A Guide to Strata Titles

Transcription

1 A Guide to Strata Titles Information Guide Revised June 2017 landgate.wa.gov.au

2 A Guide to Strata Titles Terms of Use Disclaimer of Liability This guide is produced as a community service by the Western Australian Land Information Authority (Landgate) to give people a basic understanding of strata titling principles. The information contained in this guide is distributed by Landgate, as a guide or information source only. It is a summary only and should not be taken as a precise guide to the law on strata titles. You should refer to the: Strata Titles Act 1985 (the Act) as amended; and Strata Titles General Regulations 1996 (STGR) as amended, for details. These publications are available from the State Law Publisher s website Landgate is able to provide strata information relating to: document and Plan registration, and understanding boundaries between strata lots and common property Please note: Landgate is Western Australia's statutory authority responsible for the administration of the Act and associated STGR. The Act does not provide Landgate with any judicial powers to enforce legislation. Under the Act, the State Administrative Tribunal (SAT) is empowered with this function. Landgate is responsible for registration matters only and cannot provide advice pertaining to existing strata management or other strata living matters. To the extent permitted by law, Landgate will in no way be liable to you or anyone else for any loss or damage, however caused (including through negligence), which may be directly or indirectly suffered in connection with use of this document. This general disclaimer is not restricted or modified by any of the following specific disclaimers. Various factors beyond the control of Landgate can affect the quality or accuracy of the information and products. While every effort has been made to ensure accuracy and completeness, no guarantee is given nor responsibility taken by Landgate for errors or omissions in the guide. Landgate does not accept any liability for any loss or damage incurred as a result of the use of, or reliance upon the information provided in this guide or incorporated into it by reference. Important: The information in this guide should not be regarded as legal advice. In all matters, users should seek legal advice from an independent legal practitioner. landgate.wa.gov.au

3 CONTENTS Introduction... 6 Buying a strata unit... 7 Strata development... 8 Types of schemes Strata Schemes Survey-Strata Schemes... 9 Unit entitlement Single tier strata schemes Merger and conversion Capital Gains Tax Re-subdivision Restrictions Access to services such as water and sewerage Strata company Duties of strata companies Strata councils Strata company name Common seal Strata managers Contract of employment and provision of services Transfer of management contracts What to do if you are unhappy with your strata manager Where to complain if you are unhappy with your strata manager If you wish to terminate your strata management contract What you own individually and what is common property Common property Schemes created before 30 June Schemes created after 30 June Changes which commenced 20 July Changes to description of boundaries in the Strata Titles General Regulations. 20 Small scheme exemptions Two (2) lot schemes Three to five (3-5) lot schemes Insurance Single tier strata scheme Non-single tier strata scheme Survey-strata scheme Increased premium Strata company fails to insure landgate.wa.gov.au

4 By-Laws Standard by-laws apply to all strata companies New, amended or repealed by-laws Registration of by-laws Matters in by-laws Exclusive use by-laws For the use of statements on strata plans Management statement Orders by the State Administrative Tribunal Resolutions Types of resolutions Voting for resolutions - unanimous, special and without dissent Notice of proposed resolutions - unanimous, special and without Dissent Amended resolutions Quorums at general meetings Quorum in a two (2) lot scheme Voting at general meetings Orders by the State Administrative Tribunal or District Court General meetings Management Strata levies and fees Expenditure by council Exceptions Expenditure approval at general meetings Validation of expenditure authorised by budget Roll to be kept by the strata company Proxies Certain persons cannot vote as proxy Service contracts Unfair or Excessively long service contracts before 14 April Service contracts after 14 April Building alterations Strata schemes Approval for structural alterations Application to strata company; other owners Notice of meeting Grounds for refusing application Disclosure of grounds Vacant lot Survey-strata schemes Approval for Structural Alterations Application to strata company; Other Owners Notice of Meeting Requirements applicable to strata and survey-strata schemes Plot ratio Notice of decision Approval deemed given State administrative tribunal and dispute resolution Can I bring my dispute straight to SAT? landgate.wa.gov.au

5 What types of strata titles orders the SAT make? How to apply to the SAT Evidence required to support SAT applications What to do with your SAT application Is there any time limit on when I can make my application? SAT decisions database Answers to some commonly asked questions Standard by-laws Schedule 1 by-laws Schedule 2 by-laws Additional information Where to get help Smoke alarm laws for existing dwellings Installation of Residual Current Devices (RCD s) in Residential Premises What is an RCD? RCD Laws Solar panels New building defects Further reading Where to lodge documents landgate.wa.gov.au

