You may have noticed a rise in the number of apartments and townhouses being built in Australian capital cities. More and more Australians are living in apartments for circumstantial and financial reasons. But what is strata and how does it work?This article will explain what strata is and what you need to know about living in a strata property.

Understanding Strata

Strata means ‘to layer’. In property terms, it refers to living spaces stacked on top of each other, for example, multiple families, couples and single people living in the same block of units. As a condensed form of living, it brings its own set of challenges for property owners. Even though strata management has been around for over 50 years, Australian society and our lawmakers are still adjusting to strata living. It involves complex rules, which is why strata living can be so volatile.

Strata plan developments can be:

  • residential (apartments);
  • retail (shopping centres);
  • mixed use (shops with apartments in upper levels);
  • retirement villages; or
  • resorts.

Many owners, owners corporations and strata managers do not seek out legal assistance until they have a full-blown problem. Investing money in property is a big decision. It is best to be proactive, ensure you understand strata and have legal assistance should problems arise.

There are four key areas where your owners corporation, or committee, can seek legal guidance proactively.

1. Understanding the Property

Once a development is titled as strata, it splits into two forms of property. These are:

  1. common property; and
  2. lot property.

Common property is the property that all owners share. It is managed by the owners corporation. The owners corporation is a legal entity created when the strata plan is registered. The owners in the strata scheme form the body of the owners corporation. The body manages the maintenance, repairs, finances, insurances, records and administration of the strata scheme.

Lot property is the individual property owned within the entire apartment or complex. For example, you may own Lot 31, which includes the unit, adjoining balcony and a car space in the apartment complex.

The split between common and lot property is complex. There are legal rules that determine where common property starts and finishes, which are often at odds with what owners think they own.

Challenges with Common Property and Lot Property

Some challenges may include understanding:

  • the strata plan;
  • the by-laws of the strata plan;
  • the law (a web of complex strata acts); and
  • any other legal relationships that affect the property (such as a strata management statement).

As a guide to common versus lot property, picture the ceiling in an apartment. Most ceilings will be common property from the surface of the paint up (towards the roof). However, while this might be the case in one apartment, in another, the strata plan could extend this boundary to one metre above the painted surface. In this second apartment, that additional metre of ceiling space is now lot property. In the first, anything above the painted surface is common property.

Why does this matter? Importantly, it affects who is responsible for that property, and therefore who is required to maintain, repair and insure it. If you lived in the first apartment in the example above, the owners corporation would be responsible for replacing lights that were set into the ceiling, because they extend above the painted surface. In the second apartment, you would be responsible for their replacement.

It is worthwhile to consult a strata lawyer to understand these boundaries in your particular scheme, because they impact upon your personal responsibility for the property.

2. Making By-Laws

In a regular property that is not strata, changing things in the property, like conducting kitchen renovations, is usually a simple exercise. For example, as an owner of a house, you work out what you want to change, ask your local council if you need permission, and get started once your changes are approved.

However, making changes like this in a strata property can be fraught with problems, egos and barriers – not just from council. Often, you will be told you need a by-law.

By-Laws

A by-law is a rule. Think of a by-law as the permission slip an owner needs to change common property and any parts of the owner’s lot that touch common property. For example, if you want to install an air conditioner which will be in your strata lot, you will also need permission, as the outdoor unit and pipes will touch on common property.

Getting permission makes sense when you consider that the property is  communal. A by-law is a contract between the owners corporation and the owner. A by-law for works, for example, generally contains sections like:

  • the nature of the works;
  • permissions;
  • protections for damage or loss;
  • compensation; and
  • ongoing repairs and maintenance responsibility.

Given the importance of these issues, it is essential to engage a strata lawyer to prepare a by-law. If you do not have the right permission, not only can it affect your property (including its value), but also it runs with the land, meaning it affects future owners of the property (and the value of your investment) too.

3. Resolving Disputes

Disputes inevitably arise in communal living. A common reason includes delays with repairs and maintenance.

Everyone benefits from impartial advice early in a dispute, especially one involving repair and maintenance obligations. Quite often, you can resolve disputes early and the dispute fades away. A strata lawyer will be thinking about how to minimise similar disputes in the future and can help your community put policies in place to educate parties and manage disputes internally.

However, sometimes disputes escalate despite your best efforts to resolve them. A strata lawyer can assert your rights and navigate the legal mechanics from the start. This means owners corporations and owners spend less time and money on a dispute.

4. Knowing What You Do Not Know

Perhaps the most important reason for an owners corporation or owner to have a strata lawyer is the adage, ‘you do not know what you do not know’. This idea is as true in strata as it is in many other aspects of life. For example, if you are planning to start a business, you will probably seek out a mentor or accelerator. Similarly, if you are a new owner in a strata complex, it can be helpful to talk to someone who specialises in the area. This can help you to avoid emotionally-charged situations down the track.

Key Takeaways

Strata is a complex legal area with its own dynamics, laws and cases. A strata lawyer knows these nuances and can help you and your community make good decisions, implement effective policies and procedures, and understand how to resolve disputes quickly and efficiently.

Need a strata specialist? Contact LegalVision’s strata lawyers today on 1300 544 755 or fill out the form on this page.

Paul Loccisano
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