Papua New Guinea Strata Title Legislation Overview

Key Takeaways:

The Strata Title Act 2022 and the Strata Title (Management) Act 2022 were passed during the March 2022 Parliament session in Papua New Guinea.
These acts allow for the creation and registration of strata title properties, addressing the country's increasing population and limited residential land availability.
The new legislation provides certainty of title to investors, streamlines property management, and facilitates access to debt funding, offering significant opportunities for the real estate sector in Papua New Guinea.

The Strata Title Act 2022 and the Strata Title (Management) Act 2022 were passed in the March 2022, Parliament session. Considering PNG’s rising population and lack of residential land, the Strata Title Act 2022 provides for the creation and registration of strata title properties (title ownership designed for multi-layered apartment blocks and horizontal subdivisions with common or shared areas). The Strata Title (Management) Act 2022 will provide for the management of properties under a strata title scheme.

To ensure legislative harmony, amendments were also made to the existing Land Act 1996, Land Registration Act (Chapter 191), Building Act 1961 and Survey Act 1969. The enactment of both strata title Acts and consequential amendments of other Acts, give certainty of title to investors in strata title schemes and allow for the registration of dealings on the strata titles – this is particularly important as it gives financial institutions the ability to register mortgages, or other encumbrances over individual strata titles making it relatively easier for owners to access debt funding.

Generally, the Strata Title Act 2022 prescribes the requirements, procedure to follow for the preparation & registration of strata title applications, the application approval process, and the effect of strata plan registration.

Importantly, upon registering a strata title plan, a “owners’ corporation” (corporation that is established when a strata plan is registered under the Strata Title (Management) Act 2022) is established. Members of the owners’ corporation are the owners of the strata plan units. The owners’ corporation has the legal status of a corporation and may sue or be sued.

The Strata Title Act 2022 stipulates the Department of Land and Physical Planning (DLPP) as the department responsible for administering the Act and approving the strata title applications. It is expected the DLPP will advise, if the Land Board will be the body within the department to manage, review and approve strata title applications.

Simultaneously, the Strata Title (Management) Act 2022) provides for the management of strata titles and unit plans. The key operating provisions in the Act include:

Owners’ corporation membership, legal status, functions, duties, and body corporate rules.
The establishment of an ‘Executive Committee’ of an owners’ corporation; responsible for the common property, strategic affairs, supervising of office holders and the owners’ corporation financial performance (approval of financial statements & budget presentations at the owners’ corporation annual general meetings).
Several financial management provisions, including the establishment of both the administration and sinking funds, that are to be administered by an owners’ corporation. The financial management provisions prescribe the owners’ corporation’s obligation to approve annual budgets for each fund, the setting of the estimated annual contribution for each strata title owner and outline how the funds may be used.
Lastly, the owners’ corporation building insurance obligations.

In conclusion, the passage of the Strata Title Act 2022 and the Strata Title (Management) Act 2022 during the March 2022 Parliament session represents a significant milestone in Papua New Guinea's real estate landscape. These legislative measures, coupled with amendments to existing laws, ensure a harmonious and efficient approach to property management. The enactment of these acts marks a positive step towards sustainable and organized development in the real estate sector, offering new opportunities for both investors and property owners in Papua New Guinea.