Lot Owners Bound By Law To Uphold Their Obligations

Buying into a multiple lot scheme, either as an investor or a permanent resident, can be a convenient and financially prudent arrangement in the right circumstances. However, it is a different type of ownership when compared with buying a traditional house on its own lot. As such, there are a number of important issues and obligations that lot owners must be aware of, to get the best out of their investment or new living arrangement.

WA Strata Management is a company providing a specialist service to strata companies to smooth the management process. It is our job to know and understand these issues and obligations and be able to advise our clients on compliance requirements.

Know the By-laws Applicable to Your Complex

Regardless of whether you as the owner are living in the property or renting it out as an investment, you are bound by various legislation, regulations and by-laws. When you buy into an existing property, for example, certain by-laws or rules will already have been legally enacted, so it is important that you know what these are, as they may impact on your expectations.

For example, we know from experience that keeping pets in an apartment complex can be a very contentious issue. A new owner may have an expectation that a reptile kept inside in a tank does not qualify as a pet in the same way as a dog. The other residents, and the managing agents may disagree and refer to a “no pets” policy in the by-laws. The obligation to abide by these by-laws resides with the owner.

Obligation to Contribute to Maintenance of Common Property

Owners are required to contribute to the upkeep and repair of the common property. They do this by paying levies to administer the entire scheme, which includes insuring the complex and keeping it well maintained. Regardless of whether or not owners use the tennis courts, swimming pool, gymnasium or other facilities, they still have an obligation to pay these levies on time and not fall into arrears.

Legislation requires that regular meetings are held to discuss and vote on certain issues. This is one of the areas where we assist strata companies by preparing meeting agendas, attending annual general meetings and in some cases, chairing them by request. We also circulate minutes and notices so that owners are kept informed.

Attending Meetings Part of Owner Obligations

Strata companies hold regular meetings, as required by law, to discuss and vote on certain issues. Lot owners have an obligation to attend these meetings to have input into such issues such as expenses, maintenance, repairs and improvements as well as how the complex is managed. Absentee owners can still fulfil their obligations by either appointing someone to attend the meeting in their place, or by lodging a proxy vote.

These are not the only obligations attached to owning an apartment. As with all legal transactions, buyers should do their own due diligence. As for WA Strata Management, we are always available to offer professional services to suit the individual needs of strata schemes.

Strata Title And Company Title: What’s The Difference?

When you buy a property that is an apartment, unit or townhouse (unless you buy the whole building) it will come under a title of either ‘strata’ or ‘company’. At WA Strata Management we hear people ask all the time for clarification of these two titles so we feel that it is important for you, the buyer, to be aware of what it all means. So what do these terms mean and what do they mean for you as the buyer of the property?

Strata Title

A strata title allows for a system that handles the legal ownership for a portion of a building, such as an apartment, townhouse or unit. When you buy one of these types of property these days (since 1961) it is likely that it will come under a strata title, which allows you to have exclusive ownership of your own dwelling while using the communal parts of the building. When buying a property in a building that works under a strata scheme, you will need to do a strata search to familiarise yourself with the workings of the organisation that looks after the whole building. As a member of a strata organisation (as an owner) you will be required to pay levies for maintenance and other expenses, attend general meetings and vote on decisions about the property.

Company Title

Before 1961, when the strata title mode of operation was first developed, these types of properties (units, townhouses and apartments) came under a company title, which allowed for the owner to buy a share in the company that holds the title of the building. This system is not used widely today and all new buildings would fall under a strata title.

In a company title situation, the company directors do not need to consult shareholders on any of the decisions that they make. Buildings that fall under a company title can also restrict how you use the property, and it can make the final decision about whether people can rent the property, who can buy it, and what changes can be made. Many banks will be reluctant to lend money to buy a property that comes under a company title. At WA Strata Management we recognise that it could be a beneficial investment to buy a property that is under a company title as if it is changed to a strata title it will increase the value of the property.

Are You Ready For Strata Title Investment?