6 1 Introduction This guide is produced as a community service by the Western Australian Land Information Authority (Landgate) to give the community a basic understanding of strata titling principles. It is a summary only of the law as at 20 July 1997 and should not be taken as a precise guide to the law on strata titles. You should refer to the Strata Titles Act 1985 (the Act) as amended and the Strata Titles General Regulations 1996 (STGR) as amended, for details. Residential strata schemes provide grouped housing with a community atmosphere. This combined with smaller areas, such as gardens to maintain, and the use of common facilities, such as bores and swimming pools, can make strata schemes attractive for many people. Strata schemes are also practical for industrial and commercial developments. The cost of buying into strata schemes is usually comparatively less than the cost of buying into non-strata freehold title properties. This is because all the buildings are part of a single scheme and the planning requirements are relaxed. This reduces costs by allowing larger buildings on smaller lots and shared services such as electricity, gas, sewerage and water. The outcome of this is that people are able to purchase better quality housing and/or in a better area than they might be able to in the non-strata freehold environment. Day to day living costs can also be lower in strata schemes because shared services often mean that the cost of maintenance, such as painting, is reduced. Strata schemes also have the option of strata company insurance which is generally cheaper than individual insurance. Utility costs such as shire and water rates are also generally less expensive in strata schemes. There may be occasional problems associated with strata living, but most of those problems, such as disagreements with neighbours, can also exist in the non-strata freehold title environment. The advantage of strata living is that mechanisms such as by-laws and the State Administrative Tribunal (SAT) exist to assist in the reconciliation of disputes. A Guide to Strata Titles Page 6 of 59

7 2 Buying a strata unit As with any purchase of property, the rule of "buyer beware" applies. However when purchasing strata titled properties, the vendor is required by law to provide certain notifiable information about the scheme before the purchaser signs the contract to buy the property (see sections 69(A) and 69(B) STA). This information includes: Form 28 - Disclosure Statement (this information can form part of the contract); Form 29 - Buying and Selling a Strata Titled Lot (this may contain, or have attached, the standard by-laws); a copy of the registered or proposed strata/survey-strata plan, in particular drawing attention to any information that relates specifically to the lot being purchased; the unit entitlement of every lot within the scheme and the total unit entitlement. If the scheme is not registered, the proposed unit entitlements; a copy of any by-laws, either registered, or yet to be registered, that vary the standard by-laws; and in the case of a proposed scheme, the proposed by-laws where they vary the standard bylaws. Where the strata/survey-strata plan has not been registered, the original proprietor must also provide additional information which includes: Details and costs of any service agreements to be entered into by the strata company, including any pecuniary interests held by the original proprietor in agreements to provide the services; The proposed budget of the strata company in its first 12 months and the estimated contributions to levies by the purchaser during that period; and, Details of any leases, licences, exclusive use, or privileges, granted over common property. If the vendor has failed to give the purchaser information that substantially complies with the requirements of Section 69 or 69C of the Act, and at the time required by that section of the Act, the purchaser has a right to avoid the contract (see section 69D STA). With new developments the original proprietor is required to convene and hold a meeting of the strata company within three (3) months after the registration of the strata plan, whether or not he is a proprietor at the time he does so. Penalty: $2000 (see regulation 23 (STGR) and section 49 STA). A Guide to Strata Titles Page 7 of 59

8 3 Strata development Local government authorities and the Western Australian Planning Commission (WAPC) are responsible for the zoning, planning and approval process for the creation of strata schemes. Listed below are the basic steps required to complete development of a strata scheme. 1. Check with your local authority to determine if the property is zoned for a strata development. 2. If the strata development is residential, contains a maximum of five (5) lots and is 2,500 square metres or less, a preliminary application is made to the local government authority. Otherwise, it is made to the WAPC. A licensed surveyor can provide a detailed site plan. (see regulation 15 (STGR)) 3. All survey-strata schemes require WAPC approval. 4. Once the building plan is approved in principle, a building licence is required from the local government authority before the commencement of building. Building plans and specifications are also required (does not apply to survey-strata schemes). 5. The strata plan is prepared by a licensed land surveyor after the buildings have been fully completed, including fences and driveways (does not apply to survey-strata schemes). 6. The strata/survey-strata plan is lodged at Landgate where a strata plan number is issued, if not already pre-allocated. 7. The strata plan is approved by the local authority and the WAPC (if applicable). 8. An application is lodged at Landgate to register the strata plan. The duplicate title must be produced at this stage. A new Title is then issued for each lot created by the strata plan. There are a number of factors that can complicate the process and it is often advisable to consult appropriate professionals, such as planning consultants, conveyancers, as well as licensed land surveyors, to ensure the process is completed without unnecessary delay and/or additional cost. You should also check the title for your property to ensure there is nothing preventing the strata titling, or subdivision of the land, such as a restrictive covenant. A Guide to Strata Titles Page 8 of 59

