What is strata title?
Strata title is a system for owning units/apartments and townhouses or houses that have a combination of private residences as well as communal spaces.
When you buy into a strata plan, you buy a ‘lot’, which usually includes the main unit area and possibly a balcony, garage or even storage area. In most strata schemes, there is also ‘common property’ (which is shared).
Strata schemes can also be used for:
- serviced apartments
- retirement villages
- caravan parks
It is important to note that there are commercial, industrial and mixed-use strata schemes (retail and/or commercial and/or residential).
Why do disputes emerge over strata title issues?
If people are living in close proximity to each other in high- to medium-density housing, it is understandable that disputes sometimes arise.
The most common causes of disputes in strata schemes are:
- use of common areas
- keeping pets
- excessive noise
- breaking of by-laws
- building defects
- confusion caused by complex rules and regulations
- defaults on payment of levies.
How does Monardo Solicitors approach strata disputes?
At Monardo Solicitors, we have experience acting for both owners and owners corporations in strata disputes.
We always suggest to our clients that any strata dispute be dealt with by discussing the problem with the other people involved.
When disputes cannot be resolved informally, there is a formal process of dispute resolution set out in the Strata Schemes Management Act 1996 (NSW).
The legislation provides two ways of resolving disputes:
1. The owners corporation can police its own by-laws by taking direct action against owners or occupiers who breach them.
2. The owners corporation, owner or resident can take action through NSW Fair Trading.
NSW Fair Trading provides a mediation service. Quite often, disputes can be resolved through mediation, simply because it gives everyone involved a chance to have their say. You are free to bring a solicitor, if you feel it is necessary and/or will assist the discussion.
If you fail to resolve your dispute via mediation, you can apply to NSW Fair Trading for an order by an adjudicator (a member of the Consumer and Commercial Division of the New South Wales Civil and Administrative Tribunal (NCAT)).
If you are unhappy with the adjudicator’s decision, you can appeal to the Consumer and Commercial Division of NCAT.
You can appeal a decision of the Consumer and Commercial Division of NCAT to the district court but you should seek legal advice before doing so.
Are you involved in a strata title dispute? Would you like the assistance of a lawyer? Call 02 8006 5244.
Strata Disputes FAQs
In a strata title, what is classified as a ‘lot’?
Lots can be individual units/apartments, townhouses or houses.
When a person buys a lot, they own the individual lot and also share the ownership of common property with other lot owners.
In a strata scheme, what do you own?
One major difference between owning a house and a unit or ‘lot’ in a strata scheme is that the external walls, the floor and the roof do not usually belong to the lot owner. These areas are generally common property. As such, they are the responsibility of the owners corporation.
In a strata scheme, what is classified as common property?
Common property is the part of the land and building in the strata plan that does not form part of any unit. Examples of common property in strata title properties include:
What does this mean?
Since it is common property, the lot owner cannot alter or renovate these areas without permission from the owners corporation.
What is an owners corporation?
The owners corporation is an incorporated body. It consists of every lot owner in the strata scheme. Each owner is automatically part of the owners corporation and has a right to participate in the decision making.
The main rights and responsibilities of the owners corporation include:
- maintaining and repairing the common property of the strata scheme
- managing the finances of the strata scheme
- employing people who will look after the building and its common property, (such as cleaners and gardeners)
- administering the by-laws for the strata scheme
- insuring the building against fire
- taking out workers compensation and public liability insurance
- holding annual general meetings for owners.
What is the executive committee of an owners corporation?
The owners corporation must elect an executive committee, which can make many of the day-to-day decisions about running the scheme on its behalf.
The executive committee is elected at the annual general meeting (AGM). However, the owners corporation can overrule the executive committee decisions or limit what they can make decisions about.
What is a managing agent/strata manager?
The owners corporation can manage the strata scheme itself. Alternatively, it can engage a strata managing agent to work on behalf of all owners, to help manage the scheme.
What are by-laws?
By-laws are a set of rules that all people living in a strata scheme must follow. By-laws are made on issues such as safety and security measures, floor coverings and pets.
Strata schemes can adopt model by-laws that are set out in the Strata Schemes Management Act 1996 (NSW), or they can make their own.
All owners and occupiers in a strata scheme, including tenants, are legally obliged to comply with the by-laws of the scheme.
What are levies?
The role of the owners corporation is to run the strata scheme. It must set up an administrative fund (for day-to-day operational expenses) and a sinking fund (for long-term future expenditure). The owners fund must estimate how much money is needed each year to cover all the expenses and needs of the strata scheme.
The levy amount is decided at each AGM by a majority vote.
Levies are usually paid every three months.
What is a sinking fund?
The owners corporation must also set up a sinking fund.
The sinking fund is for the costs of future capital expenses.
The amount of the fund must be enough to cover all the expenses for:
- painting common property
- obtaining property for the owners corporation (e.g. lawn mowers or washing machines)
- renewing or replacing any fixtures on the common property owned by the owners corporation
- replacing, repairing or making good the common property
- any debts, other than amounts covered by the administrative fund
- other capital expenses.
How are repairs and maintenance handled in a strata scheme?
Under a strata scheme, the responsibility for repairs is fairly straightforward. The owners corporation must repair common property and owners must repair anything within their lot.
The basic rule is that everything inside the airspace of the unit (internal walls, fixtures, carpet and paint on the walls) is usually the lot and therefore the responsibility of the owner.
Everything outside that airspace, including the walls, windows, doors and tiles fixed to the floor and boundary walls, is usually common property and, as a result, the responsibility of the owners corporation.