When you purchase property for investment that is exactly what it is—an investment.

It is important not to let your own personal desires and values get in the way of making a business decision. For many, the thought of buying property is the way to go towards building a sound future for your family and retirement.

Today, we want to outline for you the benefits of investing in strata-titled property to give you a better understanding of how it works.

As specialists in this field we feel that WA Strata Management are able to offer sound information to allow you to make the right decisions for your investment portfolio.

SAVES ON LARGE LUMP SUM OUTPUT

A strata property is when two or more dwellings share the same piece of land. How many dwellings are actually on the property is completely in the hands of the developer; it is also what the local council will allow.

By purchasing a property in this way you are generally only paying for the building and not the most expensive component—the land. This is due to the land being shared by all stake holders so it spreads the cost over each vendor.

Upkeep and the Body Corporate

The upkeep of the communal areas such as driveways, gardens, pool and gym. are all managed by the body corporate. Each vendor or owner contributes to the body corporate fund and these funds are used to carry out maintenance and repairs.

This financial contribution frees up your time to pursue other investments or pleasures.

Sound Investment

Banks are more than happy to lend as high as 95% LVR (Loan to Valuation Ratio) on strata titled property. What this confirms is that this form of investment is a sound choice.

Total Purchase Control – Buyer Beware

As a purchaser you have total control over how you purchase this style of property.

You can take the hands on approach of inspecting existing property. This gives you a bricks and mortar feel, as well as allowing you the opportunity to check out views, potential improvements, and general condition of the property.

Another popular way to purchase this style of property is off the plan. This is when you agree to buy a particular property prior to it being built.

This form of investing can be very lucrative for both parties but has also been used as the hunting ground for charlatans so you MUST do your due diligence if you intend to invest in this manner.

Understanding The Importance of a Management Statement

When a purchaser buys into a strata title property a legal relationship is immediately created between the new owner of the unit or apartment and the strata company. In fact, as a registered proprietor, the new owner automatically becomes a member of the strata company, incurring obligations and responsibilities. The vehicle through which these are communicated is a document called the Management Statement.

By-laws by Another Name

This is a term that is more commonly known as the by-laws, and while many communal living schemes generally have by-laws that are similar to each other, there are also differences that are unique to individual schemes. What is important for every purchaser is to read and understand their own by-laws to avoid any future misunderstandings.

In our experience as a professional strata management company, knowing the by-laws reduces the incidence of disputes, which take up valuable time and create unnecessary hostility between the residents and the owners’ council. Our role at WA Strata Management is to administer the scheme to ensure that the owners’ council is operating within the applicable legislation, which includes the by-laws.

The Force of Subsidiary Legislation

We have had situations where purchasers did not understand that their by-laws have the force of subsidiary legislation. This means that some activities and conduct on common property and even on their own lots have been legally restricted. Ignoring these restrictions and proceeding on their own way only results in conflict that could have been avoided had they taken an interest in the by-laws before they purchased the property.

Be Aware of Financial Penalties

Intending purchasers should also be aware that with some breaches of by-laws, the State Administrative Tribunal can impose financial penalties. They can also make orders to ensure that by-laws are complied with.

We also strongly suggest that anyone intending to purchase in a group scheme, when examining the by-laws, also considers the possibility that some things may have been missed out that could have an impact on their decision. For example, provisions about future developments may not have been considered at the time the original by-laws were framed.

At WA Strata Management,** **our experienced professional staff members work hard to assist the owners’ councils we work with to run efficient and legally compliant organisations. Having a full understanding of the power and purpose of by-laws before purchasing a property avoids some of the issues that create disharmony and conflict.

Speedy Dispute Resolution Is Essential for Peace of Mind

Each strata style property will attract its own set of bylaws. These bylaws can vary, usually based on the size and style of the property.

By this we mean if you live in one half of a duplex your requirements will be different from those of a multi-story apartment building.

If you live in a strata style property you should know what your rights are and also, what is expected of you. If you don’t know, then it is necessary to acquaint yourself with the fine print as soon as possible.

