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Living in an apartment, townhouse, or similar unit means you likely reside in a strata scheme. This involves shared common areas alongside your individual unit. But who manages this shared environment? Enter the strata committee, a group elected by owners to oversee the day-to-day affairs of the scheme.
What is a strata committee?
If you own an apartment, townhouse, or similar unit, you likely live in a strata scheme. This means there are common areas shared by everyone, alongside individually owned spaces. Strata title is the name for this type of ownership.
To manage this shared environment, the owners in a strata scheme elect a group called the strata committee. This committee acts on behalf of all owners (forming a body called the owners corporation) to manage the day-to-day affairs of the scheme.
Basically, the strata committee is like the backbone of your communal living situation. They keep things running smoothly and ensure everyone follows the rules. The specific laws governing them will depend on the state or territory in Australia where your property is located.
What decisions do strata committees make?
The strata committee focuses on day-to-day matters that keep the strata scheme running smoothly, and makes recommendations for owner approval on larger issues. It's important to remember that some bigger decisions, like setting or changing levies or major renovations, typically require approval from all the owners at a general meeting.
Here's a breakdown of their key areas:
Maintaining the property
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Authorising repairs and upkeep for common areas and facilities (like hallways, gardens, pools).
Managing finances
- Overseeing the budget for the strata scheme.
- Approving spending for everyday operations (e.g., hiring cleaners, gardeners).
- Collecting strata levies from owners (fees used to maintain the property).
- Paying bills for the scheme (utilities, insurance).
Enforcing the rules
- Approving applications related to by-laws (e.g., requests for pet ownership, minor renovations).
- Addressing breaches of by-laws and issuing notices to comply (e.g., noise complaints, parking violations).
- Hiring and overseeing contractors for services like cleaning, gardening, and security.
Important to remember
- Bigger decisions, like setting or changing levies or major renovations, typically require approval from all owners at a general meeting.
- The strata committee focuses on day-to-day matters and makes recommendations for owner approval on larger issues.
Limitations on strata committees
Strata committees in Australia have certain limitations to ensure they act in the best interests of all owners and comply with the legal framework.
Here's a breakdown of some key restrictions:
- Spending limits: Strata committees can't spend freely. They have a set spending limit, which may be determined by the strata scheme's by-laws or default legislation in your state or territory. They need owner approval for expenses exceeding this limit.
- Major decisions: Certain significant choices require a vote by all owners, typically at a general meeting. This could include setting or changing levies, amending by-laws, undertaking major renovations, or dissolving the strata scheme altogether.
- Financial transparency: Committees are obligated to be transparent with finances. This means providing regular reports to owners on the budget, income, and expenditure of the strata scheme.
- Compliance with by-laws and legislation: Decisions must comply with the strata scheme's by-laws and relevant state or territory strata laws. The committee can't make unilateral changes that contradict these regulations.
- Conflicts of interest: Committee members must avoid conflicts of interest. If a decision directly affects them financially, they should abstain from voting or discussions.
- Fairness and reasonableness: Committee decisions should be fair and reasonable, considering the best interests of all owners. They can't make arbitrary choices that unfairly disadvantage certain property owners.
Who makes up a strata committee?
The number of people on a strata committee is decided at each annual general meeting (AGM). It can range from one to nine members, with the owners corporation making the final decision (as long as it stays under nine).
There are a few exceptions:
- Two-lot schemes: In these small buildings, the committee must have at least two members, one from each property.
- Large schemes (over 100 properties): These require a minimum of three members on the committee.
Who is eligible to be a member of a strata committee?
Each property owner within the scheme has the right to nominate one person per property for election. Nominees can be the owner themselves, another property owner, or a non-owner, such as a tenant or a tenant representative.
However, certain individuals are ineligible for nomination to the strata committee, including:
- The building manager
- Any agent responsible for leasing properties within the scheme
- Anyone affiliated with the scheme's original owner (developer) or building manager, unless they have disclosed this affiliation in writing prior to the election
- Any owner who has outstanding debts to the scheme at the time of the Annual General Meeting (AGM).
Strata managers
A strata manager assists the owners corporation and/or strata committee in managing the strata scheme.
The owners corporation decides the specific responsibilities to delegate to a strata manager, which can include:
- Organising and facilitating meetings
- Collecting levies, managing banking, and securing insurance
- Providing advice on asset management
- Maintaining the scheme's financial records
Strata managers are typically appointed by the owners corporation during an AGM.
