is amplified within the shared, high-density living environment of a strata scheme.

Festive Gifts Mean Increased Fire Risk in Common Areas

Imagine a typical strata scheme on Christmas morning: several residents unwrap new, potentially non-compliant e-scooters or e-bikes. Over the holidays, these devices are constantly being used, returned, and plugged in to charge—often in fire-prone locations like balconies, common area hallways, or car spaces without adequate ventilation or fire separation.

This surge in usage and charging density increases the risk of a catastrophic fire event. While new certification standards will eventually filter out unsafe products, thousands of uncertified devices remain in circulation, and non-compliant charging behaviour is still rampant.

The festive season accelerates the need for proactive strata governance, not reactive damage control.

Reduce Fire Risk: Secure Your Scheme with a Robust EV By-Law

Waiting for a regulatory deadline (like the February 2026 enforcement date) or, worse, for a fire to occur is not a strategy. The Strata Committee has a clear duty of care to protect the common property and the safety of residents.

We specialise in drafting comprehensive, legally robust, and future-proof Electric Vehicle and E-Micromobility By-Laws that directly address these evolving risks. Our by-laws are designed to:

1. Regulate Charging Locations: Mandate safe charging areas, prohibit charging in dangerous zones (e.g., balconies, storage cages), and manage the use of common property power outlets.
2. Ensure Compliance: Require owners to only use devices and batteries that meet relevant Australian/NSW safety standards and carry the required approval marking, aligning with the new NSW Fair Trading standards.
3. Manage Infrastructure: Provide clear pathways for the installation of dedicated EV charging stations, ensuring fair allocation of costs and power consumption, and maintaining the structural integrity and insurance requirements of the building.
4. Minimise Insurance Risk: Demonstrate due diligence to insurers by implementing best-practice safety protocols, potentially mitigating premium increases or coverage issues.

Don’t let the convenience of a holiday gift become a future liability for your scheme. Act now to implement clear, enforceable EV by-law rules before the festive season influx.

NEW EV SAFETY STANDARDS: GET YOUR COMPREHENSIVE EV BY-LAW NOW

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, disputes, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

From 1 July 2025, a significant wave of strata reforms will sweep across New South Wales, ushering in the second and most substantial phase of changes to the state’s strata laws. 

These reforms, part of the Strata Schemes Legislation Amendment Act 2025, are designed to enhance transparency, accountability, and sustainability within strata schemes, impacting owners, strata committees, developers, and strata managing agents alike.

The upcoming changes build upon earlier reforms introduced in February 2025 concerning strata manager disclosure obligations and represent a concerted effort by the NSW Government to address long-standing issues and improve the overall experience of strata living.

Here’s a breakdown of the key reforms taking effect from 1 July 2025:

1. Encouraging Sustainability in Strata Schemes: A major focus of the reforms is to promote environmental sustainability. By-laws that currently prevent the installation of sustainability infrastructure (like solar panels or EV charging stations) solely based on external appearance will be banned, unless the building is heritage-listed or in a heritage conservation area. Owners corporations will also be mandated to consider environmental sustainability at every Annual General Meeting (AGM), including reviewing common property energy and water consumption and expenditure. Capital works fund estimates will also need to factor in costs for sustainability infrastructure.
2. Protecting Owners from Unfair Contract Terms: New provisions will ban unfair contract terms in standard form contracts for goods or services supplied to strata schemes, including strata management contracts. This aims to empower owners corporations with greater negotiation power and control over their financial commitments, preventing them from being locked into disadvantageous agreements.
3. Uplifting Strata Management Services and Accountability: Strata managing agents will face stricter requirements, including half-yearly reporting to the scheme on their functions (previously annual). Certain terms in strata management contracts signed on or after 1 July 2025 will be prohibited, and a statutory defence will be introduced for strata managing agents. Building managers will also have a new statutory duty to act in the best interests of the owners corporation.
4. Imposing Stricter Rules on Developers: Developers of new strata schemes will face enhanced accountability. They will be required to have the initial maintenance schedule and initial levy estimates independently certified before the first AGM. This measure aims to provide new owners with more accurate and realistic financial projections, helping to prevent unexpectedly high levies post-purchase. Increased penalties for non-compliance are also in place.
5. Easier Approval for Minor Renovations: The process for approving minor renovations will be streamlined. If a strata committee fails to provide written reasons for refusing a minor renovation request within three months, the renovation will be automatically approved. This applies to schemes with by-laws allowing the committee to decide on such requests.
6. Improving Repairs and Maintenance: The reforms aim to bolster the owners corporation’s duty to maintain and repair common property. NSW Fair Trading will be granted increased powers, including the ability to issue compliance notices and enter into enforceable undertakings, to ensure maintenance obligations are met. The timeframe for owners to claim damages for a scheme’s failure to maintain common property will be extended from two to six years.
7. Enhanced Protections for Utility Contracts (Embedded Networks): Agreements for the supply of electricity through embedded networks entered into on or after 1 July 2025 will be subject to a maximum term limit. New disclosure requirements will also apply for exclusive supply (embedded) networks, providing greater transparency for owners.
8. Support for Owners Experiencing Financial Hardship: The new laws include provisions to support owners facing financial difficulty. Strata levy notices will now feature details to help owners access assistance, such as contact information for the National Debt Helpline. Strata committees will also be permitted to enter into payment plans with owners experiencing financial hardship, a decision that currently requires owners corporation approval.
9. Streamlined Accessibility Infrastructure: The reforms aim to make it easier for owners to install accessibility infrastructure. This includes simplified approval processes and broader recognition of evidence for assistance animals.
10. Increased Record Inspection Fees: While seemingly minor, there will be increases to the fees associated with inspecting strata records.