Disputes can and do arise from time to time in this style of accommodation. The important thing is to overcome them quickly to ensure the delicate balance with householders is maintained and to avoid unwarranted stress.

Educate and Increase Knowledge

Often, issues can arise because an occupant is not fully conversant with the bylaws in effect for a particular property.

You can advise and educate by way of signage, newsletters, or direct contact. Signage in obvious places such as car parks advising car park rules helps not only occupants but also that their visitors understand and comply.

Shared or common areas such as barbeque and entertainment areas, swimming pools, saunas and gymnasiums will also attract their own set of rules. Appropriate signage outlining these rules leaves very little room for I didn’t know claims.

Newsletters need to be brief and to the point. Don’t get too wordy with legal jargon. Direct contact can be useful in certain circumstances.

Be Flexible. This goes for both occupant and the governing body. If a request is made that is outside the realm of the bylaw but does not infringe on another’s rights or break the law, it should be assessed fully before being dismissed out of hand simply because it is outside the bylaws.

When All Else Fails

For some issues the only remedy is to take more forceful action.

WA Strata Management properties that are based in Western Australia are managed by the WA Strata Titles Act (STA).

Provision has been made in this act to allow bylaws to be enforced. Penalties up to a maximum of $500 for non-compliance can be charged and at the very worst end of the scale, legal proceedings can be entered into via the State Administrative Tribunal (STA).

These steps have been placed to help resolve the most difficult issues and should only be taken to resolve the most problematic matters.

Cost of Strata Inspection Could Save Thousands Later On

Buying into a group title scheme is an excellent way to get a foothold in the property market for both owner-occupiers and for a rental investment. For busy people with no time to look after a house on a suburban block and for first-home buyers with small deposits, units and apartments are practical and affordable.

As with any major purchase, however, caution should be exercised. Before signing any contracts, intending purchasers should commission a strata report and have an inspection done, not only of the property they are interested in, but the entire complex. The initial cost could save thousands in the long run if the report and inspection show a building in decline.

Poorly Run Schemes will Show up under Scrutiny

Many apartment complexes outsource the running of their building to companies like ours. At WA Strata Management we offer a full service to our clients to ensure that their building investment is well managed, fully maintained and financially sound. Unfortunately, there are some that have not been professionally run, and it is these types of properties that a strata report will identify.

It is surprising the types of issues that come to light under the scrutiny of a thorough investigation. Disputes between neighbours, poor maintenance that impacts on the comfort and liveability of the complex, financial mismanagement requiring increased levies, and inadequate building or liability insurance are all serious matters that can cause financial loss.

Report on Financial Status, Levies and a Long-Term Budget

The report should reveal the scheme’s financial status, the current levies, any special levies that have been passed, any upcoming and past building work and all the expenses paid out over the past two years. There should also be a ten-year budget plan so that current owners and interested buyers have some assurance that known circumstances have been identified and allowed for.

Well Maintained Buildings Hold Their Value

It has been our experience that a building that is well-run and financially sound holds its value in the market, and this is why for a first-time investor, this type of report is so important. Buying into a group scheme that has not dealt with problems that go back years will have a financial impact. For example, any unexpected increase in levies could jeopardise the income needed to service the mortgage.

Buyers need to know if building defects are being addressed, or if the complex meets safety and council standards. Has there been a history of disputes between the owners and the people running the complex? If so, are the bylaws too restrictive? Is it difficult to get approval for renovations?

Professional Management Protects Everyone

All these issues should be dealt with immediately they arise. This is why more and more strata schemes are engaging businesses like WA Strata Management to run their affairs. We know the relevant laws and our staff are experienced in dealing with any issue immediately. This protects the value of the whole property and gives buyers the confidence to step into the market.

Taking The Stress Out

Many of us like the idea of downsizing and moving into a unit complex that has the amenities we would like to enjoy without all the hard work that goes with it.

For instance, many larger complexes have barbeque and entertainment areas, a gymnasium, swimming pool and even a sauna.