9 4 Types of schemes Two types of schemes are permitted under the Act, strata schemes and survey-strata schemes. The comments in this guide apply to both strata schemes and survey-strata schemes, unless indicated otherwise. 4.1 Strata Schemes This is the original form of "strata scheme", or "strata plan", commonly known as a "building strata". At least one (1) building must be shown on these strata plans and the boundaries of the strata lots, including the height of the lots (stratum), are defined by reference to the building. Prior to 30 June 1985, lots could only be within a building. After that date, part of the lot could also be the land outside the building and may also include the building structure. The lot boundaries are shown on the floor plan of the strata plan and the wording on the floor plan must be read in conjunction with the sketch to ascertain the lot boundaries (see also section 16 of this guide What you own individually and what is common property). 4.2 Survey-Strata Schemes The Act created a new form of strata scheme known as a "survey-strata scheme". No buildings are shown on a survey-strata plan, even though there may in fact be buildings on the survey-strata lots. The boundaries of survey-strata lots are surveyed by a licensed land surveyor and shown on the survey-strata plan. The lots on a survey-strata plan look much the same as lots that are shown on surveys (deposited plans, plans and diagrams) for non-strata freehold titles. Survey-strata lots may, or may not be limited in height. The height of a lot may be limited for a number of reasons, for example, to protect a neighbour's view. If there is a height limitation, it will be shown on the survey-strata plan and referenced to the Australian Height Datum (AHD). Survey-strata schemes may have common property. If there is any common property in a survey-strata scheme, it is separately numbered as a lot and prefixed with the letters CP. The other features and obligations which apply to strata schemes also apply to survey-strata schemes, e.g. by-laws, common property, strata company and structural alterations (see section 7A STA). A Guide to Strata Titles Page 9 of 59

10 5 Unit entitlement See section 14 of the Act The Act defines unit entitlement as establishing the following: (a) (b) (c) The voting rights of a proprietor The undivided share of each proprietor in the common property The proportion payable by each proprietor of contributions levied under Section 36 (see also section 21.1 of this guide Strata levies). Strata plans show the relative proportion of each owner's share in the scheme. This is called unit entitlement and is set by a Licensed Valuer. In a strata scheme, the unit entitlement of strata lots is calculated to take into account the capital value of buildings on strata lots, as well as the land (whether it is common property or individually owned). The unit entitlement of survey-strata lots is calculated on the unimproved site value of the lots and ignores the value of any buildings on the lot. The Act allows for the unit entitlement to be changed in some circumstances. Refer section 8 of this guide Re-subdivision and to the following sections of the Act: Merger of land and/or buildings (Part II Strata schemes and survey-strata schemes, Division 2A) Reallocation of unit entitlement by resolution (section 15) Reallocation of unit entitlement by Land Valuation Tribunal (section 16) Conversion to survey strata plan (Part III Variation, termination and conversion of schemes, Division 3) Order for variation of unit entitlement (section 103H). A Guide to Strata Titles Page 10 of 59

11 6 Single tier strata schemes Single tier strata schemes are ones where no lot is above another lot, that is, the floor of one (1) lot cannot be the ceiling of another lot. Multistorey blocks of flats/units are not single tier strata schemes, but a two storey unit such as a two storey townhouse/villa is generally still a single tier strata scheme. In some circumstances, the Act allows schemes to be single tier schemes, even if parts of lots, such as balconies, or other parts of buildings overhang other lots. These overhangs are called Permitted Boundary Deviations, as defined in regulation 37A (STGR). 7 Merger and conversion Owners in single tier strata schemes registered before 1 January 1998 may use a simplified process using the options outlined in Part II and Part III of the Act (see extract below). Part II Strata schemes and survey-strata schemes, Division 2A of the Act Option 1 merger of buildings into the strata lots Option 2 merger of land into strata lots Option 1 and 2 merger of buildings and land into strata lots and/or; Part III Variation, termination and conversion of schemes, Division 3 of The Act Option 3 Converting to survey-strata For details on how to merge common property or convert to a survey-strata scheme, you may obtain an appropriate brochure from Landgate s Customer Service team (see section 30 Further reading, for details). Owners in single tier schemes merging buildings and/or land into strata lots or converting to survey-strata, must engage a Licensed Land Surveyor. All other schemes registered after the 1 January 1998 can achieve the same results by the standard re-subdivision process. 7.1 Capital Gains Tax implications to consider The conversion of common property may have capital gains tax implications for some strata owners. Please contact your taxation adviser or the Australian Taxation Office for further information. A Guide to Strata Titles Page 11 of 59

