The seemingly technical and complex nature of strata developments and their corresponding regulations, can result in confusion and panic, rendering prospective owners helpless and unsure of the direction in which they should proceed. The reality is very different. Strata developments are based on a very simple but unique concept, and as such, any purchase of a strata property should be no more bothersome than that of any other type of real estate. A simple understanding of the fundamental principles and relevant factors will aid in the purchase of a strata property.
What Is A Strata Property?
A strata property is a building or complex (or multiple buildings/complexes) that have been divided into separate lots, usually apartments. These lots are sold separately and the purchaser has sole ownership of their own lot/apartment. Any communal areas belonging to the respective building or complex are jointly owned by all who reside within. Strata properties first came into existence in the 1960s with a simple residential block in Sydney, Australia. Their popularity has since grown and there are now many types of strata property available, from simple buildings to large and elaborate complexes, both residential and commercial. In addition, the concept has been duplicated and can be found in many countries throughout the world.
Owner's Corporation And Bylaws
An owner's corporation (or body corporate in certain areas), is a legal entity formed be the owners of the various lots within the strata property. It is responsible for the management and maintenance of any and all common property/communal areas. These may differ from property to property, but common examples of communal areas include stairwells, driveways, parking areas, foyers, entrance halls, gardens or even gymnasiums and pools. There are various bylaws that are applicable to strata property residents. They differ from region to region; therefore, a little research is recommended to ensure a sound knowledge of bylaws in specific areas. The aim of these laws is to foster a peaceful coexistence and ensure harmonious communal living. Bylaws are in place to regulate everything from garbage disposal to pet ownership, and the disregarding of the same can result in financial penalties.
Strata fees, or levies, are financial contributions that are made regularly by the owners within the property. Usually paid monthly, these fees are used for the maintenance and repair of any communal areas or common property. They may be divided into separate funds; for example, a fund for regular and expected maintenance or repairs and a separate fund for emergencies or unexpected issues. However, all fees will be utilised in the overall management of the strata and its individual needs. Fees will vary among properties and are generally calculated by assessing the size of the individual lot in conjunction with any amenities available.
Strata Management Services
The owner's corporation will be tasked with the general management of the strata, including regular or unexpected repair and maintenance, collecting levies, obtaining relevant insurance and any other task as set out by the individual strata contract. This can seem daunting to those that don't possess any relevant industry experience. As such, corporations often employ the use of strata management services. These are professional companies/brokerages that are experienced in all relevant matters pertaining to the management of strata properties. Choosing a management service with direct industry experience removes the strain and inconvenience from the owner's corporation and the individuals therein. A strata management service will be industry regulated and, as such, able to advise on necessary provisions to ensure compliance with by laws and contractual obligations. Individual management contracts and the cost there of will vary from strata to strata and depend upon the individual needs of each.
Services provided and arranged by a strata management company include but are not limited to:
- Preparing and overseeing annual budgets.
- Arranging and attending strata council meetings.
- The collection of fees and levies.
- The general compliance with all regulations and by laws.
- Creation and upkeep of appropriate documentation.
- Organising of any required insurance.
- Arranging general repairs and maintenance such as electrical work, plumbing repairs, roofing, garden maintenance, cleaning.
- Ensuring contingency arrangements are in place for any emergencies or urgent work.