These comprehensive reforms underscore the NSW Government’s commitment to creating fairer, more transparent, and sustainable strata communities. Owners, strata committees, and industry professionals are urged to familiarise themselves with the new requirements to ensure compliance and leverage the benefits these changes aim to deliver.

More detailed information visit NSW Government Fair Trading

Recommended Next Steps for Strata Schemes

A comprehensive review of your strata by-laws is strongly recommended in the lead-up to and immediate aftermath of 1 July 2025 to ensure your scheme remains compliant and operates effectively under the new NSW strata laws.

For expert guidance contact our specialist team of strata lawyers. Our strata knowledge will ensure your by-laws are legally sound, effectively manage your strata scheme, and ensure they meet any new legislative requirements.

ENSURE YOU ARE COMPLIANT WITH A BY-LAW REVIEW IN LINE WITH THE NEW LAWS?

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

In a recent case, the Land and Environment Court has confirmed that an owners corporation can apply to the Court for orders to require trees on a neighboring property which obstruct views from residential lots in the owners corporation’s building to be removed or pruned.  The Court confirmed that the individual lot owners do not have to apply to the Court for that relief.

The Case

A row of 21 Cyprus trees grows on a property in Sydney’s lower North Shore adjacent to a strata building.  The foliage of those trees is relatively close to the windows of some of the apartments in that building.  They obstruct the views from, and sunlight entering, the windows from those apartments.  To remedy that problem, the owners corporation of the apartment building applied to the Land and Environment Court for orders to require the neighbor to remove 9 of the trees and prune 10 of the trees.  Those orders were sought under the Trees (Disputes between Neighbors) Act 2009.

The Problem

In the case, the neighbor argued that the owners corporation was not entitled to apply for any orders on behalf of the apartment owners concerning the trees.  This was because the trees did not obstruct any views or sunlight on the common property but only from the apartments themselves and the owners corporation did not own or manage the apartments as a result of which it did not have standing to apply for orders in relation to the trees.

The Decision

The Land and Environment Court rejected the neighbour’s argument.  The Court held that the land which adjoined the trees in question was common property that was owned by the owners corporation and as the owner of that land the owners corporation could apply for an order relating to an apartment situated on the land in its strata scheme.  The Court also said that the apartment owners or residents themselves could also apply to the Court for orders in relation to the trees.  The Court stressed that this case was different to cases under the Trees Act that relate to tree damage.  In those types of cases apartment owners could only apply to the Court for orders in relation to damage to their apartments and the owners corporation could only apply to the Court for orders relating to damage to common property.

Conclusion

The Court’s decision clarifies that an owners corporation is entitled to apply for relief under the Trees Act in relation to trees on a neighboring property that obstruct views or sunlight through windows in apartments.  The Court’s decision represents a departure from earlier decision of the Court in 2012 in Salmon v Kibble[2012] NSWLEC 1359 in which it was held that an owners corporation could not make an application to the Court and instead applications needed to be made by the owners of the individual apartments.

The case provides greater flexibility for tree disputes involving strata schemes to be resolved through applications that are made by owners corporations.

Case citation: The Owners – Strata Plan No. 52378 v Huang [2025] NSWLEC 1125.

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact US

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.