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What is Strata Title?
Strata titles are a form of land ownership which allows for more than one lot to be created within a single parcel of land defined in either two or three dimensions but most importantly providing for the creation of one lot above or below another. The key is that all lots are created within a single parcel of land. Another key element of strata title is the creation of common property, which is any area within the parcel of land that is not defined as part of a lot. Common property is, as the name suggests, owned by all the lot owners within the parcel in undivided shares i.e. as tenants in common.
The original 1966 legislation was bought about in response to a need to facilitate multiple ownership within a single piece of land, particularly with more than one dwelling on it e.g. a block of flats, group of townhouses, etc. Strata title allows individual ownership of a titled piece of land and share of common property within a strata scheme which is registered with Landgate. This enables that title to be transferred from one party to another in a similar manner to normal freehold title (green title) without requiring the consent of all the other owners of the parcel, which is the main point of difference over other shared forms of land ownership. There are still many restrictions on strata titled lots which do not affect freehold title and these are mainly concerned with the protection of the rights of the other owners within the strata scheme. Apart from social disputes it is these restrictions, which can vary significantly from one strata scheme to another, that are the main cause of conflict and misunderstanding amongst strata owners.
As the name suggests “strata” means layers placed one on top of another and in strata title terms means that a strata lot does not have to be on the ground but can be many floors up within a building and consist of nothing other than internal air space.
The starting point for determining what is within a strata scheme is the strata plan which has been lodged with Landgate to create the strata scheme. The strata plan shows, along with other important information, the following -
Of course this is a very brief overview of what strata title is. For more information on the subject Landgate has excellent information on the subject - refer to our Useful Links page.
What is the role of the strata manager?
Strata titled properties are quite similar to most other types of properties so why is strata management so different? The Strata Titles Act is the big difference of course and the implications for the management of the property are far reaching. In essence, the strata property management is the same as any other property with an additional two layers of compliance over and above most other property types. The lower level relates to the management of the legal body referred to as the strata company as set out in its bylaws (running general owners meetings and strata council meetings, managing accounts and bylaw enforcement) and the upper level relates to the regulations set out in the Strata Titles Act itself (covering such things as insurance, management, alterations to lots, entering into leases, etc. etc.).
A simple example of a burst pipe in a wall between two apartments - if the whole building is owned by one owner it is simple, you call a plumber, get the problem fixed and the owner pays the cost. The same scenario in a strata scheme requires the strata manager to determine who is responsible which means being aware of where the pipe is located, where the lot boundaries are located, if there are any registered strata bylaws that could shift responsibility to either the owner of a lot or the strata company. The strata manager must also ensure that there are sufficient funds to pay for any works it commits to and that authority from the strata company has been granted to spend that money. To gain specific authority can take weeks and may require a general meeting of all the owners.
What is a Strata Company?
This is the legally incorporated body that represents all the owners of the strata plan as constituted under section 32 of the Strata Titles Act 1985. Strata Companies are NOT registered under the Corporation Act and acts more like an incorporated association than a company with shares.
In simple terms, the Strata Company consists of all of the lot owners within the scheme. The will of the owners is expressed in a general meeting of the owners and is carried out by the strata council and its servants i.e. strata manager, lawyers, accountants, trades people, etc.
Strata Companies are similar to other corporations in that ownership is determined by shares (Unit Entitlements) and have a governance body to look after the interests of the owners (strata council) but differ in that liability of the owners is not limited to or determined by their unit entitlements.
What is a Lot?
Simply, it is what you own.
A lot is the term used to identify an individually owned portion of a strata scheme. Lots are defined on the strata plan as being a lot or part of a lot. A lot has it’s own title registered at Landgate that can be bought and sold without restriction.
It is very important to have a clear understanding of where your lot boundaries are as these generally determine what you are responsible for and what the strata company is responsible for in the form of common property.
What is Common Property?
Common property is everything on a strata plan that is not part of a lot. Common property is owned by all proprietors in undivided portions determined by the unit entitlement allocated to each lot. All proprietors are equally entitled to the use and enjoyment of common property unless restricted by the grant of exclusive use rights, special privileges, leases, licenses or other legal agreement over defined parts or all of the common property. The use of common property may also be restricted through the bylaws of the strata company.
What are Unit Entitlements?
A licensed valuer determines the capital value of each lot within the strata scheme, determines the total capital value of all lots, and then apportions unit entitlements based on the proportion that each bears to the the total capital value for all lots. This results in a schedule of unit entitlement that must be completed in a specified form and attached to the strata plan. Unit entitlements determine not only the share of ownership in common property but also the level of contributions towards strata company expenses, unless varied through a registered bylaw of the strata company.
Why is Strata Title so hard?
The Strata Titles Act creates a flexible framework for regulating the development of land into shared ownership schemes. The legislation allows for the creation of schemes ranging from 2 lot schemes to schemes containing hundreds of lots which can further be used for a multitude of purposes. With this flexibility can come complexity and it is not unusual for the lot boundaries and bylaws of one strata scheme to vary significantly to another or in some cases they can vary within the same strata scheme. Management practices and cultures can also vary significantly depending on the preferences of owners and who the strata manager is.
Why do I have to pay levies?
A Strata Company must raise sufficient funds to meet its expenses the same as any other corporation or business. The more common property facilities there are, the greater the running costs. Generally the only source of income available to the Strata Company is through the raising of strata levies and billing utilities consumption charges against owners.
How are the levies calculated?
What insurance cover do I need?