If you are so inclined, these are great to have close by as it is the perfect way to meet your neighbours and do a little networking.

What may be the fly in the ointment are buzz terms such as sink fund, administrative levies, special levies, committees, by-laws, committees and meetings.

Whilst these may be new terms to you they are not that complex to someone who knows what they are doing. We believe it’s a pretty easy process to learn.

WA Strata Management have put together a précis of things that are essential for you to know, whether you are a strata property owner or are considering becoming one.

Levies

All the levies mentioned above may or may not form part of your strata agreement. There will most definitely be what is commonly called a body corporate fund.

This fund is designed to manage the running and upkeep of the shared amenities such as the bonuses we mentioned above, but also such things as the gardens, driveways and lifts if there are any, amongst others.

Other levies may be instigated from time to time and will always be discussed at the regular meetings that all owners are invited to attend and participate in.

Committees and Meetings

Strata meetings will be held on a regular basis to discuss issues and make decisions regarding the running and maintenance of the building/s and grounds.

All owners or their representatives are invited to attend and are entitled to vote on each issue.

A Committee is usually appointed from the pool of owners but may include the services of an outside source such as ourselves.

The inclusion of a strata management company such as WA Strata Management allows for the day to day management and running of the property in capable hands.

The other advantage is that because this is all we do, we bring a wealth of industry experience and have a very broad understanding of the by-laws that revolve around this style of housing.

By-Laws

Don’t get freaked at the term by-laws. This is simply a list of rules that each and every occupant is expected to abide by.

By-laws cover everything from how the rubbish is dealt with to visitor parking, noise restrictions, and hanging washing on the balustrades.

They will also include guidelines on any renovations and refurbishments to your own property.

My Next Door Neighbour is Giving Music Lessons – Can I Complain?

It was the Greek philosopher Aristotle who first noted that “man is by nature a social animal”, a concept that has since been explored by many others. In primitive times humans lived in groups because they depended on each other for survival, and families and societies gradually developed as a result. The general consensus now is that humans live in groups because they rely on each other for their well-being.

Nowhere is the practicality of this concept more tenuous than in a strata scheme, as those of us who manage them on behalf of the many owners know from experience. Sometimes these so-called “social animals” get along with each other and sometimes they don’t. Here at WA Strata Management we have experienced both extremes and had to resolve many issues, some petty and some quite justified.

Do Owners in Strata Schemes Have Unrestricted Rights?

Owners in these schemes often question their civil rights when they are confronted with a situation where their actions conflict with restrictions enforced by their management. Often they do something like establishing a home business in their apartment without checking first if that is a permissible use of their property. The business causes disruption to other residents who complain to the building management and the whole situation ends up as an issue for the Council.

We have had a lot of experience at trying to resolve these types of disputes. Unreasonable restrictions cause conflict but at the same time, where large numbers of people live in close proximity to each other, some restrictions are necessary for everyone to enjoy their space equally.

Establish Restrictions when the Plan is Registered

It is possible to impose restrictions or conditions on activities provided they are noted on the strata plan and registered at the time the plan is registered. A typical example is restricting use to over 55s schemes. This creates the transparency needed by purchasers who know what uses are or are not permitted and form part of their decision to buy. An elderly couple, for example, may look for something more suitable if the complex they are inspecting has an obvious singles scene.

One of the attractions of living in an apartment complex is the uniformity of use. Where no restrictions have been registered with the plan, this uniformity can be achieved by establishing by-laws that restrict certain activities. Indirect restrictions can be imposed for activities, which may jeopardise the building insurance, for example, or introduce health and safety hazards such as noxious substances on the premises.

Getting Resolutions through General Meetings can be Difficult

Restrictions can be established after the plan is registered but only by passing a resolution without dissent at a general meeting. These situations can become volatile and we would recommend that any Council in this position consult first with experienced professionals before going ahead.

