FAQ’sFrequently Asked Questions
What is a Strata Scheme?
“A strata scheme is a building or a collection of buildings, where individuals each own a small portion (eg. an apartment or townhouse) but where there is common property (eg. external walls, windows, roof, driveways, foyers, fences, lawns and gardens) which every owner shares ownership over.”
NSW Office of Fair Trading “Buying into a strata scheme?” 2006
What is Strata Title?
“ The original concept of strata title was to allow people to own their flats in multi-level buildings. It is a means by which a person can buy and own ‘property; which might be a substantial distance above ground level. Before strata title, the most common way of buying into a high rise building was to buy shares in the company which owned the building thus giving a right to occupy one of more of the flats. This is commonly called ‘company title’.”
NSW Office of Fair Trading “Buying into a strata scheme?” 2006
What is Common Property (in a Strata Scheme)?
Common property is that part of a Strata Scheme that is owned by everybody, not any one individual. Technically it is defined as “so much of a parcel as from time to time is not comprised in any lot.” The ‘parcel’ is the land (i.e. the lots and common property combined) on which the strata scheme is based. It therefore follows that anything that is not part of a lot is part of the common property. The strata plan (together with any strata plan of subdivision or strata plan of consolidation) is an essential tool to identify the common property.
What are 'Unit Entitlements' and what are they used for?
Every strata plan contains a list of the lots in the strata scheme and a corresponding allocation of a ‘unit entitlement’. The unit entitlement is a whole number and the total of the unit entitlements on the plan is called the ‘aggregate unit entitlement’. The unit entitlement is used to determine the lot owner’s;
- Share in the common property
- Voting rights when the voting is conducted by means of a poll.
- Right to share in distributions of surplus monies in the owners corporation’s administrative or sinking fund.
- Right to share in compensation monies paid by any public authority resuming the whole or part of the common property.
- Proportion of maintenance levies; and
- Obligation to contribute to repair and maintenance of common property under a joint exclusive use by-law.
What is the required notice to be given for Owners Corporations Annual General or Extraordinary General meetings?
The notice of an Annual General or Extraordinary General meeting of the owners corporation must be served on each owner at least seven clear days before the meeting. Where the agenda includes a motion requiring a special or unanimous resolution, the notice must also be served on each mortgagee and covenant chargee recorded on the strata roll.
What is the required notice to be given for Executive Committee Meetings?
If the strata scheme has a notice board, then notice of the meeting of the executive committee is given by displaying the notice on the notice board. If the strata scheme does not have a notice board, then notice of the meeting must be sent to each owner and each executive committee member. The notice of the meeting must:
- be given at least 72 hours before the time fixed for the meeting
- specify when and where the meeting is to be held
- contain a detailed agenda for the meeting
What is a Sinking Fund Forecast Report?
A sinking fund forecast report provides the owners corporation with budget information as follows;
- Identifies the common property items which are likely to require maintenance work and/or replacement
- Estimates the year in which the maintenance is likely to occur
- Estimates the cost of the maintenance in the year of occurrence
- Calculates the sinking fund levy contributions necessary to meet these costs after taking into account factors such as accumulated bank interest, income tax and GST.
- Most maintenance expenses accrue over time. Using a sinking fund forecast report to set the sinking fund levies ensures each owner pays a fair share of the costs attributable to their usage of the building and reduces the risk of special levies being required.
Do Occupational Health & Safety Requirements Apply to Strata?
Yes they do if the strata scheme has direct employees, is commercial or is mixed residential and commercial.
On the 1st of September 2001 the Occupational Health & Safety Act 2000 and the Occupational Health & Safety Regulation 2001 were proclaimed. This regulation sets out requirements for workplaces to put into place systems to identify, assess, control and/or eliminate health or safety risks. Because Owners have work done on common property, this legislation applies to them. This means that the owners corporation is defined as an employer under the act and that the owners corporation controls premises used by people as a place of work.
The Strata Schemes Management Act requires that hazard identification and risk assessment is undertaken and risk control measures are implemented. While the Occupational Health & Safety Act 2000 has previously established duties for persons in control of premises the regulations did not fully illustrate how persons were to discharge their obligations. The Occupational Health and Safety Regulation 2001 fully supports and more specifically defines the duties of controllers of premises where work is carried out by setting requirements relating to risk management.
This means that persons, including Executive Committees and Owners Corporations in control of premises where work is carried out have specific obligations and duties to ensure that hazards that could harm a member of the public using the Common Property or a person carrying out work on the Common Property are identified.
Once these hazards are identified they must be eliminated or if this is not reasonably practical, the risk the hazard represents must be controlled to the fullest extent possible. Then these control measures need to be assessed on a regular basis to ensure that they are effectively controlling the hazards and risks evident on the Common Property. It is important that the risk assessment is consistent with that suggested by Workcover NSW. We recommend that each building ensures an Occupational Health & Safety Audit Report has been undertaken.
What is included in the Occupational Health & Safety Audit Report?
The contents of the report should:
- clearly identify hazards and provide photographs illustrating their location
- assess risks that may result because of the hazards
- assist the owners corporation in deciding on control measures to remove, prevent, or minimise the level of risks present in future
- provide the necessary tools to allow the owners corporation to implement control measures and develop appropriate risk management policies and procedures.