Areas that are classified as ‘common property’ and are communally shared can be such things as walkways, visitor parking areas, public courtyards, external walls, fences etc. The common property is also noted on the title documents as being ‘owned’ as part of the strata scheme.
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Make sure you know exactly what you’re buying
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When looking to purchase a property in a strata scheme, it’s important to look at exactly what parts of your ‘home’ you own on your title and what areas are classified as common property and are therefore jointly owned by all strata scheme owners.
What you actually own and can call ‘yours’ when you buy into a strata scheme is different to what you can call yours when you buy a house.
For instance, in a strata arrangement the floor, ceiling, external walls and roof are often classified as common property. So, this means that they are considered to be jointly owned by all strata scheme owners. As such, any maintenance or upkeep required on these areas becomes the responsibility of the owners’ corporation.
If the floor, ceilings, external walls and roof are classified as common property in the strata scheme you are entering into, you cannot make any alterations or renovations to these areas without the approval of the owners’ corporation (which means that all owners must agree that you are able to do so).
Additionally, if you have a balcony or courtyard within the borders of your property you should find out what your ownership rights are for this space. If, for instance, you own the balcony or courtyard outright, then it becomes your responsibility to maintain. If you don’t own these areas, then you need to be conscious of the fact that you are unable to make any alterations to these areas without owners’ corporation approval.
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Make sure you know your legal requirements
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Strata schemes have to be legally governed by an owners’ corporation which governs the care and maintenance of all common property areas.
In most instances, a professional company is hired to manage the needs and activities of the owners’ corporation. In this way, the professional company acts on behalf of all owners – with their authority to do so – to manage the common property areas under title.
An owners’ corporation management company will ensure that all aspects of the common property are maintained, such as lawns mowed, flowerbeds weeded, rubbish and debris is cleared, hedges trimmed etc. The management company will also ensure that insurance policies are upheld and any repair work that is required is done (again, with the owners’ approval). The management company will also advise all owners when certain requirements need to be managed, such as new valuations done on the property for insurance purposes, new OH&S requirements arise etc.
Another legal requirement of an owners’ corporation is that an annual general meeting be held to discuss any matters that relate to the common property areas governed by the owners’ corporation. Owners can attend the annual general meeting, but are not required to do so. If an owner is unable to attend but wants to have a ‘say’ when it comes to voting on any decisions, they can nominate another owner to act as their proxy and vote on their behalf.
Another stipulation of an owners’ corporation is that each owner must pay regular fees or levies to the management company responsible for operating the owners’ corporation.
Any annual outgoing costs, such as gardening and general maintenance are covered by a special levy, agreed to by all owners, which comes out of the levy paid to the owners’ corporation. If the levy has been overspent at the end of the year, this is discussed and a solution agreed upon at the annual general meeting – such as to increase the levy for the next year and issue a special levy to cover any outstanding costs from that year.
While the owners’ corporation will manage any insurance policy on the common property, the fees for which are included in the annual levy charged to each owner, it is the responsibility of each owner to insure their own home and any property that is owned solely by them, including all their contents and other fixtures.
Before you buy into a strata scheme environment, find out the details of the owners’ corporation that is in place to manage any common property and contact the management company to ascertain what fees you can expect to pay and what they do and don’t do for the property.
You can also ask your solicitor or lender to conduct a strata search which will provide you with information about the strata scheme, including any issues or claims that have been lodged in the past by the owners’ corporation.
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Find out as much as you can about the owners’ corporation
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It’s important that you know as much as you can about the owners’ corporation and the details it involves.
