I am buying a unit. What does the term "strata" mean?

Strata title is a form of ownership used for multi-housing developments, such as:

• units

• townhouses

• villas

• detached dwellings within a defined area.

The strata plan divides the building(s) and the associated land into:

• individual lots (owned by the various lot owners); and

• common property.

Lots typically consist of the airspace within the walls, floor and ceiling of the particular unit or townhouse – that is, the lot owner really only owns the right to occupy that space, and doesn’t necessarily own the actual walls, floor and ceiling of the building.

Common property is the part of the land and building in the strata plan which does not form part of any unit, and which is shared between the lot owners (e.g. stairways, passages, driveways and visitors’ carparking).  It also includes the actual structure of the building, which is not owned by any particular lot owner.

Other terms you need to know:

Owners Corporation

The Owners Corporation (previously referred to as the body corporate) comprises the registered owners of all of the units in the strata plan. An owners corporation and its committee has powers and responsibilities to administer the building and care for such things as the land around the building, entrance, stairways and paths.  The Owners Corporation also makes decisions regarding repair and renovation of the building as required, the cost of which is covered by the strata levies that have been paid by the lot owners (see next point).

Strata levies

Strata levies are the fees paid by each lot owner to the Owners Corporation (usually quarterly) to contribute to the general upkeep and maintenance of the building and the common property. There are 3 types of strata levies:

• administrative fund (for day-to-day running expenses such as gardening and cleaning)

• sinking fund (for long term repairs and maintenance such as carpet replacement)

• special levies (if there aren’t enough funds in the admin or sinking funds for essential expenses)

The levies are determined each year by the Owners Corporation, with reference to the strata scheme’s budget. The amount of levies payable by each lot owner is determined by the “unit entitlements”. Basically, the larger the lot, the greater the portion of levies that it needs to contribute to.

Unit entitlements

Unit entitlements specify the proportion of strata costs that a particular lot needs to contribute towards the strata scheme.  For example, a top floor penthouse would have a larger unit entitlement (and therefore strata levies) than a ground floor bedsit.  The unit entitlements are determined when the strata scheme is first registered, and are generally based on the understood value of the individual lots.  If this is not the case, then the NSW Civil and Administrative Tribunal has the power to amend the unit entitlements (see case note below).

 Why would I need a lawyer after I have bought a strata property?

Change of By-Law – If you wish to undertake any improvements to your property (such as upgrading the kitchen or bathroom, installing a skylight, replacing the screen door with a security door and so on), then you would need to approach the Owners Corporation at first instance to seek permission to do so.  You will then be asked to submit a proposed “Change of By-Law”, setting out the details of the proposed work and also setting out your rights and obligations regarding the proposed work.  Shire Legal can assist you with this.

Strata dispute – You may be involved in a dispute with the Owners Corporation if you have sought approval for proposed works, but for whatever reason, it has not been granted.

Below are some examples of recent cases heard before the NSW Civil & Administrative Tribunal (Strata Division):

• A lot owner in a strata property at Point Piper, which consisted of only 3 lots, sought the appointment of a strata managing agent, and a redetermination of unit entitlements between the 3 lots (Bischoff v Rita Sahade [2015] NSWCATAP 135);
• A lot owner complained, amongst other things, that a strata meeting was not held in accordance with the legislation, prior notice was not given of repairs carried out, and consent for those repairs was not obtained (Pamela Williamson v Owners Corporation SP7348 [2015] NSWCATCD 65);
• A lot owner disagreed with a special by-law requiring individual lot owners to maintain, renew, repair and replace the windows in the external walls of their lots.  The by-law required any replacement windows to be constructed from “marine grade, white, powder-coated aluminimum, to match the existing windows” (Owners Corporation SP32033 and Patrick and Valerie Mullins [2015] NSWCATCD 23).

For more information …

Strata laws are administered and regulated by Fair Trading NSW.  There is a wealth of information available on the Fair Trading website, such as:

• Strata schemes
• Buying into a strata scheme?
• Strata Living booklet – what you need to know about living in your strata community