Strata schemes are a common form of property ownership in multi-unit developments, including apartment buildings and townhouses. This article examines what strata schemes entail, their effects on owners, and key information every owner should know.
Strata Schemes Management Act 2015 (NSW)
A strata scheme is a form of collective ownership where individuals own their private units and share ownership of common property (e.g., gardens, swimming pools, hallways). In New South Wales, the management of strata schemes is regulated by the Strata Schemes Management Act 2015 (NSW) (the Act). This legislation defines the rights and responsibilities of the parties involved in the strata scheme. Below are key summaries of the main functions, rights, and obligations of these parties.
Owners’ Corporation
The Owners’ Corporation plays a vital role in managing common property and ensuring the strata scheme operates effectively. Key functions include making decisions on behalf of owners regarding property management and maintenance, collecting levies for funding these activities, and maintaining and repairing common property. Additionally, the Owners’ Corporation must comply with the Act, relevant by-laws, hold meetings, and keep records of decisions made.
Strata Committee
Elected from the Owners’ Corporation, the Strata Committee serves as the decision-making body for daily management. This committee has the right to engage contractors for maintenance while being obligated to act in the best interests of all owners and ensure transparency. It must also report back to the Owners’ Corporation to guarantee compliance with the Act.
Strata managing agents and building managers
Strata managing agents and building managers assist in administering and managing strata schemes, often under the Owners’ Corporation’s direction. Strata managing agents are appointed for a term of 12 months if selected at the first annual general meeting (AGM) or for 3 years in other situations. Building manager agreements expire at the first AGM if signed beforehand, or after 10 years in other cases.
Both strata managing agents and building managers have the authority to make operational decisions and must act according to their contractual terms while providing regular updates on property management. Therefore, the terms and conditions of the agency agreement can significantly impact the interests of the owners.
By-laws
By-laws govern the conduct of owners and residents, dictating acceptable behaviour, such as noise levels and pet ownership. Violating these by-laws can lead to penalties. Disputes regarding by-law interpretation or management decisions can be resolved through the NSW Civil and Administrative Tribunal (NCAT), where owners can seek orders to enforce by-laws or obtain compensation.
Dispute
Disputes may arise between owners, the Owners’ Corporation, or managing agents regarding the interpretation of by-laws, management decisions, or the maintenance of common property. In such cases, the NCAT handles disputes related to strata schemes. Owners can apply to the tribunal for orders to resolve disputes, enforce by-laws, or seek compensation for damages.
Take away
To protect their interests while residing in a strata building, owners should be aware of the following:
- Understand the terms of contracts with strata managing agents and building managers. The details of these agreements can significantly affect the management of the property and your financial obligations.
- Be aware of any changes to by-laws, management practices, or regulations that could affect your rights as an owner. Regular communication from the Owners’ Corporation can help keep you informed.
- Familiarize yourself with the by-laws governing the strata scheme, as they dictate acceptable behaviour and responsibilities. Ensure you adhere to these rules to avoid penalties and conflicts.
If you are unsure about your rights or facing complex issues, seek legal advice to ensure your interests are protected and to understand the implications of any actions you may take.
If you are interested in discussing your options regarding the removal of strata managers, building managers or are concerned with how they are using your funds, please contact our office for a free consultation at (02) 9262 5495 or contact Mr Murdock at dmurdock@mclp.com.au, or subscribe to our newsletter by visiting https://mclp.com.au/publications/