The Strata Scheme Explained: A Guide for Apartment Owners
Strata schemes are a common form of property ownership in Australia, particularly for apartments, townhouses, and villas. They allow individuals to own a specific lot (like an apartment) while sharing ownership and responsibility for common property (like hallways, gardens, and building exteriors). This guide provides a comprehensive overview of strata schemes, covering key aspects like the owners corporation, strata manager, by-laws, levies, and dispute resolution.
1. What is a Strata Scheme?
A strata scheme is a legal framework that divides a building or land into individual lots and common property. Think of it as a mini-community within a larger area. Each lot owner holds a separate title to their individual unit, but all lot owners collectively own and are responsible for the common property. This shared ownership is managed through a legal entity called the owners corporation (formerly known as the body corporate).
Strata schemes are governed by state-based legislation, which outlines the rights and responsibilities of owners, the owners corporation, and other stakeholders. The specific legislation varies from state to state, so it's essential to familiarise yourself with the laws in your jurisdiction. For example, in New South Wales, the relevant legislation is the Strata Schemes Management Act 2015.
Key Components of a Strata Scheme:
Lots: These are the individual units or properties within the scheme that are owned separately.
Common Property: This includes areas shared by all owners, such as hallways, gardens, swimming pools, lifts, and the building's exterior. The definition of common property is usually outlined in the strata plan.
Strata Plan: This is a registered document that defines the boundaries of each lot and the common property. It also specifies the unit entitlement for each lot, which determines voting rights and contributions to levies.
Owners Corporation: This is the legal entity comprising all the lot owners. It's responsible for managing and maintaining the common property and enforcing the strata by-laws.
2. The Owners Corporation
The owners corporation is the governing body of the strata scheme. It's made up of all the lot owners, and its primary responsibility is to manage and maintain the common property for the benefit of all owners. The owners corporation makes decisions through meetings and voting, and it has the power to levy contributions, enforce by-laws, and engage contractors.
Key Responsibilities of the Owners Corporation:
Maintaining Common Property: This includes regular cleaning, repairs, and maintenance of all common areas.
Administering Finances: The owners corporation is responsible for collecting levies, paying bills, and managing the strata scheme's finances.
Enforcing By-Laws: The owners corporation must ensure that all owners and residents comply with the strata by-laws.
Holding Insurance: The owners corporation is required to hold adequate insurance for the building and common property.
Keeping Records: The owners corporation must maintain accurate records of meetings, finances, and other relevant information.
Owners Corporation Meetings:
The owners corporation holds regular meetings, usually annually (Annual General Meeting - AGM), to discuss important matters and make decisions. All lot owners are entitled to attend and vote at these meetings. Decisions are typically made by a majority vote, although some decisions require a special resolution (a higher percentage of votes).
Strata Committee:
To manage the day-to-day affairs of the strata scheme, the owners corporation often elects a strata committee. The strata committee is a smaller group of owners who are delegated certain powers and responsibilities by the owners corporation. The committee typically handles tasks such as arranging repairs, managing contractors, and enforcing by-laws. Learn more about Kensingtonapartments and how we can assist with strata management.
3. The Role of the Strata Manager
While the owners corporation is ultimately responsible for managing the strata scheme, many schemes engage a strata manager to assist with these tasks. A strata manager is a professional who provides administrative, financial, and legal support to the owners corporation.
Key Services Provided by Strata Managers:
Financial Management: Collecting levies, paying bills, preparing budgets, and managing accounts.
Administrative Support: Organising meetings, keeping records, handling correspondence, and managing contracts.
Maintenance Management: Arranging repairs, obtaining quotes, and supervising contractors.
By-Law Enforcement: Investigating breaches of by-laws and issuing notices.
Insurance Management: Arranging insurance policies and processing claims.
Legal Compliance: Ensuring that the strata scheme complies with all relevant legislation.
Choosing the right strata manager is crucial for the smooth operation of the strata scheme. When choosing a provider, consider what Kensingtonapartments offers and how it aligns with your needs. Look for a manager with experience, expertise, and a strong understanding of strata law.
4. Understanding Strata By-Laws
Strata by-laws are rules that govern the behaviour of owners and residents within the strata scheme. They are designed to ensure that everyone can enjoy their property without unreasonably interfering with the rights of others. By-laws can cover a wide range of topics, such as:
Noise: Restrictions on noise levels, particularly during certain hours.
Pets: Rules regarding pet ownership, such as size limits or restrictions on certain breeds.
Parking: Allocation of parking spaces and rules regarding visitor parking.
Garbage Disposal: Proper disposal of garbage and recycling.
Alterations: Restrictions on making alterations to the exterior of the building or common property.
Short-Term Letting: Rules regarding short-term letting, such as Airbnb.
It's essential for all owners and residents to familiarise themselves with the strata by-laws and to comply with them. Breaches of by-laws can result in fines or other penalties. The owners corporation is responsible for enforcing the by-laws, and it can take action against owners or residents who fail to comply.
5. Strata Levies and Insurance
Strata levies are regular contributions that owners are required to pay to cover the costs of running the strata scheme. These levies are used to fund the maintenance of common property, insurance premiums, and other expenses. The amount of levies payable by each owner is typically determined by their unit entitlement, which is specified in the strata plan.
Types of Strata Levies:
Administrative Fund: This fund covers the day-to-day operating expenses of the strata scheme, such as cleaning, gardening, and minor repairs.
Sinking Fund (Capital Works Fund): This fund is used to cover major repairs and replacements of capital items, such as roofs, lifts, and building exteriors. Contributions to the sinking fund are typically higher than contributions to the administrative fund.
Special Levies: These are one-off levies that are raised to cover unexpected expenses, such as major repairs or legal costs.
Strata Insurance:
The owners corporation is required to hold adequate insurance for the building and common property. This insurance typically covers damage from fire, storms, floods, and other perils. It's important to note that strata insurance usually only covers the building structure and common property, not the contents of individual units. Owners are responsible for obtaining their own contents insurance.
6. Resolving Strata Disputes
Disputes can arise in strata schemes for a variety of reasons, such as disagreements over by-laws, maintenance issues, or financial matters. It's important to have a process for resolving these disputes fairly and efficiently.
Common Methods for Resolving Strata Disputes:
Internal Dispute Resolution: The first step is usually to try to resolve the dispute internally, through communication and negotiation between the parties involved. The strata committee may be able to assist with this process.
Mediation: If internal dispute resolution fails, mediation can be a useful tool. Mediation involves a neutral third party who helps the parties to reach a mutually agreeable solution.
- Tribunal or Court: If mediation is unsuccessful, the dispute may need to be referred to a tribunal or court. The specific tribunal or court will depend on the nature of the dispute and the state in which the strata scheme is located. In NSW, the NSW Civil and Administrative Tribunal (NCAT) commonly handles strata disputes. Frequently asked questions can provide some initial guidance.
Understanding your rights and responsibilities as an apartment owner within a strata scheme is crucial for harmonious living. By familiarising yourself with the information in this guide, you can navigate the complexities of strata living with confidence.