12 8 Re-subdivision See sections 8, 8A, 8B, and 8C of the Act Subject to the passing of appropriate resolutions, lots on a strata, or survey-strata plan may only be further subdivided by a re-subdivision plan of the same type, that is, a strata lot may only be re-subdivided by another strata plan and a survey-strata lot may only be re-subdivided by another survey-strata plan. A licensed land surveyor will be required to make the appropriate changes to the strata, or survey-strata plan which must be lodged and examined by Landgate before being acted upon. In some cases the unit entitlement may change and a Licensed Valuer will be required to do a new schedule of unit entitlement. A Form 20 Application for Re-Subdivision (STGR) is registered at Landgate to effect these changes. In some cases, a Form 23 Disposition on Re-Subdivision (STGR) will also be required. 9 Restrictions See sections 6 and 6A of the Act Restrictions may be added to, varied or removed with appropriate consents and lodgement of appropriate documents with Landgate. Restrictions on strata plans under sections 6 and 6A of the Act are not registered as by-laws. A Form 19 Notice of Resolution to Vary, Remove or Add a Restriction (STGR) is to be used. The appropriate consents from local government and the WAPC may also be required. The Act allows a restriction which requires that lots may be only, or predominantly, occupied by retired persons to be registered on a strata plan, or a survey-strata plan, either at the time it is registered or registered at a later date after passing the relevant resolutions. Other restrictions may also be registered on the plan. (Note: these restrictions are shown on the strata plan and are not recorded as by-laws under the Schedule of Encumbrances. Care should be exercised in creating restrictions as poorly drafted areas may cause unexpected problems. It may be advisable to have a lawyer, strata consultant or other professional draft the restriction. A Guide to Strata Titles Page 12 of 59

13 10 Access to services such as water and sewerage The Act allows sharing of access to services such as water, sewerage and electricity and often these services pass through common property and other lots in the scheme. To ensure continuity and maintenance of these services within the scheme, the Act allows access (implied easements) under sections 11 and 12 to common property and lots for maintenance of the existing services (see section 12A STA and regulations 37A and 37B STGR). 11 Strata company See section 32 of the Act The strata company (also referred to as the Body Corporate) comes into existence automatically on the registration of the strata/survey-strata plan when the titles are issued. Other than holding the first annual general meeting (see section 20.8 General meetings in this guide), no expenditure, or action by the owners is required to form it. All owners of lots on the strata/surveystrata plan are automatically members of the strata company. There is no requirement to register a strata company with the Australian Securities & Investments Commission Duties of strata companies See section 35 of the Act Some of the principal duties of strata companies are to: enforce the by-laws; control and manage the common property for the benefit of all proprietors; and properly maintain and, where necessary, renew and replace the common property, including the fittings and fixtures used in connection with the common property. A Guide to Strata Titles Page 13 of 59

14 12 Strata councils The Act recognises that in some schemes, it may be impractical for all owners to participate in the day to day management of the scheme and therefore provides for the strata company to be operated by a council of owners. The strata company is run by the council in accordance with the conditions specified in the Act, the by-laws in force for the strata scheme at that time and subject to any restriction imposed or direction given at a general meeting of the strata company. The council may delegate to one (1) or more of its members such of its powers and duties as it thinks fit, and at any time revoke the delegation (see schedule 1, by-law 8 STA). The by-laws in Schedule 1 provide that if there are three (3) or less owners, the council consists of all owners. A council may consist of between three to seven (3-7) owners as determined by the strata company. If there are more nominations than the number of councillor positions, the council must be elected (schedule 1, by-law 4). Members of the Council of Owners do not acquire any privileges by virtue of their election to it, or because they become office bearers of the council. They are required to carry out their duties for the benefit of all owners, without favour. Details of standard by-laws which apply to all strata schemes, unless the strata company has amended them, are outlined in Section 28.1 Standard by-laws within this guide. Some key by-laws that may be of interest include: the council of the strata company is constituted (by-law 4), how council members are elected (by-law 5), what the duties of the council office bearers are (by-law 6) and meetings of council (by-law 8). The Chairman, Secretary and Treasurer of the strata council hold the same respective positions of the strata company (see schedule 1, by-law 7). Further information on the duties of the office bearers of the strata company is contained in schedule 1, by-laws 9 and 10 of the Act. To ensure that your scheme is managed efficiently, it is imperative that owners form an effective council. This will ensure that the duties of the strata company are carried out and if a strata manager is employed to carry out some of the duties of the strata company, the council of owners would then effectively instruct and monitor the manager. If you are unhappy with the way your scheme is run, a possible solution is to stand for election to the council, so you can participate in the day to day running of the scheme. A Guide to Strata Titles Page 14 of 59

