News

What is a Strata Scheme?

In New South Wales, properties such as apartment buildings, unit blocks or townhouses are managed in a strata scheme. The day-to-day management duties of a strata scheme vary from scheme to scheme, and are generally managed by the following bodies.

The owners corporation

The owners corporation is responsible for the management of the strata scheme. When a person becomes the owner of a lot within a strata scheme they automatically become a member of the scheme's owners corporation and are entitled to participate in decision making regarding issues which affect the scheme. Such issues may include:

  • the by-laws that govern the scheme;
  • Maintenance and repair of common property; or
  • Financial management.

The consideration of these issues is conducted by way of regular general meetings, which members are entitled to attend. The Owners Corporation may make decisions by a simple majority vote (ordinary resolution) or with at least 75% of the members present and entitled to vote (special resolution).

Where a lot has more than one owner, only one owner may hold a vote at meetings, though all owners may attend. Tenants may also appoint a representative on the owners corporation, though that representative is not entitled to vote at a meeting. An owner is only entitled to vote if they are 'financial', meaning that they have no overdue strata levies payable as at the date of the meeting.

The owners corporation also has a number of executive responsibilities including:

  • enforcing the by-laws of the scheme;
  • Ensuring access to common property or individual lots is provided to external parties for particular purposes, such as for fire safety inspections;
  • Notifying residents of maintenance, pesticide treatments and other work being conducted which affects the residents

Strata managing agent

The owners corporation may be assisted in the discharge of its responsibilities by a strata managing agent. A strata managing is an agent employed by the owners corporation. The manager must be licensed and is contracted to undertake specific responsibilities delegated to it by the owners corporation. Only certain responsibilities  are able to be delegated to the strata manager under the Strata Schemes Management Act 2015.

Under the Strata Schemes Management Act 2015 the owners corporation retains the right to execute any responsibilities they have delegated.

Strata committee

The strata committee is a body elected by the owners corporation to enable a more efficient decision making process regarding day-to-day decisions concerning the scheme. The owners corporation can pass motions at a general meeting overruling the strata committee or limit the scope of the committee's decision making powers.

People eligible to be appointed to the committee include:

  • The sole owner of a lot in the strata scheme
  • Usually, one co-owner of a lot, unless the co-owners own multiple lots
  • A non-owner, if nominated by an eligible person who has not been nominated themselves for a position on the committee

Those who are ineligible, unless they also own a lot in the scheme, include building managers, agents who lease lots to tenants on behalf of lot owners and, generally, a person connected to the original owner of the scheme or the building manager.

Committee members elect amongst themselves a chairperson, secretary and treasurer for the committee. The chairperson oversees all general meetings and procedural matters. The secretary calls meetings by providing advance notice to members and produces meeting agendas and minutes. The treasurer notifies lot owners of levy contributions required and keeps proper accounting records.

Building manager

The building manager is appointed by the owners corporation to assist with the day-to-day management of the building itself.

Generally, a building manager will be responsible for the management, control and repair of common property. They may also perform cleaning, concierge and security functions in the building.

A building manager may not  enforce by-laws or carry out functions of the owners corporation.

The appointment of a building manager should be considered at the owners corporation AGM. The building manager's powers and responsibilities are ultimately governed by a building manager agreement between the building manager and the owners corporation, the details of which are to be considered at the AGM. Prior to their appointment the building manager should disclose all financial interests they hold in the strata scheme.

This article was written by lawyer Mitchell Micevski. 

Back