Fair Strata Split?

Franky – You would not be changing the by-laws. You would be changing the unit entitlements. Changing unit entitlements is a fundamental change.

Unit entitlement have an impact on all your strata costs e.g. levies, special levies etc.

You may be entitled to receive a reimbursement. 

You will need to seek an Order from the Tribunal under [s236] of the Strata Schemes Management Act 2015 to reallocate the unit entitlements.

The solicitor’s split sounds about right but a valuer is the most qualified person to make this assessment. It will ultimately be the Adjudicator who makes the decision about the split based on all of the information.  

You, as an owner, can apply for this Order. The owners corporation can also apply for this Order.

You will need to obtain a valuation by a qualified valuer of all of the apartments in the building to enable the Adjudicator to properly assess what is fair. 

The relevant section is below. Please read it and come back to us with further questions if you have any.

236 Order for reallocation of unit entitlements

(1) Tribunal may make order allocating unit entitlements The Tribunal may, on application, make an order allocating unit entitlements among the lots that are subject to a strata scheme in the manner specified in the order if the Tribunal considers that the allocation of unit entitlements among the lots:

(a) was unreasonable when the strata plan was registered or when a strata plan of subdivision was registered, or

(b) was unreasonable when a revised schedule of unit entitlement was lodged at the conclusion of a development scheme, or

(c) became unreasonable because of a change in the permitted land use, being a change (for example, because of a rezoning) in the ways in which the whole or any part of the parcelcould lawfully be used, whether with or without planning approval.

(2) Matters to be taken into consideration In making a determination under this section, the Tribunal is to have regard to the respective values of the lots and to such other matters as the Tribunalconsiders relevant.

(3) Persons who may apply for order An application for an order under this section may be made by any of the following:

(a) an owner of a lot (whether or not a development lot) within the parcel for the strata scheme,

(b) the owners corporation,

(c) the lessor, in the case of a leasehold strata scheme,

(d) the local council, or by any other public authority or statutory body representing the Crown, being an authority or body that is empowered to impose a rate, tax or other charge by reference to a valuation of land.

(4) Application to be accompanied by valuation An application for an order must be accompanied by a certificate specifying the valuation, at the relevant time of registration or immediately after the change in the permitted land use, of each of the lots to which the application relates.

(5) Qualifications of person making valuation The certificate must have been given by a a person who is a qualified valuer within the meaning of the Strata Schemes Development Act 2015 .

(6) Ancillary orders that may be made if original valuation unsatisfactory The Tribunal may, if it makes an order allocating unit entitlements that were not allocated in accordance with a valuation of a qualified valuer and, in the opinion of the Tribunal, were allocated unreasonably by an original owner, also order:

(a) the payment by the original owner to the applicant for the order of the costs incurred by the applicant, including fees and expenses reasonably incurred in obtaining the valuation and the giving of evidence by a qualified valuer, and

(b) the payment by the original owner to any or all of the following people of the amounts (if any) assessed by the Tribunal to represent any overpayments (due to the unreasonable allocation) for which liability arose not earlier than 6 years before the date of the order:

(i) the lessor, in the case of a leasehold strata scheme,

(ii) the owners corporation,

(iii) the owners of lots.

(7) Lodgment of order The owners corporation must ensure that a copy of an order made by the Tribunal under this section is lodged in the Registrar-General’s office no more than 6 months after the order is made. Nothing in this section prevents a person who is entitled to apply for an order under this section from lodging a copy of an order made under this section.

Note : Section 246 contains provisions with respect to the recording of an order made under this section.

The strata plan drawn when the strata scheme was created should show who the garages belong to.

If the garages are not on a lot or are not separate lots themselves, then they must be part of common property.

If they are the former, then you need to get your Unit Entitlements changed.

If they are the latter, then you need to get the current occupants to pay rent for them.

The easiest way to establish the value of the garages for either purpose is to get local estate agents to tell you how much a unit and a garage is worth (just as a ballpark figure).

So then you re-calculate the UEs accordingly.  Let’s say for the sake of argument that the units are worth $500k each and the garages are worth $50k each.

Instead of your unit entitlements being 25 each, the would be 2 @ 27.5 and 2 at 22.5. 

Or the owners corp could rent the garages to the current  users and pass them on when that owner sells, on a first in, best dressed basis, so that access to the garage doen’t become part of the value of the flat.

Or you could even agree to sell the garages to whoever offered the most, with the money going to the sinking fund.

There are two critical issues here.  First you need to establish who owns the garages. Then you need to get unanimous agreement (if humanly possible) on what to do about it.

Either way, the people currently using the garages are going to lose – the key will be to soften the blow as much as possible without cheating the other owners out of too much of what they are entitled to.

The easiest way to change unit entitlements is with unanimous agreement. But there are mechanisms via NCAT whereby a reasonable solution can be imposed by the Tribunal if one or more owners refuse.

Hi you said

“Currently the strata fees are split 25-25-25-25”

But whats the actual Unit Entitlements as registered in the strataplan – is it the 30-30-20-20 as indicated by your solicitor?. 

I have seen where small self managed schemes say lets split all the costs evenly as that is simple without the required (at least in ACT) unopposed resolution at an AGM.  I am not sure if this can even be done in NSW.   

You don’t have enough time to put together anything regarding the unit entitlements, and to be honest even if you did, I am not sure the other owners would be receptive to having that landed on them at an AGM at relatively short notice.

This is a complex matter. As a starting point you need to get a copy of the strata plan showing what the garages are, are they common property with exclusive use or are they part of the lots, or are they separate lots owned by those owners.  Are the owners just paying for their apartments, and somehow the garages have been missed?

If the garages are common property with exclusive use, when that exclusive use was granted, did the owners pay something for that exclusive use?

In terms of unit entitlements generally, these are (or should be based) on value at the time of registration.  So taking your scheme as an example, it may be that at the time of registration it was determined that the four lots had equal value. The question is, did the valuation include the garages? You need to bear in mind that value is not just determined by things like size – for example if you have two apartments which are exactly the same, but one has views, the one with views will have a higher value.  If lower units have outside areas then that will increase their value.

The cases on reallocation of unit entitlement indicate that it is not that easy to change them – the question in a case like yours will usually be, was the allocation unreasonable at the time?  What I am saying is that just because on the face of it an allocation may seem not right, that doesn’t mean you will succeed in having the allocation changed.

Click the embedded link – this may help: 

 A copy of the registered strata plan can be purchased from LPI’s approved information brokers.

This info was sourced from here: 

https://www.lpi.nsw.gov.au/about_lpi/strata_scheme_questions/strata_scheme_laws

I have also read somewhere that this site may be helpful for accessing strata plans: https://www.saiglobal.com/property/. 

If you are in Sydney you could visit their office and perhaps obtain a copy over the counter (for a fee). Contact details are here: https://www.lpi.nsw.gov.au/about_lpi/contact_us