15 13 Strata company name Section 32 of the Act requires the strata company name to be in a specific format, which is The Owners of (insert the name of the scheme as shown on the strata plan) Strata Plan Number (insert the number of the strata plan). In schemes created before 14 April 1996, the name of the building is used instead of the name of the scheme. See the example below. 14 Common seal See section 32 of the Act Strata companies can only sign documents using a common seal which is usually affixed in the presence of at least two (2) members of the council of the strata company (see schedule 1, bylaw 15 STA). A common seal should contain the name of the strata company (exactly as shown on the strata/survey strata plan) and the strata/survey strata plan number. Generally any rubber stamp manufacturer will be able to make the rubber stamp, refer to the example shown below. Council members attesting to the affixing of the seal should sign, then print their names in full (clearly) underneath their signatures. Only one (1) co-proprietor of a lot can sign as a member of council (see schedule 1, by-law 4(6) of the Act). Where a member of council is a delegated by a corporation and attesting the affixing of the seal they should sign, print their name in full and also include the following under/alongside their printed name As authorised signatory for (name of corporation) as delegated under section 45 (2) of the Act. Name of Building or Name of Scheme, whichever is applicable. A Guide to Strata Titles Page 15 of 59

16 15 Strata managers Larger strata schemes often employ strata managers to assist the council to carry out some of the duties of the strata company. The strata manager may be a company or an individual. This does not remove the need for a strata council. Rather, it may increase the need for one, to ensure the strata manager is effectively instructed and monitored. While the strata manager is the servant of the strata company, the quality and level of service the strata company receives from the strata manager often depends on effective instruction and control of the strata manager by the strata company, or the strata council (see schedule, 1 bylaw 8) The only powers strata managers have, are those given to them by the strata company. Generally, the strata manager cannot make decisions on behalf of the strata company and cannot do anything that requires a resolution of the strata company Contract of employment and provision of services When employing strata managers, strata companies should ensure that: The services required to be provided by the strata manager are clearly set out in the service contract. All owners have a clear understanding of the role and services that are to be provided by the strata manager. Lines of communication between the parties are clearly set out (generally all communications should be between the strata council and the strata manager, and be in writing). The strata council monitors the performance of the strata manager. The strata council continues to undertake any responsibilities it has retained. Contracts with strata managers should generally be for a relatively short term, such as a year, so if the strata manager does not meet the required level of service, their services can be easily terminated Transfer of management contracts Strata managers sometimes transfer their management portfolios to other managers. If you do not want this to happen without your consent, that requirement should form part of the contract for the service What to do if you are unhappy with your strata manager If you think your strata manager is not meeting its contract obligations, you should check the contract to ensure that the services in question are in fact required to be performed by the strata manager. You should also ensure that the strata manager has been advised of the need to carry out the particular duties. If it is ascertained that the strata manager is failing to meet contract obligations, the strata council should request in writing that the duties be performed as per the contract. A Guide to Strata Titles Page 16 of 59

17 15.4 Where to complain if you are unhappy with your strata manager Strata management, at present is not a regulated industry. However, many strata managers are real estate agents, or members of the Strata Community Australia Western Australia (SCA(WA)) formerly known as the Strata Titles Institute of WA (STIWA). If the strata manager is a real estate agent, in the first instance you should take your complaint to the principal of the real estate agency. If that fails to resolve the situation, the strata council may re-direct their complaint to: Department of Commerce Consumer Protection Level William Street PERTH WA 6000 Tel: consumer@commerce.wa.gov.au. Consumer Protection is now the statutory authority responsible for regulating real estate agents under the Real Estate and Business Agents Act Consumer Protection may conciliate in the dispute or take disciplinary action against the agent, as appropriate. In certain circumstances, Consumer Protection can also require agents to refund fees or commissions paid to consumers. In addition to taking the matter to Consumer Protection, if the strata manager is a member of the Real Estate Institute of Western Australia (REIWA), the strata council may also take the complaint to REIWA. REIWA s contact details, as at the date of this publication, are: REIWA PO Box 8099 SUBIACO EAST WA 6008 Tel: +61 (0) If the strata manager is a member of SCA(WA), the strata council may take the complaint to that organisation, after having approached the Principal of the strata management company. SCA(WA) s contact details, as at the date of this publication, are: SCA (WA) PO Box 8105 SUBIACO EAST WA 6008 Tel: +61 (0) If you, as an individual, consider that your strata complex is not being managed properly by the strata council; then you may apply to the SAT to have the matter resolved. A Guide to Strata Titles Page 17 of 59

18 15.5 If you wish to terminate your strata management contract Before you take action to terminate your strata management contract, you should: ensure the contract for the service allows you to do so; and ensure that arrangements are put in place to carry out services previously carried out by the strata manager, for example, have you selected a new strata manager and do you need further authority to approve the expenditure necessary to employ the new strata manager? You may need to seek legal advice before you terminate the contract. A Guide to Strata Titles Page 18 of 59

