Who’s in charge?

The owners of units in a strata title complex are ultimately in charge of how their complex is run.

Of course, they have to abide by the requirements of the Strata Titles Act 1985 and other pieces of legislation that affect property and owners generally. Local government authorities (councils) have the most regulations affecting strata and other properties, but some state and even federal Acts are also relevant.

Owners also have to abide by the by-laws of their property, although they could seek a vote to change those by-laws.

Owners can exercise their authority via a general, special or annual general meeting, through the passing of resolutions and by consensus. Meetings are difficult to organise. A certain minimum number of people (a quorum) have to attend or send proxies. They can take a lot of time.

Owners elected to a council of owners can act on behalf of the owners, in between meetings, and this is the usual practice. Whatever the council decides has the same authority as if it was done by a full meeting, though meetings can restrict the power of a council. For example, a meeting may authorise a council to get something done only if the cost does not exceed a certain amount.

Decisions of a general meeting can over-ride the decisions of a council of owners. Councils may also delegate some decisions to a professional strata manager. Usually the range of decisions will be defined in writing, including a maximum expenditure before further approval is required. Typically strata managers make only daily operational decisions (for example getting something repaired); major decisions (eg, repainting an entire complex) are referred back to the council or a general meeting.

Disclaimer: This information is of a general nature only. It does not take into account your individual circumstances. It is not legal advice. If in doubt you should seek professional advice.

How strata works

The WA Strata Titles Act 1985 allows more than one unit to be built on a single piece of land and for the units to be owned directly by different people (rather than everyone having a share in all units).

The Act requires that a strata company be formed to manage the complex as a whole. The strata company will manage common property (driveways, carparks, gardens, rubbish area etc).

The strata company will also be responsible for the compliance with local laws, enforcement of bylaws within the complex (for example, noise and external appearance) and some issues that affect more than one owner.

Usually the strata company will levy a regular charge on all the owners to cover its costs (strata levies).

The strata company (sometimes called a body corporate) is a legal entity in its own right, but of course it needs people to actually make decisions and do things.

The owners of the units (called proprietors) can manage the complex via general and annual meetings, but this is usually too cumbersome so the owners can elect a council of owners to do this work in between meetings. The council of owners is sometimes called a council of management, committee or corporate body.

Only owners can vote for the council or at annual general meetings. Owners can vote by proxy, but only people named on title deeds (or nominated by a company that owns a unit) can actually be on the council.

A strata company must abide by the provisions of the Act.

It may also make quite wide ranging by-laws to restrict what people can do to their units; typically you must apply to the council of owners before you make any structural or external appearance changes.

By-laws can also be used to regulate people’s behaviour (including noise after certain hours, the keeping of pets and even smoking in common areas).

The responsibilities of a strata company are complex and the hours required to get it all done are more than a volunteer council can be expected to have available. Most strata companies appoint a professional strata management company to help them with some or all of the work.

If you’re thinking of buying a strata unit you should check out the by laws before you make a decision. You should also check what the levies will be, and remember they are in addition to council and water rates. Sometimes they include insurance on your property.

Disclaimer: This information is of a general nature only. It does not take into account your individual circumstances. It is not legal advice. If in doubt you should seek professional advice.

Levies and other costs

Most strata companies charge regular levies to each owner, to cover their costs.

This is a class of cost that does not exist with detached housing. Depending on the complex, it can be significant. Elevators add a lot to costs, pools contribute too. Complexes with a large number of units may have slightly lower levies due to economies of scale.

Costs can include maintenance, repairs, insurance, utility supply, complying with regulations and fees from a strata manager.

Usually an annual budget is prepared and levies are based on this budget, but the actual levy must be agreed at the annual general meeting of owners and could be more or less (if, for example, other funds are available) than needed to meet the budget.

Levies cannot be increased without the approval of the owners, though decisions on some increases may be delegated to the council of owners.

Payment of levies once agreed is however compulsory and the strata company can take legal action to recover unpaid levies including charges against the property.

