Strata basics – who does what, when and why?

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At times like these, when our worlds have been turned upside down and everything seems to be changing around us, it’s often a good idea to recentre, recalibrate and get a firm grip on facts rather than rumours, myths and out-of date opinions.

With that in mind, our sponsors CHU Insurance and their partners Flex offer this instant guide to living in strata in NSW


According to the Australian Bureau of Statistics census, of the nation’s 1.2 million apartments, almost half are in New South Wales1. That’s a lot of apartment buildings, a lot of owners corporations, and a lot of responsibility.

Strata committees are a vital part of any strata property, with a great deal of responsibility for ensuring that owners, residents and even visitors are safe, happy and protected.

What is an owners corporation and what does it do?

Firstly, the owners corporation of a strata property is a legal entity, like a company. Its members are all the owners of the lots in the property, and they can vote on specific (mostly major) decisions or they can leave some decisions up to an elected committee that’s chosen by and from owners at the AGM (Annual General Meeting).

In turn, that committee can appoint professional, external strata managers to look after all the admin side of things, but only the committee, or sometimes the entire owners corporation membership, can make decisions that affect the property.

Amongst those decisions, are a number of really important areas that the committee and owners corporation must deal with, and are required by law. These things include:

Insurance

Obviously a vital one. In NSW, all owners corporations must have insurance to cover damage to buildings, personal injury, personal property damage, and volunteer liability insurance. But this is just a minimum. Owners corporations often add to their insurance policies with cover for machinery breakdown (especially if your building has lifts), fraud and theft, legal expenses, catastrophe and repair cost shortfalls. A complete list of strata insurance options specific to NSW can be found here.

Managing budgets

The owners corporation charges each owner a levy every year to cover expenses such as maintenance costs, council rates, repairs to common areas, cleaning and gardening, insurance premiums, safety inspections, etc. These levies are agreed at the AGM, but it’s up to the committee to make sure the money is spent properly, or invested wisely for future use.

Maintenance and repairs

As with any property, things need to be repaired or maintained so they stay safe and operational. The common areas and shared facilities of a strata property (e.g. driveways, car-parking, lobbies, buildings, etc) are all the responsibility of the owners corporation, so it’s up to the owners corporation committee to ensure there’s an ongoing schedule of maintenance and that any problems are dealt with quickly and cost-effectively, particularly before the problem gets worse, or causes injury.

Safety

Hand-in-hand with maintenance, comes regular safety inspections. Many of these are required by law, such as fire alarms, smoke detectors and exits, lift machinery and swimming pools. Others are optional, such as regular building inspections for damp or movement, occupational health and safety audits and electrical, gas and plumbing checks. Arranging these is the responsibility of the committee – though in many cases, the strata manager (if there is one) will flag these when required and book the inspections on the owners corporation’s behalf.

By-Laws

While state laws often set out general rules for strata properties – and even offer model by-laws for owners corporations to adopt or adapt – individual owners corporations can make their own by-laws specific to their property. These laws must be approved by owners at an AGM or special general meeting, and cannot be unfair, oppressive or discriminatory. They are then managed and enforced by the strata committee when necessary, and, under the law, breaches can end up in court in serious cases.

Legals

Speaking of courts, since the owners corporation is a legal entity it can sue and be sued, get legal advice and take legal action. The entire owners corporation is almost always consulted before any legal action is taken, though a committee can sometimes request simple legal advice on non-contentious matters.

Employment

Large apartment complexes will often employ staff and/or enter into service contracts. This may simply be a regular gardener and/or cleaner, but can also be a full-time building manager, concierge, or caretaker. They are employed and managed by the owners corporation through the committee. As an employer though, the owners corporation must follow all the rules of employment law including occupational health and safety, employee insurance, and wages, super and other entitlements.

Communication

The owners corporation, through its committee, strata manager or sometimes building manager, is responsible for keeping owners and residents up-to-date on news and information that may affect them. This could include any changes to by-laws, state strata laws, or developments, or simply notifying residents of any maintenance, inspection, pesticide use, committee decisions, new facilities or even social get-togethers.

If you’re an owner, and you’ve ever wondered about the owners corporation committee, have a chat to a current member or your strata manager. You might find you’d like to join the committee, as it can be a rewarding role. There is more information on NSW owners corporations at Flex.

The Flat Chat forum has regular discussion on insurance.

1 Australian Bureau of Statistics Census of Population and Housing, 2016

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