19 16 What you own individually and what is common property The most common scenario for two to five (2-5) lot single tier schemes is for the buildings to be individually owned. However, this depends on when the scheme was registered. In schemes registered before 30 June 1985, the outside areas are usually common property. In schemes registered after 30 June 1985, part or all of the outside areas may be individually owned, they could also be common property or a combination of both. To understand what you own, it is essential that you obtain and examine a current copy of your strata plan and seek advice on its interpretation Common property Common property is property which is jointly owned by all of the owners in the strata scheme and is not contained within any lot (see section 3 STA). Many strata owners believe that there is no common property in their scheme, and that they own the whole of "their strata unit" (for example, the building in which they live) and the surrounding garden and carport area. However, in many cases this is not correct! Due to changes to the Act, and different ways in which strata plans have been prepared, a number of individual ownership/ common property scenarios exist. In many cases, some part, if not the whole, of the building structure is common property Schemes created before 30 June 1985 In schemes created prior to 30 June 1985, the building and areas outside the buildings are common property, unless: there has been a strata plan of re-subdivision lodged changing the lot boundaries; the boundaries of the lots in a two to five (2-5) lot single tier strata scheme have been moved to the external surfaces of the buildings on 20 July 1997, pursuant to the automatic merger provisions of the Strata Titles Amendment Act 1996; or the boundaries of the lots in a single tier strata scheme have been moved by resolution of the strata company at some time after 20 January 1997, pursuant to the provisions of the Strata Titles Amendment Act Schemes created after 30 June 1985 After 30 June 1985, it was also possible to own buildings and outside areas. From 30 June 1985, the Act allowed for variation of the standard provisions to include individual ownership of buildings and land outside, as well as the cubic space inside the building. This has led to a number of combinations of individual ownership and common property. Some examples are: individual ownership of the buildings and areas inside and outside the buildings; A Guide to Strata Titles Page 19 of 59

20 individual ownership of the inside and outside areas, but only part of the buildings, for example, the walls, but not the roof; and ownership of the inside and outside areas, but not any part of the building. The scheme requirements dictate the mix of individual ownership and common property Changes which commenced 20 July 1997 One change to the Act which became effective on 20 July 1997 automatically moved the boundaries of the lots, or part lots within buildings shown on the strata plan, to the "external surfaces of the buildings" in single tier schemes of five (5) lots or less. This means that the building, including attachments, such as television antennae, water heaters and air conditioners etcetera, are individually owned. Building additions, added on carports and pergolas, are not included in this boundary change. The change only occurred if no owner lodged an objection to it with Landgate before 21 July 1997, after which time, it was no longer possible to object to the automatic changes. It should be noted, the change also affected schemes where the building was already individually owned, this is because it included attachments to the building that were not previously included in the definition of a lot. The Capital Gains Tax implications described in section 7.1 of this guide also apply to the automatic boundary changes Changes to description of boundaries in the Strata Titles General Regulations See regulation 37AA (Gazetted 24 January 2006 and amendment Gazetted 2 September 2011) Any boundaries on new strata plans that are described in a manner defined under section 3(2)(b) of the Act will now be limited to the inner surfaces of the floor, walls and ceilings and in any other case, in a manner that unambiguously defines the cubic space and its location in relation to the relevant building. For example, Multi-Tier Schemes. The subsequent amendment allows for buildings which are single tier and buildings which are multi-tier that are contained within the same strata plan to be defined differently. A Guide to Strata Titles Page 20 of 59

21 17 Small scheme exemptions See sections 36A and 36B of the Act The 1995 amendments to the Act allowed small schemes to be exempt from some of the management requirements under the Act. The strata company for the scheme remains in existence, despite the exemptions for small schemes Two (2) lot schemes See section 36A of the Act Two (2) lot schemes are automatically exempt from the following requirements: to hold annual general meetings, after the first one (1) has been called by the original proprietor; to keep minutes of meetings and books of account; to prepare annual accounts; to have a separate mail box for the strata company; to keep a roll of lot owners, but each lot owner must notify the other owner of his or her address for the service of notices; and to establish an administrative fund, for example, a strata levy fund. Owners of two (2) lot schemes may decide to comply with any of these requirements. However, if they decide to establish an administrative fund they must first pass a by-law to that effect Three to five (3-5) lot schemes See section 36B of the Act The same exemptions that apply to two (2) lot schemes may apply to schemes having three to five (3-5) lots if the strata company passes a by-law to that effect. The by-law must be made by a resolution without dissent. By-laws made to adopt the exemptions can be set aside by a new by-law passed by resolution without dissent. A Guide to Strata Titles Page 21 of 59