Levies are charged equally per “unit entitlement”. The unit entitlement reflects the area of the unit and its access to amenities. The unit entitlement may increase with higher floors, mostly because of presumed greater use of lifts.

Units within a complex can all have a different number of unit entitlements and this means they will pay different amounts as the rate of levy is applied per unit entitlement. The formula for calculating unit entitlements is set out in the Strata Titles Act 1985. Additional levies may also be charged, for example special purpose levies (for some
particular purpose such as major repairs or upgrades). There may also be a “sinking fund levy” which builds up a cash reserve. The sinking fund might be drawn on for periodic major maintenance work or for unexpected contingencies.

Levies are separate from council rates and water rates.

Some strata companies include building replacement insurance in their expenses as it is cheaper for them to get a single policy to cover an entire building than for each owner to get a separate policy. You should check this with with strata company.

Disclaimer: This information is of a general nature only. It does not take into account your individual circumstances. It is not legal advice. If in doubt you should seek professional advice.

Getting things done

There is always something that needs doing around a strata complex.

It will save the owners money if they can do as much as possible themselves: take out the bins, perhaps do some of the gardening.

For most complexes however the amount of work will just be too much.

Many tasks must be done by licensed workers, for example electricians and plumbers.

Even where there is no qualification requirement, the importance to property value of things like quality external tiling and painting makes it essential to engage professionals.

Even the best council of owners can only do so much on their limited, volunteer time.

The first step for most complexes is to engage a strata manager to do a lot of the work, under their direction.

A good strata manager also brings expertise, a wide knowledge of all things to do with strata – and reliable trade and other service suppliers.

Some larger complexes can afford to to appoint a resident as a paid caretaker. If they are also a handy person, this can be very cost effective to get things done.

In summary:

  • Organise residents to do as much as possible, especially small tasks that can be costly to get an external service for, such as bin movements.
  • Appoint a good strata manager.
  • If your complex is large enough and you have a suitable person, consider a part time on-site caretaker.

Disclaimer: This information is of a general nature only. It does not take into account your individual circumstances. It is not legal advice. If in doubt you should seek professional advice.

Neighbours

If you’ve never lived in a strata complex before, you should be aware that apartment living requires greater sensitivity to and cooperation with your neighbours.

You don’t have to socialise with them or even really like them, but you do have to respect their rights as residents.

Noise is the most important consideration; most apartments have poor sound insulation and sound carries around most complexes.

Residents must be quieter at all times and restrict any noise in the late evenings and early mornings.

Slamming doors (unit doors and car doors) and early or late car movements can also be an issue.

Other points of conflict can include correct placement of rubbish, closing security doors and keeping up exterior appearance standards.

People who are not happy with this higher level of neighbour cooperation should reconsider apartment living.

Disclaimer: This information is of a general nature only. It does not take into account your individual circumstances. It is not legal advice. If in doubt you should seek professional advice.

Who pays for what?

Who pays for something in a strata complex most often comes down to ownership.

In very small strata developments (two or three units) with no common property it may be that each owner is responsible for every cost associated with their unit.

In most complexes however, there is common property and there may also be provision for some units to have exclusive use of what is strictly common property.

Generally speaking, the strata company pays for the:

  • Maintenance of all common property such as walkways, lifts, swimming pools and carparks, including lighting and other energy use, painting and statutory charges.
  • Water, gas, sewerage and power connections to the property, plus booster connections if required and any telephone connections box.
  • Plumbing, gas and electricity lines within the complex but not inside any unit.
  • Site drainage.
  • The external walls and roof of all buildings, including painting and repairs.
  • Rubbish collection.

Of course, all owners have in interest in keeping strata company costs down, as costs will be passed on in levies. Generally speaking, the unit owners pay for:

  • Utility connections to their unit and all consumption charges.
  • Everything that happens inside their unit.
  • Glass in windows.
  • Security door/window fittings
  • External door locks.
  • Lighting to private use areas including patio/balcony areas.

