Unit Entitlements and Common Property Ownership

The proceeds are determined by the unit entitlements – the share/interest of each owner in the strata scheme is reflected in their unit entitlement, and that extends to the common property.

In terms of the legal position re common property – it’s complicated but basically the owners corporation holds the common property as a whole on trust for the owners, each owners’ interest in it being reflected in their unit entitlements. 

So for example if you have a strata scheme with 10 owners all with equal entitlements and the property is sold for $10million net of costs, then each owner receives $1million.

It’s interesting that your units are different sizes but the same entitlements – but note that lot entitlements determined on value rather than size, or rather they are meant to be.

Not sure about how things are in WA  but everywhere else Unit Entitlements (UEs) are more closely allied to the intrinsic value of the property than just the size (which is, nonetheless, a contributing factor).

For instance, a much bigger apartment with no outlook might have the same Unit Entitlement as a smaller apartment with a view.  It sounds like the same does apply in WA, judging by what THIS Landgate document says:

The Strata Titles Act 1985 as Amended defines unit entitlement as establishing the following: 

a) The voting rights of a proprietor
b) The undivided share of each proprietor in the common property
c) The proportion payable by each proprietor of contributions levied under section 36 of the Strata Titles Act 1985 as Amended.

Strata/Survey-Strata Plans show the relative proportion of each owner’s share in the scheme. This is called unit entitlement and is set by a Licensed Valuer. In a strata scheme, the unit entitlement of strata lots is calculated to take into account the capital value of buildings on strata lots as well as the land (whether it is common property or individually owned).

On the face of it, having the same UEs for different sized properties is not fair (unless they are more or less of the same value). However, changing it can be hard.  

According to THIS webpage from a company called Lavan Legal, it can be done either by a unanimous vote – which you are unlikely to get if one person is paying a lot less in levies than they should – or you can apply to the State Administrative Tribunal.  That requires a special resolution by the “Strata Company” as the body corporate is called in WA , which in WA requires a vote by in favour by 50 percent of owners, both in terms of lot numbers and UEs.  The votes have to be at a properly constituted general meeting  in person or by valid proxy.  

To pass the special resolution, there should be no more that 25 percent of votes against and opponents have 28 days to get 25 percent of the votes required to reject the special resolution. The slight advantage you have at this stage is that if you are paying too much you also get a disproportionately high vote.

In any case, let’s look at the figures. Based on your levies, if they are calculated on equal shares and you re-calculated them on square metres, you would save the princely sum of $9 per quarter. Considering that even if you get the special resolution you will have to pay your share of the surveyor and legal costs, the only cost-effective way (in my opinion) of recalculating the levies on that basis is to get unanimous agreement. I must quickly add that experience strata lawyers might take a very different view so  bear that in mind.

However that’s just on size – I may be wrong but believe the correct calculation is on value.  If you are paying the same unit entitlements as a unit twice the value of yours because of its position in the building, then there is something seriously wrong and you should speak to an experienced strata lawyer about it. They may know another avenue whereby you can correct a seriously skewed set of UEs.

But bear in mind that the difference in a unit’s value may have  a lot to do with its fit-out and finish –  that has nothing to do with UEs.