What is Strata Scheme?
Strata often refer to units, apartments, villas & townhouses where individuals own a part. There is however, common property for the use & enjoyment of all of the owners within the complex. A simple way to view it is ownership from the “inside walls out”.
What is a Strata Manager?
The strata can be self-managed with the owners within the complex; however, it is more common for the complex to be managed by an independent Strata Management Company who are experts in the field. Strata Managers are responsible for managing the sinking fund & administration fund of the complex. All repairs relating to strata are conducted and organised through the Strata Manager. Strata Managers would liase directly with the Body Corporate or Owners Corporation to ensure that the property is maintained in a proper manner and that all strata by-laws & regulations are adhered to.
What is a Sinking & Administration Fund?
Living in a strata complex requires the owner to make quarterly contributions towards the sinking & administration fund which is managed by the Strata Manager. Your contributions will be allocated towards these funds, taking into account the facilities at the complex. The sinking fund is designed for long term expenses, for example, if there was a major expense with a driveway, roof or pool. The administration fund is designed to cater for the more day to day expenses within the complex, for example, a gardener or cleaner.
When considering a purchase within a strata scheme, your Solicitor should arrange a strata report to search the records maintained by the Strata Manager. This report is conducted by an independent strata report company, and will reveal the relevant financial information of the strata. It is important that it is determined that the level of funds present in the strata is adequate for the size and age of the complex.
What if the Sinking Fund is Low?
In some circumstances the strata report may not be favourable. In other words, your legal representative may feel that there is insufficient funds within the strata given the number of units & the age of the dwellings. If that is the case, owners can often be asked to make a special contribution towards the sinking fund. This can vary in amount, so you would need to consider the purchase carefully.
Do You Have to Attend a Meeting? What is the Owner’s Corporation or Body Corporate?
It is in your best interests to be actively involved in the Body Corporate or Owner’s Corporate. This body is formed by a group of owners who are chosen to represent the owner’s interests within the strata and to liase with the Strata Manager. You may not wish to take a position on the Corporation, but you can certainly attend meetings and have a voice and opinion of matters affecting the complex.
What are the By-Laws?
By-laws are a set of rules that residents of the complex are required to abide by. This includes owner occupiers and tenants. By-laws relate to matters such as safety, pets, security, cleanliness, noise levels, pool usage etc.
Insurance & Rates?
Building insurance is paid from the strata contributions. An owner would still be encouraged to cover themselves from the “inside walls in”. Items such as stoves, hot water services, carpets & fixed floor coverings would need be covered. Check with your insurance company, as most require a strata “top-up” insurance cover for these items. Of course home contents would be insured by the owner or occupant as they normally would.
Council & Water rates are payable by the owner, however, they are often more economical than non-strata ownership. They are often a lower figure due to the fact that there are more residences on the block.
Of course, telephone & electricity are the owner’s responsibility.
Overall, strata living can provide a carefree low maintenance lifestyle option for many sectors of the marketplace; however, you should always research your purchase with care and diligence.
For further information on strata please refer to the Office of Fair Trading website. (LINK: http://www.fairtrading.nsw.gov.au/