Some expenses can go either way, according to the decision of an individual strata company, for example insurance.

There are some grey areas and situations commonly arise where the rules cannot be unambiguously applied. In these cases strata companies must negotiate a consensus solution with owners. The essential principle is that the strata company should treat all proprietors equally.

So, for example, a strata company should be cautious about paying for an upgrade that can only benefit some owners.

However, a strata company might decide that it will pay for costs of a particular class of event, which might occur to any tenant, but when it actually happens will only affect some tenants. An example might be burst pipes inside walls. The Act is not precise about this. A strata company might decide it will cover damages from such events and then make substantial payment s just for the benefit of one owner who suffered an actual burst pipe.

Disclaimer: This information is of a general nature only. It does not take into account your individual circumstances. It is not legal advice. If in doubt you should seek professional advice.

For strata companies

Experience suggests there are a some core issues that affect most strata companies.

They include:

  • Getting proprietors to attend meetings and be active on the council of owners.
  • Getting residents involved in caring for the property.
  • Enforcing by-laws particularly in relation to alterations/additions (including
    air conditioners) and anti-social behaviour.
  • Funding needed work while keeping levies down.
  • Finding a good strata manager.

There are no magic solutions to any of these issues; you just have to keep working at them, but working in ways that are known to lead to results.

For example, by-laws are easier to enforce when residents know what the by-laws are and have accepted them. Surprisingly, many residents of strata complexes don’t know what their by-laws are. They don’t understand why they exist and so don’t really respect them.

Councils of owners can chip away at these attitudes by making sure all residents know the by-laws. Rather than a long, dry legal document the by-laws can be dressed up in attractive brochure or booklet that is presented to all new arrivals, welcoming them to the complex. A regular complex newsletter can keep people up to date on events around the complex – and each issue can explain the importance of one of the rules. Each general meeting could include a by-laws item. Each AGM might include a review of the by-laws, to see if any need updating.

Similarly, if damage levels around the complex a high, a campaign might be started of not just fixing breakages but of notifying all owners every time of the problem and the cost – and reminding them that the expense will ultimately be reflected in their levies.

It’s a matter of experience, of knowing how things have worked (or not) in hundreds of strata complexes, and having the time to set measures in place.

Experienced strata managers can add a lot of value in this area, giving experience-based, practical advice on the major, common issues councils of owners face. We suggest that to start tackling the five common problems above, deal with the last one first: find a strata manager who can give you experienced, practical and even creative advice.

Disclaimer: This information is of a general nature only. It does not take into account your individual circumstances. It is not legal advice. If in doubt you should seek professional advice.

For tenants

New tenants should receive a copy of a strata’s by-laws when they move in, but it’s smart to get this before signing to rent a property.

For example, if you have a dog you don’t want to discover after signing a lease that the bylaws prohibit pets.

Experience suggests that you should look for a unit with tenants similar to yourself. For example, a quiet complex where most owners are retired will inevitably chaff on a group of young adults who like to party, leading to conflict that is unpleasant for both sides. Choosing a complex occupied mostly by young people would be more likely to lead to a good experience all round.

If you’ve never lived in a strata complex before, you should be aware that apartment living requires greater sensitivity to and cooperation with your neighbours. Noise is the most important consideration; most apartments have poor sound insulation and sound carries around most complexes. Residents must be quieter at all times and restrict any noise in the late evenings and early mornings. If this doesn’t suit you, reconsider the idea of an apartment.

Tenants have no say in the operation of a strata complex they are renting in. They have no right to attend or vote at strata meetings or to direct the council of owners or the strata manager.

They can ask their landlord or landlord’s agent to pursue any issue and this is the best avenue for them to pursue.

Tenants do however have extensive rights under various mostly state government Acts and strata companies must respect those rights. Tenants who believe their rights are being infringed should first contact their landlord or landlord’s agent.

Most relevant legislation including consumer protection for tenants is administered through the State Government Department of Commerce. Visit https://www.commerce.wa.gov.au/ consumer-protection/renting-home for more information.

