Strata Management Statements (SMS) exist in the context of mixed-used developments, where the development is subdivided into stratum lots which may then be subdivided into one or more strata schemes. For example, a building may have a retail stratum lot on the ground floor, a commercial stratum lot on the first floor and a residential stratum lot on the second floor – stratum lots can subsequently be subdivided into strata plans.
A SMS is a document setting out provisions for managing a stratum subdivision. It is a contractual agreement having the effect of an agreement under seal on lot owners (both stratum and strata lot owners), occupiers, mortgagees, chargees and lessees.
The legal requirements for amending a SMS are set out in section 103 of the Strata Schemes Development Act 2015 (which replaced section 28U of the Strata Schemes (Freehold Development) Act 1973).
These amendments are a complex and time consuming process which generally involves:
- Drafting the necessary amendments to the statement;
- Where a stratum lot has been subdivided by a strata plan, the owners corporation of each strata plan must pass a special resolution approving the amendments (the SMS should include a reference to which schemes are part of – or subject to – the statement);
- Obtaining written consent from each owner of a stratum lot (this will include owners corporations and owners of stratum lots that have not been subdivided into a strata scheme) and all registered mortgagees and lessees of stratum lots.
Each strata scheme affected by a Strata Management Statement will also be subject to their own set of by-laws. As such, in order to maintain a coherent set of rules for each strata plan, each scheme should consider passing a by-law reflecting the intended amendments to the SMS (as both instruments may set out rules in relation to the same matter). These by-law amendments will not affect the registration of the SMS amendments – they can be conducted in parallel, at their own pace.
Once the SMS amendments have been approved by all parties involved, they must be registered with the Land Registry Service (LRS) in order to have effect.
The mechanics of the process are the completion of a prescribed form ‘Request 11R’ form which should attach:
- The text of the amendments, as approved
- The required consents: in the case of individual persons (mortgagees, lessees, etc.). This will be done through a consent form. In the case of each strata scheme, through an Approved Form 13 executed by each owners corporation’s representative.
- An executed Approved Form 23 for each strata scheme.
- The annexure to the form should also be executed by the scheme acting as the applicant of the request.
This is then lodged in PEXA for registration.
Once the registration is completed, the LRS will update each scheme’s title to include the amendment.
Finally, it is important to highlight that, beyond any statutory requirements, the Land Registry has its own practices and procedures for processing and registering SMS amendments, with additional rules and requirements which can only be successfully and efficiently dealt with by someone with specific experience in working with the LRS on these sorts of matters. If you need assistance with the amendment of a strata management statement, please Contact Us | Kerin Benson Lawyers
This is general information and should not be considered to be legal advice. You should obtain legal advice specific to your individual situation.
Author: Paulina Mena