THINGS YOU NEED TO KNOW ABOUT 6OWNING IN STRATA

THINGS YOU NEED TO KNOW ABOUT 6OWNING IN STRATA

About the author Amanda Farmer is a strata lawyer with over 14 years experience advising strata owners, communities, managers and developers. As a Fellow of the Australian College of Community Association Lawyers and a member of Strata Community Australia (NSW), Amanda is a recognised expert in the field of strata law. Amanda is the owner of Lawyers Chambers on Riley, a boutique legal practice in Sydney s Darlinghurst, focusing on NSW strata and community title law. CONTACT AMANDA (02) 8262 6103 0410 488 802 amanda@yourstrataproperty.com.au LinkedIn Amanda is also the founder of Women in Strata: a networking and support group for women working in strata management. Amanda s podcast, Your Strata Property, delivers reliable, accurate and bite-sized information to property owners struggling to understand the often-complex world of strata and community living. 98 Riley Street Darlinghurst NSW 2010 2

The 6 things you need to know about living in strata THESE ARE THE 6 THINGS YOU ABSOLUTELY MUST KNOW ABOUT WHEN OWNING A STRATA PROPERTY: 1. By-laws 2. Levies 3. Lot property vs. Common property 4. Meetings 5. Strata manager 6. Committee This ebook provides an introduction to each of these 6 topics. The information contained in this document is up to date as of 10 November 2017 Disclaimer: The information contained in this ebook applies to strata schemes in NSW. This ebook does not contain legal advice. It is intended to provide general information in summary form only. You should not rely on the content of the ebook as legal advice. If you would like legal advice specific to you and your situation, please contact me directly. 3

1. By-laws

1. By-laws These are the rules about the day to day running of the community, including rules about what you can and can t do within your unit, and the parts of the property for which you are responsible. Some examples of the types of issues by-laws often deal with include:- pets air conditioning units noise renovation works hard flooring washing landscaping use of swimming pool/gym short term letting rules around moving in or out A copy of the building s by-laws would (or should) have been attached to the contract you signed when you bought your unit. If you are renting, a copy of the by-laws should have been attached to the tenancy agreement you signed when you commenced your rental. In the case of purchasers, often not all of the by-laws are attached to the sale contract, only those that deviate from the standard or model by-laws. You can find a copy of the model by-laws for residential buildings constructed before 1 July 1997 here. The by-laws for residential buildings constructed after 1 July 1997 but before 30 November 2016 are the by-laws registered with the strata plan, including any later changes made to those by-laws in accordance with the legislation applicable from time to time. For residential buildings constructed from 30 November 2016, see the model by-laws here. To be absolutely sure which by-laws apply to your building, you should ask your strata manager for a complete and up to date copy of the by-laws, including any special by-laws. Special by-laws are those that add to or change existing or model by-laws. See section 5. Strata manager in relation to communicating with your strata manager. 5

1. By-laws continued... The Strata Schemes Management Act requires you to comply with the building s by-laws, at risk of being served with a notice to comply and being taken to the NSW Civil and Administrative Tribunal ( NCAT ) if you continue to breach the by-laws. The NCAT can impose fines for continuing breaches of the by-laws, ranging from $1 to $11,000. If you want to carry out any renovation work that will add to, alter or erect a new structure on the common property, your building will probably require you to draw up your own by-law dealing with the work (see point 3 below in relation to common property ). That by-law needs to be approved at a meeting of the owners (see section 4. Meetings in relation to meetings ). Once approved, the bylaw will be registered on the building s title and binds both you and anyone who owns the lot after you. If you aren t sure whether or not you need a by-law, send an email to your strata manager describing the work you want to carry out and they should point you in the right direction. By-laws should be drafted by experienced strata lawyers. 6

2. Levies

2. Levies The strata levy is the amount that a strata lot owner needs to pay each quarter towards the cost of maintaining, repairing or renewing the building. If your building has engaged a strata manager (see section 5. Strata manager), the strata manager usually issues an invoice for the levy every 3 months and the levy is paid to the building s trust account, which is managed and operated by the strata manager on the instructions of the Committee (see section 6. Committee in relation to the Committee). The levies go towards items such as:- Maintaining the common property Paying insurance premiums for the building Meeting recurrent expenses such as water, electricity, carpet cleaning, lawn mowing Strata management fees Renewing, replacing and repairing common property. The owners corporation (which is the legal entity that owns the common property all owners together form the owners corporation) prepares an annual budget and estimates the amount that will need to be paid over the course of the year to meet the expenses in that budget. The contribution (or levy payment ) that each lot owner must make towards that amount is calculated on the basis of each lot s unit entitlement. A lot s unit entitlement is the number that is allocated to it on the schedule of unit entitlement shown on the title to the building. If, for example, a building of 10 lots has a total unit entitlement of 100, and each lot has a unit entitlement of 10, then each lot owner should be responsible for contributing one tenth of the annual revenue for the building. Quarterly levies can range anywhere from $200 per quarter for a small, self-managed building (ie: with no strata manager s fees) to in excess of $5,000 per quarter for a city penthouse in a luxury harbour front building with concierge service and numerous facilities. 8