22 18 Insurance See sections 53 to 59 of the Act The basic principle of insurance in strata schemes is to provide for joint insurance of common property, to ensure that owners are adequately covered against loss or damage arising from claims against the strata company that occur in or on common property. You should consult your insurer to ensure you have adequate insurance cover for both individually owned lots and common property in your strata scheme Single tier strata scheme In a single tier strata scheme the strata company must take out joint insurance of buildings (to their replacement value) and insure for public liability (for at least $5,000,000) in respect of common property unless: (a) the only common property is the air above the lots and the soil below them, or fences; or (b) the strata company decides by resolution without dissent (or unanimous resolution in a two (2) lot scheme) not to take out joint insurance. Any owner can insist on joint insurance of common property at any time. The strata company must also take out any other insurance required by law, for example, workers' compensation, if applicable, and any other risks which the strata company decides to insure against. This is the same as for non-strata freehold titled properties. The owners can take out individual building and public liability insurance of their individual lots, unless the strata company decides by majority decision to take out joint insurance Non-single tier strata scheme In a strata scheme which is not a single tier strata scheme (eg. a multi-storey/high-rise building), the strata company must take out the following insurances: building insurance for all buildings on the land in the scheme (except if there is an exemption under the STGR) to their replacement value; and public liability insurance for the common property, for at least $5,000,000, unless exempted by an order of the Strata Titles Referee. The strata company must also take out any other insurance required by law, for example workers' compensation, if applicable, and any other risks which the strata company decides to insure against. This is the same as for non-strata freehold titled properties Survey-strata scheme Where there is common property is a survey-strata scheme, the strata company must take out the following insurances: building insurance for any buildings on the common property, to their replacement value; and public liability insurance for the common property (if any), for at least $5,000,000. A Guide to Strata Titles Page 22 of 59

23 The strata company must also take out any other insurance on common property required by law, for example workers compensation, if applicable, and any other risks which the strata company decides to insure against. This is the same as for non-strata freehold titled properties Increased premium See section 54 and 54A of the Act If the strata company has difficulty in obtaining reasonable insurance cover for any buildings due to some activity on a lot, the strata company may do one (1) of the following: give the owner of that lot notice in writing requiring the owner to stop carrying on that activity on the lot; or give the owner notice in writing requiring the owner to do certain works specified in the notice. If the lot owner fails to comply with either of these requirements, the strata company may obtain an order from the SAT requiring compliance. As an alternative to either of these requirements, the owner may be required to pay the amount by which any insurance premium is increased due to the activity carried on the lot. If any insurance premium payable by the strata company (not only for building insurance) is increased solely due to some activity on a lot, the owner of that lot may be required to pay the amount of that increase Strata company fails to insure See section 103L of the Act If the strata company fails to take out any insurance required by the Act, an owner may take out that insurance in the name of the strata company. The SAT has power to make orders for that owner to be compensated for any payment made. A Guide to Strata Titles Page 23 of 59

24 19 By-Laws and changes to them See section 42 of the Act The standard Schedule 1 and Schedule 2 by-laws contained in the Act are reprinted in section 28.1 and 28.2 of this guide Standard by-laws The by-laws which apply to all new (from registration of the plan) and existing strata companies are: schedule 1 and 2 by-laws, which are printed in the schedules to the Act; and any management statement that may be registered and new or changes to existing by-laws (including by management statements) which are registered on the strata/survey strata plan New, amended or repealed by-laws In any two-lot strata/survey strata scheme, any resolution (including a resolution to amend, add or repeal a Schedule 1or Schedule 2 by-law or any other by-law will require a unanimous resolution. In any other strata or survey-strata scheme: o o Schedule 1 by-laws may only be amended, repealed or added to by a resolution without dissent (sections 3AC, 3C and 3CA STA). Schedule 2 by-laws may be amended, repealed or added to by a special resolution (sections 3B, 3C and 3CA STA) All new by-laws must specify whether the by-law is a schedule 1 or schedule 2 by-law and be consecutively numbered after the existing by-laws for the relevant schedule to which they belong. By-laws may be made at the request of local government or other authorities. The by-law may not be amended or repealed without the consent of the requesting authority, if that requirement is specified in the by-law (see sec 42(2d) STA) Many schemes draft their own by-laws. While the owners at the time understand what was intended, the by-laws may be interpreted differently by new owners. Many registered by-laws are ambiguous and may be unenforceable from a practical standpoint. It is therefore advisable to have by-laws drafted by an appropriate professional, or to seek legal advice. Care should be taken not to make by-laws that are discriminatory, or that cannot be easily enforced. Recording of by-laws at Landgate does not guarantee their enforceability, either at law, or in practice Recording of by-laws See section 42(4) of the Act Any new by-law, amendment to, or repeal of, an existing by-law must be lodged at Landgate within three (3) months of the date of the meeting that passes the resolution. If you need to wait A Guide to Strata Titles Page 24 of 59

