Strata questions, answered

The owners corporation is every lot owner in the scheme and holds the legal power. The strata committee is a smaller group the owners elect at each annual general meeting to make day-to-day decisions on their behalf. The owners corporation can overrule any decision the committee makes.

Most schemes let their committee handle day-to-day spending, approve applications made under a by-law, issue notices to comply and decide payment plan requests. A committee cannot make a decision that needs a special or unanimous resolution, that must be taken at a general meeting, or that the owners corporation has reserved to itself.

How we support committees

A strata committee can have between one and nine members. The owners corporation sets the number at each annual general meeting and it cannot exceed nine. A two-lot scheme must have at least two members, one from each lot, and a scheme with more than 100 lots must have at least three.

The committee then chooses its office bearers: a chairperson to run meetings, a secretary to handle notices, minutes and the strata roll, and a treasurer to keep the accounting records and issue levy notices.

An owner can nominate one person for each lot they own, and that person does not have to be an owner. Nobody can be elected while they owe money to the scheme at the time of the meeting.

An agreement entered into at the very first annual general meeting of a new scheme can run for no more than 12 months. After that, a strata management agreement can run for up to three years. The agent must give notice that the agreement is expiring between three and six months before the expiry date.

The draft agreement of the preferred agency has to be attached to the AGM agenda so owners can read the terms before they vote. If the fees are expected to exceed $30,000, the secretary must attach two independent draft agreements rather than one.

Every term is negotiable, including any charge for ending the agreement early, whatever the agency calls its standard contract.

What changing managers involves

Yes. Every strata scheme in New South Wales must report in the Strata Hub each year, within three months of its annual general meeting. That includes two-lot schemes and duplexes. Contact details must also be updated within 28 days of any change, or if a strata renewal committee is formed.

Reporting is an obligation of the owners corporation, so a missed return sits with the owners, not the agent. We lodge it for the schemes we manage and keep the record of what was reported and when.

Records and administration

A 10-year capital works fund plan forecasts the major work a scheme expects to need over the next decade, such as painting, roofing, lifts or sustainability upgrades, and what each item will cost. Every annual budget must take that plan into account, which is how the capital works fund levy is set.

A plan that has not been revisited in years is the single most common reason a scheme ends up raising a special levy. Construction costs have moved sharply, and a forecast written before they did will understate what the building actually needs.

Budgets, levies and reporting

It depends on the work. Cosmetic work needs no approval at all. A minor renovation needs approval by more than half the votes cast at a general meeting, or by the committee where a by-law allows that. Major renovations, including anything structural or affecting waterproofing, need a special resolution.

An application for a minor renovation is treated as approved if the owners corporation has not refused it within three months, and the scheme has to keep the record of the decision for ten years.

Structural work needs at least 14 days written notice before it starts, and building work over $5,000 has to be designed and built by registered design and building practitioners.

Compliance and by-laws

Under the Strata Building Bond and Inspections Scheme the developer lodges a building bond of 2 per cent of the contract price with the Secretary before the occupation certificate is issued. That bond can be used to rectify defects found by the scheme inspections, and is returned to the developer if none are found.

The scheme covers apartment buildings including their carparks, common areas and any commercial or retail space. Lower-rise buildings of three storeys or less are generally covered by home building compensation cover under the Home Building Act 1989 instead.

The inspection deadlines are strict. A new scheme that misses them loses the protection the bond was lodged to provide, which is why the dates belong on the committee calendar from the first AGM.

Maintenance and repairs

A by-law is changed by special resolution at a general meeting, which means no more than 25 per cent of the votes cast may be against it. The owners corporation must then register the consolidated by-laws with NSW Land Registry Services within six months of approving the change.

The by-law, the motion and an explanatory note go to the secretary before notice of the meeting is sent, or the motion waits for the meeting after that. A change that is never registered does not take effect, which catches out more schemes than it should.

By-law reviews and enforcement

Only partly. An owners corporation can adopt a by-law restricting short-term rental accommodation in lots that are not the host's principal place of residence. It cannot stop an owner letting the home they actually live in while they are away. A by-law may also set an occupancy limit of two adults per bedroom.

Before adopting a by-law like this, the scheme has to think about bookings already taken and guests already staying. Many schemes give the by-law a start date some months out so owners and residents have time to adjust.

By-law reviews and enforcement

Ask the owners corporation for a section 184 certificate. It sets out the committee, managing agent and building manager details, the levies payable, any arrears on the lot being bought, and how the scheme proposes to fund the work ahead of it. Take that certificate to your solicitor before you sign.

A buyer can also inspect the scheme records, and buy titling information such as the strata plan, registered by-laws and easements from NSW Land Registry Services through an approved information broker.

What is worth reading first: the minutes of the last two years, the capital works fund balance against the 10-year plan, and any levy arrears across the scheme rather than just the lot.

Certificates and records