3. Lot property vs. Common property

3. Lot property vs. common property When you purchase a unit in a strata building, you are essentially purchasing air space. That air space is known as your lot. Anything outside of your lot is either someone else s lot, or common property. The registered strata plan (which would have formed part of the contract you signed when you purchased your unit) shows the boundaries of your lot, and other lots. Any property outside of a lot is, by default, common property. 8 36m2 PT9 (60m2) Total 113m2 10 42m2 PT11 (79m2) Total 87m2 It is not always easy to work out from a strata plan where your lot ends and the common property begins. You should also refer to the by-laws which often set out rules about how you can and can t deal with the surrounding property (see section 1. By-laws). It is very important to understand where your lot ends and the common property begins because, generally speaking, you cannot do anything within the building that materially affects the common property without first obtaining the consent of the Owners Corporation. This is particularly relevant if you want to renovate your lot and you will be penetrating or moving walls, flooring, or services for water or electricity. If you require a definitive answer on whether or not your activities will affect common property, you should seek expert advice specific to your situation and your strata plan. 10

4. Meetings

4. Meetings There are two types of meetings within strata buildings: 1. general meetings 2. committee meetings. 1. GENERAL MEETINGS All lot owners are invited to attend general meetings. A general meeting will occur at least once each year (ie: the Annual General Meeting ) but where it is necessary for lot owners to meet earlier than the anniversary of the last Annual General Meeting, an Extraordinary General Meeting may be convened. This often occurs if the lot owners need to consider whether or not a by-law should be approved, as by-laws can only be approved by the general meeting (see section 1. Bylaws in relation to by-laws). In addition to approving a by-law, the following items can only be dealt with by the general meeting:- The raising of levies The election of committee members The appointment of a strata manager The appointment of a caretaker The approval of legal action, where the legal costs estimated for the action will exceed $3,000 and urgent action is not necessary to protect the interests of the owners corporation. A decision to add to, alter or erect a new structure on the common property for the purpose of improving or enhancing the common property. 12

4. Meetings continued... Lot owners can vote at general meetings either by attending the meeting in person, or by sending in a properly completed proxy form, or by another means determined by the owners corporation by resolution passed in a general meeting, e.g. via Skype. The agenda for the meeting should attach a proxy form which you can use if you wish. If you own a lot in a large strata scheme (ie: a building with more than 100 lots), you must send your proxy back to the secretary at least 24 hours before the start of the meeting in order for the proxy to be valid. In small strata schemes (100 lots or less) a proxy can be handed in just before the meeting begins. The chairperson presiding over the meeting can decide that a motion should not be considered at a general meeting if there is no quorum. A quorum is present if:- a. one quarter of the number of persons entitled to vote are present, either in person or by proxy, OR b. if one quarter of the total unit entitlement for the strata scheme is represented by the persons present (see point 3 above in relation to unit entitlement). 13 It is a matter for the chairperson to decide, in his/her discretion, whether a motion should proceed to be considered in the absence of a quorum. The chairperson may decide to adjourn the meeting in the absence of a quorum. 2. COMMITTEE MEETINGS There are no set requirements for the frequency of committee meetings and much will depend on the size of the building and the number and type of issues that arise for consideration. Some committees meet once per month, some meet once per year. Notice of committee meetings must be given at least 72 hours before the time fixed for the meeting. Notice is either sent to each lot owner and committee member, or (if the owners corporation is required by the bylaws to maintain a notice board), by displaying the notice of meting on the notice board. See section 6. Committee in relation to how the committee is formed. A decision of the committee is taken to be a decision of the Owners Corporation, though a committee cannot decide on anything that can only be decided by the owners in general meeting.

