Frequently Asked Questions
What is a Strata Scheme?
A strata scheme is a building or collection of buildings that has been divided into ‘lots’. Lots can be comprised of either individual units/apartments, townhouses or houses.
When a person buys a lot, they own the individual lot and also share the ownership of common property with other lot owners. Common property generally includes things like gardens, external walls, roofs, driveways and stairwells.
Strata living can provide a friendly community-style environment, but differs from living in a freestanding house. Some activities may be more restricted – for example, where you can park your car or how you can renovate your lot. It is important for people to be aware of the responsibilities and obligations. Contact us for more details
What do I actually own in a Strata Scheme?
One major difference between owning a house and a unit in a strata scheme (or ‘lot’), is that the external walls, the floor and roof do not usually belong to the lot owner. These areas are usually common property, which means that the maintenance and repair of these parts of the building are the responsibility of the owners corporation.
As it is common property, the lot owner cannot alter or renovate these areas without permission from the owners corporation. Lot owners may need permission to do things such as install services (eg. cable television, phone or internet), knock down walls or replace locks on doors or windows.
Before purchasing a strata lot, the prospective buyer should be clear on the common property boundaries. For a definitive answer on the common property, refer to the strata plan for your individual strata scheme from Land and Property Information NSW.
The strata plan shows the layout of the strata scheme and the common property details. Pay close attention to items such as sliding doors leading to balconies, garage doors and balcony railings, because strata plans may differ on whether they are common property.
You can also obtain expert advice if you are uncertain about the common property boundaries. Contact us for more details.
What are Levies?
The role of the owners corporation is to look after the business of the strata scheme. They must set up and keep an administrative fund (for day-to-day operational expenses) and a sinking fund (for long-term future expenditure).
The owners corporation must estimate how much money is needed each year for the funds to cover all the expenses and needs of the strata scheme. The levy amount to be paid by owners is decided at each annual general meeting (AGM) by a majority vote. All levies must be worked out based on the unit entitlements of each lot. Levies are usually paid every 3 months.
An owners corporation has the same type of expenditure as a conventional householder. There are council rates, water and electricity charges for common areas, building and public liability insurance and repairs and maintenance of common areas. In a strata scheme, there can also be additional costs such as workers compensation insurance, building valuations, and the resolution of any disputes arising within the scheme.
Lot owners need to make regular contributions to the owners corporation to cover the maintenance and administration of the strata scheme. Owners should pay close attention to the quality and finishes of a building as everything the scheme has to offer must be maintained eg. swimming pools, lifts, tennis courts, saunas etc.
On occasion, lot owners may be asked to pay a ‘special levy’ to raise funds for some expense. This is a one-off payment that is usually made for major renovation or repair work. Special levies can only be made by agreement within the owners corporation.
Contact us for more details regarding the payment of levies.
Who are Strata Managing Agents?
The owners corporation can manage the strata scheme itself, or it can engage a strata managing agent to work on behalf of all owners to help manage the scheme. If it engages a strata managing agent, the owners corporation enters into a contract with the agent, which outlines their duties and responsibilities. The owners corporation has the power to instruct the agent to do certain works and if necessary, they can overrule the agent.
The appointment of a managing agent can only be decided by a majority vote at a general meeting. Only a person who holds a strata managing agent’s license under the Property Stock and Business Agents Act 2002 can be appointed.
Agents can carry out some or all of the functions, duties or powers of the owners corporation including administrative matters such as calling meetings and collecting levies. They should also give advice and guidance about legislative requirements.
Contact us for more information about appointing a Strata Managing Agent.
What should I do before signing a Contract
We recommend you obtain professional advice about the complexities involved in buying a strata unit before you sign any contract. Look at the records of the owners corporation. Know as much as you can about the maintenance of the building and the related costs, and look for any signs that money may need to be spent soon.
There are companies that specialise in inspecting the books. Sometimes your solicitor will arrange this for you. You can also inspect the books yourself. The owners corporation must make their records available following payment of the necessary fees (usually done through the strata manager).
You can also access the following records:
The strata roll (this shows who owns each unit, mortgagees and others who have an interest in lots, general information about the strata scheme, the name of the managing agent, insurance details, the by-laws and the unit entitlements for the scheme and each lot)
General records, such as notices served about disputes or required by legislation, orders, minutes of meetings, accounting records, financial statements, correspondence received and sent, notices of meetings, details of proxies, voting papers
Plans, specifications, certificates, diagrams and other documents if supplied by the original builder at the first annual general meeting
The certificate of title for the common property
The last financial statements
Current insurance policies and the receipt for the last premium paid
Other records held by the owners corporation, and
Records or books of account kept by a strata managing agent.
Contact us to find out more about requesting documents.