What is strata title?
Strata title is a system for owning units and townhouses, which generally have a combination of private residences as well as communal spaces.
When you buy into a strata plan you buy a “lot”, which may include the main unit area and possibly a balcony, garage or even storage area. Other parts of the property – such as a foyer, stairways and driveways – are usually common property.
What is an owners corporation?
All unit owners are voting members of the owners corporation, which has the responsibility for making decisions that benefit the building and caring for things such as the land around the building, entrances, stairways and paths.
For the day-to-day decision making, owners corporations usually delegate authority to an executive committee (Once the Strata Schemes Management Act 2015 commences on 30 November 2016, this committee will be called the strata committee). Owners vote on the composition of this committee each year at the annual general meeting. Often owners corporations also choose to delegate some of their power and duties to a strata manager.
The Strata Schemes Management Act 2015 governs an owners corporation’s rights and responsibilities.
The rules and regulations which bind all owners and occupiers (including tenants) are called by-laws. Some by-laws restrict residents’ behaviour, such as their right to keep pets on the property. The owners corporation has power to remove or change by-laws and create new ones.
What must I do as part of the owners corporation?
The main rights and responsibilities of the owners corporation include:
- Raising levies
- Employing people who will look after the building and its common property, such as cleaners, gardeners, etc
- Enforcing by-laws and suing for any damage to common property
- Adding or amending by-laws
- Insuring the building against fire, and taking out workers compensation and public liability insurance
- Keeping the building and common property in good order
- Holding annual general meetings for owners
- Keeping minutes of meetings and preparing accounts
- Recording the owners and occupiers of lots on a strata roll
- Providing information about the strata scheme to owners and mortgagees.
What must I do as an owner?
You have a few main obligations as an owner of strata title. These include:
- Paying your rates, taxes and levies on time
- Letting the owners corporation know if the owner or occupiers change
- Complying with by-laws
- Behaving in a way that doesn’t offend other residents and doesn’t interfere with their ‘peaceful enjoyment’ of their property
- Not altering the lot without the owners corporation and the local council’s consent where appropriate.
There are two types of regular levies payable by lot owners, both usually payable quarterly:
- An administrative levy, which funds the day to day running of the scheme, and covers such matters as common property maintenance, insurance premiums, strata manager fees and other regular expenses
- A capital works fund levy, which as the name suggests funds the ongoing capital expenses of the scheme, such as painting and replacing floor coverings for the common property. (Note that prior to the commencement of the Strata Schemes Management Act 2015, this fund is called the sinking fund levy).
Where an owners corporation has not sufficiently budgeted for an expense in the scheme’s budget, it may be necessary to strike a special levy. These can be substantial and are often payable in several instalments.
When buying or selling a unit, it is prudent to find out:
- Whether the owners corporation has or is likely to raise a special levy
- Whether you will be required to contribute to that special levy if it is raised before you enter into a contract to buy or sell a unit, or before the date of settlement of a contract to buy or sell a unit.
Your solicitor can include additional conditions in a contract to protect you from having to contribute to the payment of special levies that are raised prior to the date of the contract or prior to the date of completion of the contract.
Obtaining a report on the records of the owners corporation can provide useful insights into the financial position of the owners corporation and particular issues that have emerged in the running of the owners corporation. Your solicitor can organise such a report.
What are my duties as a landlord?
If you choose to rent out your property, you should give your tenants a copy of the by-laws and make it a condition of their tenancy agreement that they comply with them. You also need to let the owners corporation know the names of the tenants, the date the tenancy commenced and the name of any real estate agent involved.
Can I have pets in a strata property?
If you want to keep a pet on the property, often the standard by-laws say you first have to ask for the consent of the owners corporation, which can’t unreasonably withhold permission. However, because the owners corporation can make its own by-laws, the rules for your property may well be different. New model by-laws relating to the keeping of pets commence on 30 November 2016, but only apply if adopted by the scheme. Your solicitor can help you check this out.
If you think the owners corporation is unreasonably withholding permission for you to keep a pet, or if someone is keeping a pet without permission, you can contact NSW Fair Trading to resolve your dispute.
How do I resolve a strata dispute?
The best way to resolve a dispute with another owner or resident is to talk to them. If you can’t reach an understanding, you can ask NSW Fair Trading to mediate the dispute. Mediation involves resolving a dispute by negotiation through an independent mediator. Any agreement reached then binds everyone involved in the dispute.
The NSW Civil and Administrative Tribunal (NCAT) also deals with certain strata disputes, visit the NCAT website.
You can contact NSW Fair Trading on 1300 135 399 or visit fairtrading.nsw.gov.au.
How can a solicitor help?
If you’re buying a strata property or if you have issues in a strata property, your solicitor can help in a number of ways, including:
- Advising you on your rights and duties as a lot owner or member of the owners corporation
- If you’re buying a strata property, making sure you know what you’re buying
- Advising on the owners corporation’s rights and responsibilities
- Preparing changes to by-laws and registering them at the Land and Property Information
- Helping you resolve any disputes with other owners or residents
- Preparing the contract for sale if you’re selling.
If you don’t yet have a solicitor, don’t worry. We’ve made it easy to find one near you through our online Find a Lawyer service.
- The Law Society of New South Wales
- 170 Phillip Street
- Sydney NSW 2000
- DX 362 Sydney
- T: (02) 9926 0333
- E: firstname.lastname@example.org