A strata scheme is usually a building or collection of buildings with many apartments, units or lots. Each lot can be an apartment, a townhouse or even a house. When you buy one of these units, you not only own the unit you buy, but you also share the ownership of the common property, including external walls, foyers, driveways and other shared spaces, with other owners.
Buying into a strata scheme is quite different from buying a stand-alone property. If you’re thinking of buying into a strata scheme, it’s important for you to understand your rights, obligations, and responsibilities before you buy.
The Owners Corporation
The Owners Corporation is a body made up by all owners of a strata scheme. Its role is to look after the business of the scheme, including its day-to-day operation.
The Executive Committee of the Owners Corporation is responsible for making decisions on the behalf of all owners.
The Section 109 Certificate
Before you buy into a strata scheme, your conveyancer or property lawyer should make sure that you get a Section 109 Certificate for the property. You will need to get the written permission of the Vendor, Strata Manager or Owners Corporation in order to obtain one.
The Section 109 Certificate offers you a financial overview of the strata scheme and gives you an idea of how well it’s being run. It also gives you other information including:
● Names and addresses of the Executive Committee members of the Owners Corporation;
● Levy contribution;
● Administrative fund contributions or levies;
● Sinking fund contributions or levies;
● Special contributions or levies;
● Costs of legal proceedings;
● Interests charged;
● Outstanding levies or amounts;
● Insurance details; and
● Details of the Managing Agent and Caretaker, usually a Strata Company.
When you buy a strata property, you are required to pay a levy to fund the administrative fund and the sinking fund of the Owners Corporation. The administrative fund is used to cover day-to-day operational expenses, including water and electricity charges for shared areas. The sinking fund is used to cover long-term future expenses, such as renovation.
Sometimes you may be asked to pay a special levy to cover a special expense. For example, if a major repair or remediation work is needed for the building, all owners may need to make a one-time contribution to cover the repair cost.
By-laws are general rules that people who live in a strata scheme must follow. These rules cover issues such as garbage management, pets, parking, noise level, and installation of equipment. These rules may impose certain lifestyle restrictions on the residents of a strata property.
In some strata schemes, special by-laws may apply which may provide a lot owner with use and enjoyment of common property or rights to parts of the common property.
Therefore, you should check out all the by-laws of a strata scheme before you buy into it.
Before purchasing a property in a strata scheme or during the cooling off period, it is common for a conveyancer or property solicitor to obtain a Strata Report for the Purchaser. This Strata Report is conducted by a Strata Inspector, who goes to the Strata Manager’s office and physically inspects the strata records.
The Strata Inspector will provide a Strata Report which provides details and information of the current status of the strata scheme, contributions, levies, book of accounts, title deeds, by-laws, disputes, insurances, safety issues, building defects, remedial works, meeting minutes, expense history, disputes, legal proceedings and costs.
The information provided by the Strata Inspector may assist you with determining whether or not you want to proceed with buying the strata property.
Seek Professional Advice
Due to the complexities involved in buying into a strata scheme, it’s best for you to seek professional advice before you commit to a purchase. A solicitor or conveyancer can arrange a strata search, strata report and strata roll, which will give you information on the owners, financial statements, repair history and by-laws of a strata scheme. Your solicitor will also review the strata plan with you so that you know the exact boundaries between the private and shared areas
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