25 28 days after the meeting for the resolution to be confirmed, the by-law must still be lodged at Landgate within three (3) months of the date of the meeting. The by-law is not effective until reference is made on the registered strata plan Matters in by-laws By-laws may be made in respect to any of the following matters, including exclusive use or enjoyment of, or special privileges in respect of, common property or any part of it: the corporate affairs of the strata company; any matter listed in schedule 2A to the Act; any matter relating to the management, control, use and enjoyment of the lots and any common property; exclusive use of common property; apportionment of strata levies; the plot ratio restrictions or open space requirements, and/or fines for breaches of the by-laws. A strata company may provide for a penalty in a bylaw which may be imposed by SAT Exclusive use or special privileges by-laws See section 42(8) of the Act It is possible to create by-laws granting individual lot owners exclusive use and enjoyment of, or special privileges in respect of, common property or any part of it. Such by-laws will usually require a clear sketch plan of the relevant part of the common property and may be subject to conditions, including obligations to maintain and repair the relevant part of the common property or may be made subject to a payment or a combination of conditions and payment. A proprietor who would have the benefit of such a by-law must give written consent to the adoption of the bylaw (see section 42 (8) STA). To pass a by-law relating to exclusive use and/or special privileges in a two lot scheme a unanimous resolution is required and in any other scheme, a resolution without dissent is required. Proprietors granted exclusive use are responsible for the repair and maintenance of their exclusive use area, unless the by-law states otherwise (see section 42(11)(b) STA) For the use of statements on strata plans Some strata plans have notations indicating certain areas are for the use of particular lots. These notations do not have any effect, unless an exclusive use by-law has been lodged to support them. To lodge an exclusive use by-law, generally the document will require a suitably dimensioned sketch plan to support the proposed by-law (note: the sketch on the strata plan cannot be used). The sketch plan is usually prepared by a licensed surveyor. A Guide to Strata Titles Page 25 of 59

26 19.6 Management statement See section 5c of the Act A document known as a "Management Statement" may be registered at the same time as the strata or survey-strata plan is registered. The Management Statement specifies by-laws which are to apply to the scheme from the time of registration and may include: restrictions on what types of houses or other buildings may be built on the lots or what activities may be conducted on the lots; and a plan of re-subdivision for future subdivision of a lot within the scheme. The Act also specifies a number of other matters that can be provided for in Management Statements (see schedules 2 and 2A STA) Orders by the State Administrative Tribunal See sections 81 to 103R of the Act The SAT may make various orders in relation to by-laws made by the strata company, or where the strata company has refused to make certain by-laws. A Guide to Strata Titles Page 26 of 59

27 20 Resolutions 20.1 Types of resolutions The STA provides for four (4) different types of resolutions which can be passed at general meetings of the strata company. 1. A unanimous resolution must be passed by All lot owners (or their proxies-see section 23 of this guide), or other persons entitled to vote (see section 3 of the Act). 2. Except in the case of a two-lot scheme, where a unanimous resolution is required, a resolution without dissent is passed, if: o o The owners (or their proprietors) of not less than 50% of the lots in the scheme, who between them represent not less than 50% of the unit entitlements in the scheme, vote in favour of the resolution and: No person votes against it at the meeting when it is voted on or within in 28 days later. (see sections 3AC, 3C and 3CA STA) If the proposed unanimous resolution or resolution without dissent is passed with amendment at a meeting, notice of that amendment must be given to each owner who was not present personally or by proxy at the meeting. If that notice is not given within 7 days after the meeting, the resolution will be of no effect (see sections 3C(2) and 3C(3) STA). An owner who owes any contribution or other money to the strata company is not entitled to vote on an ordinary resolution or a special resolution (see section 3D and Schedule 1 by-law 14(6) STA). In most cases the Act requires a unanimous resolution to any two (2) lot scheme resolution. 3. A special resolution is passed if those lot owners, or other persons entitled to vote, who vote: in favour of the resolution have no less than 50% of the lots in the scheme OR have no less than 50% of the unit entitlement in the scheme; and against the resolution do not have 25% or more of the unit entitlement in the scheme OR 25% or more of the lots in the scheme (see section 3B STA) In schemes having three to five (3-5) lots, a special resolution will be passed: In a 3 lot scheme, if there are 2 lots in favour and those lots have between them not less than 50% of the aggregate unit entitlements; In a 4 lot scheme, if there are 3 lots in favour and those lots have between them not less than 50% of the aggregate unit entitlements of all lots; and In a 5 lot scheme, if there are 4 lots in favour and those lots have between them not less than 50% of the aggregate unit entitlements of all lots (see section 3B(3) STA). 4. An ordinary resolution is any resolution which is not required to be passed as one (1) of the previous resolutions. The schedule 1 by-laws in the STA provide that, unless a poll is called, an ordinary resolution is passed by a simple majority of persons entitled to vote and who vote (including proxies) on a show of hands at a meeting of the strata company (see schedule 1, by-law 12(6) STA). A Guide to Strata Titles Page 27 of 59