STRATA TITLE

Published 16 Dec 2015
Louis Andreatta

What is strata title?

Generally, when you buy a lot in a strata plan, you buy the airspace within your lot which is shown on the strata plan. It may include a residential or commercial unit, a balcony, a garage or in some cases a storage unit.

The physical building of which your lot is a part is owned by the Owners Corporation. The corporation owns not only the physical building but all communal spaces within the boundaries of the strata plan.

What is an Owners Corporation?

The Owners Corporation is comprised of the collective of all owners of all lots.

All unit owners voting as members of the Owners Corporation have the responsibility in making decisions to benefit the building and caring for the building entrances, stairways, paths etc.

Owners Corporations usually elect an executive committee to make the day to day decisions regarding the governing of the strata plan. Usually, owners vote to elect the executive committee at each annual general meeting. Frequently, Owners Corporations appoint a Strata Manager, an external expert whose job is to assist the Owners Corporation and executive committee comply with the obligations contained in the Strata Schemes Management Act. An owners' rights and responsibilities are set out in that Act. The Owners Corporation is required to comply with the Act and the regulations made under the Act.

By-laws

The strata plan is also governed by by-laws. By-laws bind all owners and occupiers of the lots in the strata plan including tenants. By-laws make rules regarding residents behaviour and an owner or occupiers rights to keep a pet is also generally, governed by by-laws. The Owners Corporation has the power to remove or change by-laws and create new ones.

If you are the owner of a lot and you rent out your property, you must give your tenant a copy of the by-laws and make it a condition of the tenancy agreement that the tenant complies with the by-laws.

Your obligations as an owner of a lot in a strata plan

You will be required to pay quarterly levies and on occasions special levies.

The levies you pay are deposited into the Strata Plans Administration Fund Account and also it's Sinking Fund Account. Day to day expenses of the strata plan are funded from the Administration Fund. Long term expenses such as planned building maintenance are funded from the Sinking Fund Account. The money raised by the Owners Corporation by way of levies is used by the Owners Corporation to pay all necessary insurances such as building insurance, public liability insurance, and building maintenance and keeping the building and common property is good order. Generally, if you are the owner of a lot in a strata plan, you will not be required to pay building insurance as this is done by the Owners Corporation. However, an owner should always take out appropriate contents insurance and if the property is tenanted, owners should also consider taking out land lords insurance. Land lords insurance may protect owners of tenanted lots when the tenant defaults or where the tenant or an occupant suffers an injury as a result of the owner's failure to properly maintain the lot.

Each lot in a strata plan is allocated a unit entitlement number. Your share of the strata plans expenses which you pay by way of levies is in the proportion that the unit entitlement of your lot bears to the aggregate unit entitlement for the strata plan. For example, if your unit has a unit entitlement of 10 and the aggregate unit entitlement of the strata plan is 100 then effectively by way of levies, you will pay one tenth of the expenses incurred in managing the strata plan. The unit entitlement of each lot is determined at the time the strata plan is created and registered at the Land and Property Information office.

In certain circumstances, however, where there is a 2 lot strata plan with no common property and the building in each lot is separate and distinct, each owner may take out their own building insurance.

Owners must pay rates and taxes relating to the lot. Owners must comply with by-laws.

An owner must never alter a lot without the Owners Corporation and the local councils consent.

Obligations of the Owners Corporation?

The main obligations of the Owners Corporation include:

• Raising levies

• Employing people to look after the building and it's common property such as cleaners and gardeners

• Enforcing by-laws

• Suing owners for unpaid levies

• Insuring the building

• Taking out workers compensation in public liability insurance

• Keeping the building in good order

• Holding compulsory annual general meetings for owners

• Keeping minutes of meetings and preparing accounts

• Recording the owners and occupiers of lots on a strata role

Maclarens Lawyers

If you are buying a lot in a strata plan, Maclarens Lawyers can assist you to identify precisely what you are buying.

Maclarens Lawyers can advise you of your rights and duties as the owner of a strata lot or as a member of the Owners Corporation.

Maclarens Lawyers can advise Owners Corporations of their rights and responsibilities.

Maclarens Lawyers can assist you to resolve any disputes with other owners or the Owners Corporation.

If you are aggrieved by a decision of the Owners Corporation, you may be entitled to seek an order against the Owners Corporation in New South Wales Civil Administrative Tribunal. Maclarens Lawyers can represent you in such proceedings.