What is Strata?

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If you are thinking of buying a strata property you should know what strata is.

Strata title is an Australian property title system established over 50 years ago, which has spread around the globe. Strata title allows you to have ownership of part of the property as a parcel called a “lot” and share ownership of the remaining area called “common property”, such as lifts, gardens or pools.

To understand strata, it helps to understand some of the following strata terms:

What is a strata plan?

The strata plan is the registered document which provides:
• Sketch of the building/lot
• Size of the lot
• Title reference details
• Unit entitlement (your proportional ownership)
• Easements
• By-laws attached to the strata plan after registration

The strata plan defines the legal boundaries of the lots.

Understanding and interpreting the strata plan and the boundaries of the lot can be very difficult. It is important to properly interpret your strata plan. Do you own the courtyard area and parking bay? Are you responsible for the repair of concrete cancer to the balcony or the strata company? Sometimes the strata plan refers to “For the use of lot …”, but this may be meaningless.

Before you commit to a purchase get a Strata Records Report so you know what you are buying.

What are levies?

Strata levies are your contributions, as the owner, to the Administrative Fund and the Reserve Fund.

The Administrative Fund covers the day-to-day management of the strata property including insurance cover, maintenance, the collection of arrears and strata manager fees.

The Reserve Fund is the essential fund used by the strata company to fund the long-term maintenance of the property.

Who decides how much I pay for levies?

The amount paid by owners in levies is decided by owners of the annual general meeting. Your strata manager does not set your levies but may assist the Council by suggesting levy amounts to cover the costs of the strata company.

Why do I pay more levies than my neighbour?

This can be very frustrating and difficult to understand.

Levies are paid proportionally based on unit entitlement. If the total allocation of units of entitlement at your strata property is 100, and your neighbour has 10 units of entitlement and you have 15 units of entitlement. This will mean that your neighbour will pay 10% of the total levies and you will pay 15%.

What is unit entitlement?

Unit entitlement is each owner’s proportional share of ownership in the whole strata property and is allocated at the time of registration of the strata company. The purpose of the unit entitlement is to determine:

• the portion of levy contribution each owner must pay
• voting proportions or weights in certain voting options at meeting of the strata company
• the proportion of ownership in common property as an undivided share

The unit entitlement is determined by a licensed valuer based on many criteria. These criteria have change significant over the past decades. Owners may act to change the unit entitlement distribution where clear evidence is available that the unit entitlement is no longer appropriate.

What is the Council of Owners?

The Council of Owners acts, like the board of a company, to manage the strata scheme. The Council is a group of owners who exercise the power and duties of the strata company on behalf of, and for the benefit of all owners. The Council is elected each year at the annual general meeting.

The role of the Council is usually voluntary. The Council consists of between 3 and 7 owners. The Council may delegate some of its duties to a strata manager. The Council instructs the strata manager.

What is a strata manager?

The strata manager acts to perform the day-to-day management and administrative tasks of the strata property. The strata manager acts on behalf of and under instruction from the Council of Owners.

The strata manager is your best source of assistance and information and should be your first point of contact.

Can the strata manager be changed?

The Council has the authority to select a strata manager and therefore, change the strata manager. The Council should have in place a strata management agreement between the strata company and the strata manager. This agreement defines the relationship between the parties, including the end of the agreement.

The strata manager is your best source of assistance and information and should be your first point of contact.

What is the Annual General Meeting and why should I attend?

Decisions at the strata property are made by the owners at the annual general meeting. So, the AGM is the most important event in your strata calendar. It is in your best interest to attend the meeting to help make the best possible decisions.

The Annual General Meeting should be held about 6 weeks after the end of the strata company financial year or within 15 months of the last AGM.

What are my responsibilities in strata?

When you purchase a strata unit, you are buying into a community, and with that comes obligations and responsibilities. You need to:
• park in your parking bay only
• be aware of the noise you are broadcasting
• be careful not to damage common property
• be careful not to leave rubbish or other items on common property
• properly manage your pet
• make sure your guests act appropriately
• get approval to make changes to appearance or structure of your unit.

What is a management statement?

The management statement is attached to and registered with the strata plan and describes how the strata property will be managed. This includes rules for the repair/maintenance, behaviour of residents, pet management, financial management, insurance cover and safety management.

What are by-laws?

By-laws are the rules of the strata property. The by-laws Schedule 1 & 2 as set out in the Strata Titles Act 1985 WA are the default rules of management for the strata property. The default by-laws can be amended by the management statement at registration, or by retrospective changes to the by-law.

In conclusion, when you purchase a strata unit, you a buying into a community.