Help! I bought a strata unit!

[adapted from podcast episode 001 – what is strata?]

 

What exactly is strata? 

What are by-laws?

What are strata levies? 

What is all this paperwork I have in my mailbox and what am I supposed to do about it?

Help!

Strata is unique.  It can be complicated.  It can be old fashioned. It can be hard to find good information.  The Your Strata Property podcast aims to answer the above questions and  more: demystifying strata a little for you so that you can enjoy and get the most out of what is likely to be your most important investment:  your property.

What is strata?

Strata was invented in Australia about 55 years ago. It is a system of property title that’s now copied across the world.

It’s a system that allows you to own part of property only, sharing the other parts of the property with other owners.

The decision to create a strata building

So, how is it created? I’ll explain this by using an example.  Let’s say, in Sydney’s Eastern suburbs, the local council has just chosen to rezone a large chunk of a beach side suburb. Where once only single storey houses were permitted, the rezoning means that multi-storey buildings can now be constructed.  We have a very astute, successful property developer, named Joe.  Joe finds out about this rezoning. He thinks: “Hey, this sounds like something I need to be involved in.”  So he starts buying up the houses in this area, knowing that they’re about to be rezoned and that he just might be able to get a new development approved. So, Joe buys about six houses, all in the one block.  He puts together a development application and he lodges it with the local council.

By his application, he is telling the council that he wants to knock down these six houses and in their place he wants to build one, 8 storey unit block, with 28 units and basement parking.

What is a strata plan?

If this development is approved by the local council,  the unit block not only needs to be built in reality,  it also needs to be created on paper.  There needs to be a “plan”. We call this, the “strata plan.”

A strata plan is prepared by a surveyor, and once it’s done, signed off and approved by the council, it’s registered with Land and Property Information NSW (which we in the biz call the “LPI”). The effect of the registration of the plan is to turn those six lots that used to have six houses on them, in to the 28 lots and the common property that make up the new unit block (keep reading for more about “lots” and “common property”. Those are terms you’ll come across regularly in strata).

What is my strata plan number?

When a strata plan is registered with the LPI, it’s given a number.  At the moment, the LPI is issuing new strata plans with numbers that are around the 90,000 mark. So, a strata plan with the number 92518 is the ninety second thousandth, five hundred and eighteenth strata plan to be registered in NSW. Pretty cool.

So, returning to our example, Joe goes and lodges his new strata plan for registration. The strata plan is stamped and registered with strata plan number 92518. The strata plan number is unique to that building and it is something you as a strata owner are likely to come across regularly in your day to day dealings with strata. It’s the number that’s going to be on your levy notices, the letters you get from your strata manager, the agendas and the minutes of meetings. It might be something that you’re asked to provide to your bank or, if you’re renovating your property, to your builder or tradespeople. These people may also want to know what your “lot number” is. Be aware that your lot number is not always the same as the unit number that appears on your front door.

If you want to find out what your strata plan number is or what your lot number is, a good place to start is your levy notice (the invoice that you get each quarter to remind you to pay your strata levies). If you’re still a little bit lost, give your strata manager a call.  Drop him or her an email.  Just say “Hey, my name is Sam Smith.  I live at 2 Black Road.  I hear you’re my strata manager. I just want to know what my strata plan number and my lot number is.”  That will probably be the simplest question your strata manager gets all week and they will happily answer that one for you.

What are by-laws?

Now, returning to our strata plan that our successful developer Joe has now lodged with the LPI.  He has lodged that strata plan together with a series of by-laws. “By-laws” is a term that you might also have come across in your strata dealings.  The by-laws are set of rules that govern the day to day activities of the building.  This is where you’ll find information about:

  • whether or not you are allowed to keep an animal
  • where you can or can’t hang your washing
  • where you can or can’t park your car
  • the rules around using common facilities like the gym and the swimming pool.

The by-laws are almost always registered with the strata plan.  By-laws don’t have to be registered with strata plan but it’s a very unusual building that doesn’t register them with the strata plan. They can then be changed down the track – removed, amended or replaced.

The set of by-laws is a document that you really should be reading before you buy a strata property. If you have forgotten to do that, don’t panic.  Have a read of them now and make sure you are aware of the rules governing your community.

Where does my lot end and the common property begin?

As set out at the beginning of this article, strata is a system that allows you to own part of the property only, and you’re sharing other parts of the property with other owners.

The part of the property that you own is called your “lot”, and the part that you share with others is called “common property”.  It’s literally “property in common”.

The strata levies that you pay each quarter are generally going towards the maintenance of the common property.

When it comes to common property, we’re talking about things like:

  • stairwells in a walk-up building
  • lifts in a more modern building
  • the foyers
  • the entryways
  • the front door to the building
  • shared backyards
  • ventilation systems
  • swimming pools
  • gyms…

…all of those shared facilities that everybody uses a little bit of each day.

When trying to identify where a lot ends and the common property begins, the strata plan is key. The strata plan – literally, the sheet of paper – is the first think to look at when you’re trying to identify boundaries.

You might think that the boundaries of your lot are obvious: I can see the walls of my unit, I know where my front door is, I walk up the stairs and I walk in to my unit, I’ve entered my lot.  But this is one of the most vexed issues in strata law and one of the largest areas of dispute.  If you can’t work out with certainty where a lot ends and the common property begins, then you are going to be in a world of pain when you are trying to work out who is responsible for repair and maintenance,  who is responsible if there is damage, if there’s a water leak,  if there are things left in the building. Are they on lot property? Are they on common property?

The strata plan is usually going to show all the relevant boundaries of lots and common property. But reading strata plans can be confusing. Some are more complicated than others.  Sometimes just looking at the drawing on the plan can’t give you a clear answer and you’ve got to look at things like notations on the plans. These are little notes written on the plan by the surveyor who prepared the plan. You might also have to go to the strata legislation and look at the definition of “lot”.  Different definitions apply unfortunately, depending on when your building was built.  This is where the complexity comes in. By-laws might also set out rules about what parts of property you can and can’t use, what you can and can’t do within your lot, what you are and aren’t responsible for. So it’s important to be familiar with the by-laws as well, because they are going to change the way that you interact with lot and common property.

If you are a little bit lost,  it’s always a good idea to get some expert advice.  Every strata plan is different and when you have a question with lot riding on it – for example, am I responsible to pay this bill or not? – it’s usually worth doing some homework,  getting some advice and making sure you’ve got the right answer.

Summary

In this article, we’ve discussed:

  • what is strata
  • how are strata plans created
  • bylaws
  • lots and common property.

These are all concepts that we discuss in some detail on the podcast.

Action Steps

A few steps you can take straight away to become a bit more familiar with your strata building:

  1. subscribe to the Your Strata Property mailing list at the end of this article and get your free copy of The Strata Essentials eBook: 6 things you absolutely must know about owning a strata property.
  2. check in with your strata manager: find out who they are first, if you don’t know.
  3. go to a meeting. You should be getting agendas for meetings, minutes of meetings, in your mailbox or (in some more progressive buildings) in your email inbox. Read the paperwork that you receive.
  4. drop your strata manager a line, introduce yourself, and take an active role in your community. The more involved you are, the more you are going to learn and the more you get out of your home or your investment.

 

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