Hiring a professional strata manager is not legally required. However, many strata schemes opt to employ one, as strata committees often consist of volunteer members who benefit from the managerial support in coordinating the lot owners' affairs.
If issues arise with a strata manager, it is advisable to discuss these concerns with the owners corporation, which has the authority to terminate their services. This can be accomplished by:
- Choosing not to renew their contract upon expiration
- Voting to dismiss them at the next general meeting
- Filing a petition with the Tribunal for their removal
For detailed procedures on appointing or dismissing strata managers and other staff, refer to relevant guidelines on managing strata employees.
Office-bearer jobs in strata committees
Chairperson
The strata committee chairperson takes the helm of the group and presides at general and committee meetings. The role gives power to the bearer to decide on issues and procedural matters. However, the chairperson does not have a casting vote.
This role requires leadership and management skills - those who aspire to take the lead should be people-oriented and diplomatic. Self-confidence is also a must to be able to handle the pressure that comes with the role.
Secretary
The secretary of the strata committee has the role of convening meetings. This position entails preparing, taking, and distributing the minutes of all meetings and conventions. The secretary also has the responsibility to keep records and answer queries addressed to the owners' corporation.
For those who wish to be a successful strata committee secretary, attention to detail and organization are two of the much-needed skills. The ability to manage time efficiently is also plus.
Treasurer
Perhaps the most complicated role, the treasurer is in charge of everything finance-related. Being a treasurer involves sending notices of levies, receiving and recording payments made to the corporation, keeping accounting records, and preparing financial statements.
Given the complexity of the role's nature, the treasurer should be organised and trustworthy. Having a background in accounting is handy too since you will be crunching numbers.
Defining the strata scheme for property owners
You will hear the term strata when you purchase an apartment, townhouse, or unit. A strata scheme is a building or group of buildings divided into individual units, apartments, or townhouses. Under a strata scheme, property owners have an entitlement not just to their units but also to the other common areas available for use to the residents. Common areas such as gardens, external walls, staircases, driveways, and roofs are co-owned by unit-holders. The responsibility of maintaining these areas falls on the hands of all the co-owners.
The ownership of the building is shared through an owners' corporation. Strata title is the specific term for this form of property ownership.
Residential projects are not the only ones which exist under a strata scheme - commercial buildings, retail establishments, mixed-use developments, resorts, serviced apartments, retirement villages, and caravan parks may also be under a strata arrangement.
Benefits of owning strata title property
The most significant advantage of taking on a strata-titled property is the cost - units are typically cheaper than landed properties particularly in high-density areas such as state capitals. You also do not need to worry about the maintenance of common areas since this will be taken care of by the levies each unit-owner is required to pay.
Strata-titled properties are also in demand, making them viable assets for property investors. You will encounter fewer problems selling these properties for profit given their consistent demand, especially in busy metropolitan areas.
If you are planning to buy a strata-titled property, you might also encounter lenders who are more willing to approve you for a loan - it is easier to get financing as lending policies for strata-titled properties are more favourable for home buyers. Lenders can even allow you to borrow up to 95% of your property's value.
Disadvantages of buying strata title property
Since the maintenance of the building is taken care of by levies, you should expect that these contributions will not come cheap. For more expensive projects with pools, elevators, and gyms, strata levies are significantly more costly. Furthermore, these levies are subject to increase as the building ages.
Living in a unit or apartment also requires you to be more people-oriented. Walls are the only ones that separate you and your neighbours and this might be an issue for homeowners who sometimes want to enjoy peace and quiet.
Read: What to know when buying a strata property
Strata committee vs owners corporation vs body corporate: What's the difference?
The terms owners corporation and body corporate are synonymous with each other in many places but can be used interchangeably. Both terms describe the same type of entity responsible for managing shared property in a development. These responsibilities include the overall management of the strata scheme, including maintaining and repairing common property, managing finances, and ensuring compliance with relevant laws and regulations.
The strata committee is a smaller group elected by the owners corporation to perform day-to-day governance and make operational decisions for the strata scheme. This committee acts as the executive arm of the owners corporation, handling tasks like minor maintenance decisions, managing disputes, and enforcing by-laws within the scheme. The committee reports back to the owners corporation and operates under its authority.
To sum it up, the owners corporation/body corporate serves as the overarching body and the strata committee handles the more immediate administrative tasks.
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Photo by Isaac Quesada on Unsplash
This article was originally written by Gerv Tacadena on 2 November 2017.
Collections: Property Investment
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