Many aspects of a tenancy are controlled by or are the responsibility if the landlord, not the strata company. For example, most things inside a unit are the landlord’s responsibility rather than the strata company. Determining who is responsible before starting a complaint will speed up the process.

Disclaimer: This information is of a general nature only. It does not take into account your individual circumstances. It is not legal advice. If in doubt you should seek professional advice.

For landlords

Many people buy strata units as investments and rent them out. Most complexes contain a mix of owner-occupied and rented units.

If you rent out a unit you own, be aware that you are responsible for many aspects of the behaviour of your tenants. For example, if your tenants damage common property and don’t pay for it, the strata company may be able to collect from you, including via a court order and charge against your property.

You should (and the by-laws may requires that you do) give prospective tenants information about the complex before they agree to rent it. In particular you should give them a copy of the by-laws and encourage them to read it.

Putting aside any legal liability, complexes where people are living in harmony are more desirable to live in and typically have lower maintenance cost, a higher standard of surrounding and earn better sale and rental prices.

Even if you’re not living there, it is your unit and the value of your investment will be affected by whether its occupants contribute to the harmony of the complex or not.

You should not direct your tenants to contact the strata manager for any issues, except of course in emergencies. The strata manager works only for the owners and should be approached only by owners or their agents. You are responsible for the management of your tenants and their issues.

You are required by law to advise the strata company manager of the names of all your tenants and to keep them updated on changes. The strata company has a right to know who is living in its complex.

Councils of owners tend to draw most of their members from owner-occupants. This can lead to those council members feeling they are left to do an unfair amount of the work.

Sometimes non-resident owners feel that the council is doing things that don’t suit them. The best way to get the most out of an apartment investment is to be involved with its management; to attend all meetings and if possible to be on the council of owners. A council will not reflect the interests of people who are not represented on it.

Finally, when you have tenants move in or out of a complex, please advise your strata manager or council of owners with full details. When you buy and if you sell, please advise your settlement agent to keep the strata manager informed.

This will help in the ongoing management of the complex and it may also help you. Strata managers are usually involved in providing essential information to settlement, including the required Section 47 clearance certificate which documents outstanding and prepaid charges and other matters. Failure to advise strata managers often results in unexpected charges and sometimes in delays to transfers and protracted legal issues.

Disclaimer: This information is of a general nature only. It does not take into account your individual circumstances. It is not legal advice. If in doubt you should seek professional advice.

For owner occupiers

The quality of your life in a strata complex and the value of your investment will be significantly affected by the work of your strata company and council of owners.

Strata companies have the power to get things done and make a difference, but they don’t automatically have means of doing so: they need people to attend meetings, be involved and get things done.

As an owner occupier you are there, you are well placed to know what is going on and ensure that things are done.

If you don’t do your bit, maybe no-one will take up the slack and your complex will slide backwards.

Being on a council of owners is not unduly demanding and you can start out just being an ordinary member without an office bearer role (eg, chair, treasurer).

Most councils meet only monthly and the transact a lot of business by email and phone with each other. Anything that’s too time consuming or requires expertise they can delegate to the strata manager.

Consider it.

Please note you are required by law to advise the strata company manager when you buy and if you sell your unit, or if yo have other people move in.

This will help in the ongoing management of the complex and it may also help you. Strata managers are usually involved in providing essential information to settlement, including the required Section 47 clearance certificate which documents outstanding and prepaid charges and other matters. Failure to advise strata managers often results in unexpected charges and sometimes in delays to transfers and protracted legal issues.

Disclaimer: This information is of a general nature only. It does not take into account your individual circumstances. It is not legal advice. If in doubt you should seek professional advice.

Glossary

Annual budget. All strata companies should have an annual budget in writing. A wellprepared budget is an important management tool in controlling costs and setting levies.

By-laws. Regulations specific to a given complex and approved by its proprietors. The Strata Titles Act includes a standard by-laws which proprietors may amend. The by-laws may regulate property changes, pets, parking and social behaviour.

