Strata title properties are properties that form part of a Strata Plan, as opposed to a Deposited Plan. Strata Plans are common for properties that share facilities, such as apartments or townhouses. These shared facilities are referred to as the common property, which owners of individual lots have access to and responsibility for, such as a pool or entertainment area.
Factors to Consider:
- Owners Corporation
Strata schemes have an Owners Corporation, which is the collective of all owners. The Owners Corporation manage the Strata scheme and are responsible for organising meetings of the owners to vote on matters such as finances, insurance, by-laws and common property.
- Levies
Each owner of a lot within a Strata Plan must pay regular contributions (usually quarterly) to the administrative and capital works fund. These payments are referred to as levies. The Owners Corporation can also introduce a special levy payable in addition to regular contributions where there is not enough money to cover expenses, such as major repair works. The introduction of a special levy can result in a major expense for owners.
The amount that each owner must contribute is calculated based on their unit entitlement. The unit entitlement of a lot is based on the lot’s relative market value at the time when the Strata Plan was registered, accounting for factors such as the size and position of the lot.
- Administrative Fund & Capital Works Fund
The administrative fund is used to manage day-to-day expenses such as insurance, recurring expenses and maintenance of the property, whereas the capital works fund is used for major capital works to the property.
- By-Laws
By-laws are rules which regulate owners. By-laws are likely to cover matters such as use of the common property, maintenance, behaviour of owners and renovations.
- Renovations
Owners of Strata title property are somewhat limited in the types of renovation they can carry out. Cosmetic work such as laying carpet or painting the interior of the property can be done without approval. However, minor repairs such as kitchen renovations or installing an air conditioner requires more than 50% of votes at a meeting of the Owners Corporation and major renovations such as removing a wall or bathroom renovations require more than 75%.
- Insurance
The Owners Corporation are responsible for maintaining insurance for the building. This means owners only need to insure their contents, which can save them hundreds of dollars per year.
When purchasing Strata title property, it is important that the above factors are considered. These properties are popular among first home buyers seeking to live in desirable locations at a lower cost, or people seeking a low maintenance property.
The team at Baker Love Lawyers are well placed to assist in relation to purchases of Strata title property. Please contact our office on (02) 4944 3322 or via the form below, should you require any advice or assistance.
