This information has been provided by
Australian law firm, Australian Conveyancing Services and is applicable in New South Wales
only.
General Information on
Strata Title
With the population around Sydney in particular growing at an ever rapid rate, Units and Townhouses are becoming a popular (and cheaper) alternative to owning a house & land. There are now over 60,000 strata title schemes in New South Wales alone.
When you own or want to buy a Unit or Townhouse, you need to
consider the special legal nature of that type of property, that
doesn’t apply to an ordinary house & land situation.
This is because a ‘strata titled’ complex consists of not just one dwelling, but many (from the normal ‘6 pack complex’ to a unit complex of 100s of units). Whether you
own a unit in a small complex or a large one, there are certain principles that generally apply, as follows:
You own your unit and the airspace encompassing that unit
(but not the roof, external walls or floor). What
you do own is normally the internal walls, and fixtures
and fittings such as kitchen, carpets, drapes, etc.
Each unit in the strata scheme has a unit entitlement. Unit entitlement governs the voting rights attaching to the unit, and the proportion of levies that the unit must pay. Each unit owner has an undivided share in the owners corporation, in proportion to the unit entitlement attaching to the unit.
You have an ownership share, along with all other
unit holders, in the common property surrounding the unit (such as
foyers, driveway, pool, grounds, common stairwells, etc)
in proportion to your unit entitlement.
There are rules which govern your use of the Unit and the common property,
referred to as the Owner's Corporation by-laws.
These by-laws set down the rules of living in the
complex.
The
Owners Corporation
All
of the Owner's comprise the Owner's Corporation and they
elect an executive committee to make most of the
decisions. They are responsible for the
maintenance of common property and other matters
relating to the complex. The external building and
the common property is owned by the owners corporation.
Insurance
The owners corporation has the insurable interest in the
improvements, and is obligated to effect replacement
insurance each year on the building and improvements. The
owners corporation is also obligated to effect insurance for
public risk (covering common property) and worker’s
compensation (covering workers employed by the owners
corporation).
Before selling a Unit/Townhouse, make sure that any resolved disputes or settled problems within the Body Corporate are recorded in writing on their roll. If they aren’t it can cause problems later when the Buyer searches the records and thinks that there are ongoing problems.
If you are a Seller,
keep your insurance in place until the date of completion.
A
unit owner has the insurable interest in the internal fixtures (eg lighting, carpet and
curtains) and contents (eg furniture and moveables, including carpet) in the unit, and this should be covered by a separate insurance policy of the unit owner.
Owner's Corporation
Levies
Owner's Corporation
levies are struck for each unit, and the amount depends
on your lot entitlement. There are normally two
levies that are payable on a periodic basis:
an administrative budget covering annually recurring expenditure, (ie insurance, annual repairs, lighting to common property, wages etc); and,
a sinking fund budget, to cover long term expenditure (ie painting of the building, repair/replacement of lifts etc). This fund is designed to have funds available to meet long term expenses when they occur. If adequate funding is not put into place early in the life of a building, the sinking fund will not have sufficient funds to meet long term expenses, and the result will be that the owners at the time when the expense is incurred by the owners corporation will have to pay the expense, which will be raised by way of special levy by the owners corporation.