Chairperson. The Strata Titles Act specifies that all Councils of Owners once elected shall appoint a Chairperson to chair meetings. Other council members ma chair meetings when the chair is absent. A strata manager may not chair meetings of the Council of Owners unless they also happen to be a member of the Council of Owners, but a strata manager can chair general meetings of all types.

Common property. Property that may be used by any owner or resident of the complex, for example driveways, paths, gardens, pools etc.

Complex. A property with more than one separate units.

Council of owners (also called a council of management, committee or corporate body).
The Strata Titles Act specifies that Strata Companies may appoint a Council of Owners to manage business in between general meetings. Only an owner whose name appears on a title deed or the nominee of a company named on a title deed may be on the Council of Owners.

Council rates. Charged against each property by the local government authority to cover the costs of the council.

Levy. Annual charge, usually applied quarterly, made against each proprietor in a complex by its strata company.

Local government authorities. Councils, eg Perth City Council. Councils are the level of government generally having most contact with Strata Companies.

Meetings (general). A general meeting is any meeting that can be attended by Proprietors or their proxies, for the purpose of making decisions about the management of the complex. Meetings (annual). A strata company must hold an annual meeting that decides on the budget and the levies for the year following and confirms or elects office bearers to the Council of Owners.

Meetings (special). A special general meeting is usually called to deal with a specific, urgent issue.

Natural person. A human being, distinct from a company or other corporate structure which
is a legal entity but obviously cannot attend meetings or do anything unless it is represented
by a person.

Owners (also called proprietors). People or companies that own one or ore units in a complex.

Quorum. The minimum number of people who must be present in person or by proxy to make a meeting valid. This number is specified in the Act and depends on the total number of members. Remote attendance eg via Skype is generally considered acceptable.

Secretary. The Strata Titles Act specifies that all Councils of Owners once elected shall appoint a Secretary to manage and report on correspondence.

Treasurer. The Strata Titles Act specifies that all Councils of Owners once elected shall appoint a Treasurer to manage and report on finances.

Strata manager. A professional person or firm providing management services to strata companies, for a fee.

Unit entitlement. The “unit entitlement” of a strata titled unit is a number which reflects the area of the unit and its access to amenities. The unit entitlement may increase with higher floors, mostly because of presumed greater use of lifts. Rates are levied per unit entitlement, so the basic rate is multiplied by the unit entitlement number of a given unit, to calculate the levy for that unit. Units within a complex can all have a different number of unit entitlements and this means they will pay different total levy amounts. The formula for calculating unit entitlements is set out in the Strata Titles Act 1985.

Section 47. A clearance certificate which documents outstanding and prepaid charges and other matters at the time a property changes hands.

Sinking fund levy. Additional levy raised to build up a cash reserve, called a sinking fund. The sinking fund might be drawn on for periodic major maintenance work or for unexpected contingencies.

Special purpose levy. Additional levy raised to fund some particular purpose such as major repairs or upgrades.

Strata Titles Act 1985. In WA, the primary legislation governing the creation and operation of strata titled developments.

Strata title (sometimes called a body corporate). A type of property ownership that includes direct and exclusive ownership of one or more units plus indirect ownership of common use space, through membership of the strata company.

Strata company. A legal entity that holds ownership of common property in a strata complex and has responsibility for the management of the complex. A strata company is governed by the Strata Titles Act, it is no subject to the Companies Act. It does not have shareholders, but all owners within the complex are members of the strata company.

Water rates. Charged against each property by the water provider, under authority of the state government, to cover capital works and consumption.

Learn more

The website of the Strata Community WA, the professional body for strata managers, is a great resource.

Visit: http://wa.strata.community/

The Strata Titles Act 1985 can be read in full at: http://www6.austlii.edu.au/cgi-bin/viewdb/au/legis/wa/consol_act/sta1985173/

A widely used publication is:
The Role of the Council in Strata Company Management by Ian Laird 2007