Ask your solicitor to assist you in gaining access to the following information from the owners’ corporation before you commit to purchasing a property in a strata scheme:
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- The strata roll – which shows who owns each unit, any mortgagees and others who have an interest in properties that fall within the strata scheme, any general information about the strata scheme, the details of the management company and managing agent, insurance details and any by-laws and unit entitlements that apply to the scheme and to each property;
- All general records – including any notices served about disputes or required by legislation, the minutes of owners’ corporation meetings, any accounting records, financial statements, correspondence that is received on behalf of the owners’ corporation and sent out and any details of proxies or voting papers;
- Any plans, specifications, certificates, diagrams and other documents if they were supplied to the owners’ corporation by the original builder;
- The certificate of title for the common property;
- The last financial statements;
- All current insurance policies and the receipt for the last premium paid;
- Any other records that are held by the owners corporation; and
- Any records or accounting books that are maintained by the management company responsible for managing the owners’ corporation2.
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Get a Section 109 certificate
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If you are an owner, or you have the permission of the owner, you can write to the owners’ corporation and request a Section 109 certificate.
A Section 109 certificate outlines key information about the strata scheme it governs, such as:
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- The names and addresses of the executive committee members of the owners’ corporation, the managing agent and the caretaker (if applicable).
- The levies paid by each of the owners to the owners’ corporation.
- Any outstanding levies that sit against the property records.
- The address at which all records and financial statements that relate to the strata scheme can be viewed.
- Any special by-laws governing the strata scheme that have been made by the owners’ corporation in the previous two year period.
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It is important to be aware that if any levies are outstanding on the property you purchase and they are not shown on the section 109 certificate, then you will not be responsible for the payment. However, if outstanding levies do exist and you are not aware of them because you have not viewed the certificate on which they are recorded, then you will be liable for payment.
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Find out about any existing ‘community rules’ or agreements
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By their nature strata schemes, where numerous people co-exist in the same location can become much like communities, where the behaviours and attitudes of all residents can have an impact on the lifestyle of others. As such, it is very important for people to be well aware of their responsibilities and obligations as a member of a strata scheme.
So, when joining a strata scheme 'community' you need to find out about any standing rules or shared understandings that exist amongst all owners in the community.
For instance, the common by-laws of strata scheme arrangements normally specify that anyone wanting to entertain must take into account the existence of his / her neighbours and keep noise at an acceptable and non-intrusive level – and be mindful of the needs of others in the community, ie, having a good night’s sleep.
Your strata scheme may not allow for the presence of pets. If you are allowed to have pets, it’s your responsibility to ensure that your pet doesn't disturb the other owners or tenants or behave in any way which affects the wellbeing and lifestyle of the others.
Cars that are parked in the wrong places or in ways that impact the ‘ease of movement’ of others can often cause arguments between people living in strata arrangements. In short, parking on common property is not allowed, unless a car is parked in a visitor car park. Visitor car parks however, are specifically for the use of visitors, not owners.
Owners are only allowed to park in the car park space that they own. However, if they have more cars than car parking spaces, they must park the other car(s) elsewhere, ie, in the surrounding streets. In some instances, the owner may be able to request permission from the owners’ corporation to park in the visitor parking spaces, however, this request would need to be agreed to by all owners.
In some strata schemes some of the ‘manual’ tasks, such as mowing lawns, weeding garden beds, clearing rubbish and trimming hedges are not services that are outsourced via the owners’ corporation management company, rather, the owners get together on a regular basis and have working bees to perform the task together, which helps to create more of a community vibe.
Being ‘neighbourly’ is not something that can be legally mandated, it’s a state of mind and attitude – and in a strata scheme environment, having a sense of community and shared care for your surroundings can add to the general feeling of ‘home’.
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If you’re looking at buying an apartment, unit or townhouse in a strata scheme, RAMS can help you find a RAMS home loan solution to suit your needs and lifestyle. Talk with a RAMS Consultant today.
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Talk with a RAMS Consultant to discuss your home loan needs
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1 “Units no longer housing’s poor cousin” Weekly Property Pulse Professional Edition 25 September 2009 © Copyright 2009 RP Data Ltd
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2 For more information, see http://www.fairtrading.nsw.gov.au/Tenants_and_home_owners/Buying_property/Buying_into_a_strata_scheme.html
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