With our many years of experience in these situations, WA Strata Management can examine a situation and provide advice about the practicalities of some restrictions. Taking this step first may prevent an escalation of the situation and have everyone in the complex behaving like social animals.

Clearing Up the Confusion of Strata Scheme Terminology

The term ‘Strata Scheme’ is used to describe a residential complex that contains two or more separate dwellings. that is, anything from a duplex to a multi-unit dwelling.

You are able to purchase a strata dwelling, either prior to building, during or after completion.

When you purchase property within a strata scheme you will be issued with a number of items.

The first will be Form 28, which is a standard Disclosure Form designed to provide you with key information relevant to the Strata, and Form 29, which supplies you with general information and is part of Form 28.

Other items of interest that you should be given are copies of the:

  • Strata Plan which will outline the boundaries of your particular share of the property, known as the Strata Lot and will include information regarding anything that is included in the Lot such as land, buildings, courtyard, garden and carport. It will also provide information on entitlements, registered amendments of bylaws, and any encumbrances that may affect the Strata Lots or common property.
  • Built Strata, which will show the dimensions of the entire complex – building and land, including common property.
  • Survey Strata, which will outline the dimensions of the Strata Lots and common property but not the land.

You may submit a Section 43 Certificate to obtain levy and insurance information prior to purchase.

When You Become an Owner of a Strata Property

There are a number of responsibilities that must be undertaken to maintain a Strata Property correctly.

The first is to create a Strata Company, which is made up of the owners of the Lots in the Strata Scheme. This allows owners to meet with each other to discuss issues, schedule maintenance and levies.

The levies are provided by each Lot owner in proportion to individual unit entitlements and are used to maintain common property and pay insurances for same.

Common property is the land or improvements that all Lot owners are entitled to use such as driveways, gardens, pools, spas, laundry rooms etc.

In most cases the Strata Company will elect to employ the services of a Strata Manager such as ourselves, WA Strata Management, to manage the finances, maintenance, and other affairs of the Strata Company.

This is because the legislation and bylaws of this style of development is not only complex but is ever changing and improving. We take the worry and stress out of your Strata and we free up your time for more pleasurable pursuits.

We hope we have helped to clear up any Strata confusion but please do not hesitate to contact us to discuss your needs, issues, and desires.

Strata Management 101

For the newcomer to cluster or group housing the world of strata management can be confusing.

Cluster housing is a term used to refer to shared residential living schemes consisting of three or more lots on the same land. This figure can expand to as many as has been approved for that particular property.

When you buy property within a development such as this, a Body Corporate will be appointed to oversee the management of the property and to ensure the common areas are in a good state of repair, as well as being kept clean and tidy.

Under strata management an owner will be responsible to pay body corporate fees that are used to administer these things and more, such as the payment of insurance.

The Body Corporate is made up of a Chair, Secretary, and Treasurer, all of whom will hold property within the strata.

There will be regular meetings held to discuss issues that arise and an Annual General Meeting is held once a year to appoint people to these roles and make decisions about what needs to be addressed in the following year.

It will then be the Body Corporate’s task to carry out any decisions that have been made.

Take the Worry and Care out of the Picture

Whilst it is still necessary for a Body Corporate to be formed to give all owners an arena to discuss issues and make suggestions about the property’s upkeep and other matters, a lot of the more time consuming tasks can be delegated to the best strata management team your money can buy.

The property specialists at WA Strata Management have a combined industry experience of more than 70 years.

We use this experience to take the pressure off you and your Body Corporate team when you appoint us to administer and oversee:

  • Financial management including Insurance
  • Clerical and administrative support and follow up
  • Maintenance and contract negotiations.

We can also assist with ensuring the relevant legislative requirements are being met and we advise on the legal necessities and outcomes concerning the operation of your strata scheme.

Our abilities and services do not stop with the residential market. We are also able to assist with mixed commercial and factory lots.

Whether you are in Karratha in the north, Margaret River in the south or Kambalda to Manjimup in the east we are able to represent you and your Body Corporate, offering great rates and service and, above all else, open communication.