The University of New South Wales’s City Futures report in June 2020 found that over 1.1 million people, approximately 15% of the NSW population, lives in a strata scheme.  This number is expected to grow year on year.

As the number of people residing in a strata scheme increases, inevitably so do the issues and disputes relating to strata schemes. This article is a very high level overview for first time residents and owners in strata schemes.

What is Strata?

A strata scheme is defined in section 4 of the Strata Schemes Development Act 2015 as:

“(a) the way a parcel is subdivided under this Act into lots or lots and common property, and

(b) the way unit entitlements are allocated under this Act among the lots, and

(c) the rights and obligations, between themselves, of owners of lots, other persons having proprietary interests in or occupying the lots and the owners corporation, as conferred or imposed under this Act or the Strata Schemes Management Act 2015 .”

A strata scheme is made up of the common property and the individual lots.

An owners corporation is a distinct legal entity. It is responsible for the management of the strata scheme and comes into existence upon the registration of the strata plan. It has the ability to sue, be sued and has perpetual succession, however it notably is not a corporation for the purposes of the Corporations Act 2001.

Upon the registration of the strata plan, each lot owner becomes a member of the owners corporation, with varying unit entitlements based upon the allocation which is registered with the plan. Unit entitlements establish the voting rights of lot owners and the proportion of the levy that a lot owner is responsible for paying to the owners corporation.

How does living in a strata scheme work?

The way that a strata scheme operates will vary in each state and territory. In NSW, lot owners within a strata scheme will be subject to the following governing documents that are in (in order) the Strata Schemes Management Act 2015 and the Strata Schemes Development Act 2015, Strata Schemes Management Regulation 2016, the strata management statement (if one applies) and the registered by-laws of the scheme.

The by-laws for the scheme are what most lot owners will be most familiar with. They regulate and authorise such things as noise, keeping of pets, parking and storage. Each lot owner will be responsible for a proportion of quarterly levies for the maintenance of common property areas such as elevators, swimming pools and fire safety measures. Lot owners will generally need to seek approval for conducting building work affecting the common property. This may require them to agree to a common property rights by-law authorising such work under specific conditions.

Common grounds upon which disputes arise include breaches of a scheme’s by-laws, unauthorised works and building defects. In matters such as these we can act for the individual lot owner or for the owners corporation.

If you have a strata related issue or are seeking a by-law to undertake work, please contact our office.

Authors: Zachary Sie and Allison Benson