5. Strata manager

5. Strata manager A strata manager is appointed by the owners in general meeting. If the strata manager is appointed at the first annual general meeting, the appointment must be for no more than 12 months. In any other case, the appointment is limited to a maximum of 3 years. An owners corporation and strata manager must sign a contract (often referred to as an agency agreement ). Under the contract, an owners corporation can delegate to its strata manager:- a. all of its functions; b. one or more of its functions specified in the contract; or c. all of its functions except any specified in the contract. A strata manager cannot be delegated matters that can only be decided by the owners corporation in general meeting (see section 4. Meetings). This means a strata manager cannot decide the amount of the levies, whether or not to reappoint themselves, or whether to add to or alter the common property. The strata manager s contract will set out the day to day duties of the strata manager, which usually include administrative tasks such as receiving and distributing correspondence, issuing levy notices, arranging tradespeople, keeping the owners corporation s books and records in good order, including financial records; arranging insurances; liaising with committee members, attending meetings and ensuring recurring expenses are met. From time to time, strata managers may be instructed to carry out additional tasks, such as: coordinating a renovation or rectification works project for the building; instructing lawyers; attending additional meetings outside of the annual general meeting. The strata manager s contract will often nominate an additional fee for these types of services. 15

5. Strata manager continued... Strata managing agents must be licensed and, in NSW, must be registered with the NSW Office of Fair Trading. They are required to comply with the provisions of the Property Stock and Business Agents Act, particularly when it comes to dealing with the funds in the owners corporation s trust account. If you are an owner, the strata manager s name and contact details would have been listed on the front page of your purchase contract. If you are a tenant, the strata manager s name and contact details may be listed on your tenancy agreement, or you can obtain them from the real estate agent managing the property. It is important to understand that the building s strata manager and the real estate agent managing your rental are usually not the same people. If you are still not sure who your strata manager is or how to contact them, see if the building has a notice board displaying any notices from the strata manager, or ask your fellow residents if they can point you in the right direction. 16

6. Committee

6. Committee As set out at section 4. Meetings, the committee is elected at the Annual General Meeting. In a strata scheme with only 2 lots, the committee comprises those 2 lot owners. In a strata scheme with more than 2 lots, the committee may comprise anywhere between 1 to 9 members, with the owners in general meeting deciding how many positions there will be on the committee and electing members to those positions. Usually at its first meeting, the committee appoints office bearers from its members. Those office bearers are: a chairperson a secretary and a treasurer. The following people are eligible for election to the committee:- a. A person who is an owner; b. A company nominee of a corporation that is an owner, or c. An individual who is not an owner but who is nominated for election by an owner, or 18 d. A tenant representative, who is nominated by other tenants. This only applies in a strata scheme where at least half the lots in the scheme are tenanted. In the case of (c) above, the person nominating you for election must not themselves be a candidate for election. Bear in mind that you can nominate yourself for election to the committee, as long as you are not a co-owner. If you are a co-owner (eg: you and your spouse own your unit in joint names) and you wish to be nominated for election to the committee, you must be nominated by:- a. an owner who is not your co-owner; OR b. your co-owner, as long as that person is not themselves a candidate for election. A decision of the committee is taken to be a decision of the Owners Corporation, though a committee cannot decide on anything that can only be decided by the owners in general meeting (see point 4 above for examples of items that can only be decided by the owners in general meeting).

Want to know more? The world of strata and community living is unique and, in many ways, complex. I hope that this information has answered a number of your questions, but perhaps it has also raised more. You can find out more about strata and community living by listening to the Your Strata Property Podcast. You can also read our many articles on the topic at www.yourstrataproperty.com.au/strata-articles. As you are now a subscriber to our regular email newsletters, you will be kept updated on new podcast episodes, upcoming guests and interesting articles. If you or your strata building requires legal advice, you can find out more about my legal practice at www.lawyerschambers.com.au or contact me directly via amanda@lawyerschambers.com.au. Please get in touch and let me know what you thought of this information. I welcome your suggestions and ideas about the further information and resources you d like to see Your Strata Property offering to strata owners. Thanks for reading, Amanda Farmer Owner and founder of Your Strata Property (02) 8262 6103 amanda@yourstrataproperty.com.au 98 Riley Street Darlinghurst NSW 2010 yourstrataproperty.com.au The information contained in this document is up to date as of 10 November 2017 Disclaimer: The information contained in this ebook applies to strata schemes in NSW. This ebook does not contain legal advice. It is intended to provide general information in summary form only. You should not rely on the content of the ebook as legal advice. If you would like legal advice specific to you and your situation, please contact me directly. 19

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