If you own a strata apartment in South Australia, you are automatically part of a strata corporation. But what exactly is a strata corporation, what does it do, and what does it mean for you as an apartment owner?
For many people buying their first apartment, the terminology surrounding strata living can seem complicated. Strata corporation, common property, unit entitlements, levies, management committees, by-laws and general meetings are all terms that apartment owners will encounter.
Understanding how your strata corporation works is important because decisions made by the corporation can directly affect your home, your financial obligations and potentially the long-term value of your property.
What Is a Strata Corporation?
A strata title is a form of property ownership in which land is divided into separate units together with common property. Strata title is commonly used for apartments, units and some townhouse and commercial developments.
When a strata plan is lodged with the Lands Titles Office, a strata corporation is formed.
The strata corporation is a legal entity made up of the owners of the individual strata units. Every unit owner automatically becomes a member of the strata corporation.
This means that when you purchase a strata apartment, you are not simply buying your individual unit. You are also becoming part of a larger legal and financial structure responsible for managing the shared aspects of the property.
What Does a Strata Corporation Do?
One of the most important functions of a strata corporation is to manage and maintain the common property for the benefit of the unit owners.
Common property can include areas and facilities shared by owners, depending on the particular strata plan. It may include things such as entrances, stairways, corridors, driveways, gardens, roofs and other shared parts of the development.
The strata corporation is also responsible for administering the corporation’s other property and enforcing its articles.
In practical terms, the corporation is responsible for many of the things that keep an apartment building operating, maintained and functioning as a community.
Who Is the Strata Corporation?
The strata corporation is all of the unit owners collectively.
This is an important point for apartment owners to understand.
Your strata corporation is not the strata manager.
A strata manager may be appointed to assist with the administration and management of the corporation, but the corporation itself consists of the owners.
Similarly, the management committee does not own the building or replace the corporation. The committee acts on behalf of the corporation within the powers given to it.
Understanding these different roles can make strata governance much easier to understand.
What Is the Management Committee?
A strata corporation can choose to conduct its business through general meetings or delegate some of its functions to a management committee.
The management committee is responsible for carrying out the business of the strata corporation within the powers given to it.
Management committee members are generally unit holders, and the committee is appointed by ordinary resolution at a general meeting.
A committee can therefore play a very important role in the day-to-day governance of an apartment building.
However, being on a management committee is a responsibility, not simply a title.
Committee members are involved in decisions that can affect the building’s finances, maintenance, contracts, common property and the interests of all owners.
What Does the Strata Manager Do?
Many apartment buildings appoint a professional strata manager to assist with the administration of the corporation.
A strata manager can provide valuable assistance with matters such as meeting administration, records, correspondence, financial administration and other functions delegated to them.
However, owners should understand that appointing a strata manager does not mean that owners no longer have responsibility for their strata corporation.
The owners remain the members of the corporation, and important decisions remain matters for the corporation and, where applicable, its management committee.
Being informed and involved therefore remains important.
What Are Strata Levies?
Strata corporations need money to operate, maintain common property and meet their financial obligations.
Under the Strata Titles Act 1988, a strata corporation can raise funds and may, by ordinary resolution, levy contributions against unit holders. Contributions are generally proportional to the unit entitlements of the various units, unless another basis is determined by unanimous resolution.
These contributions are commonly referred to by apartment owners as strata levies.
Levies may contribute towards expenses such as:
- Building insurance
- Maintenance and repairs
- Common electricity and services
- Cleaning
- Gardening and grounds maintenance
- Professional and management fees
- Building projects
- Other costs associated with operating and maintaining the corporation
It is important to remember that strata levies are not simply an additional “fee” for owning an apartment.
They are a mechanism for owners to collectively fund the responsibilities of the corporation.
Why Are Levies Sometimes Higher Than Expected?
Apartment owners can understandably become concerned when levies increase.
However, a well-managed building needs to plan for both its regular operating expenses and significant future expenditure.
Major repairs and maintenance can be expensive. Roof work, painting, waterproofing, concrete repairs, lifts, fire safety systems and other major building infrastructure can require substantial expenditure.
A corporation that continually keeps levies artificially low may ultimately find itself facing significant special levies when major work becomes unavoidable.
For apartment owners, the cheapest levy is not necessarily the best levy.
Good financial planning should consider the condition of the building, anticipated maintenance requirements and the long-term needs of the property.
What Is Common Property?
Understanding common property is one of the most important aspects of strata ownership.
Your individual apartment is your unit, but your building also contains areas and infrastructure that are shared by the owners.
Exactly where the boundaries between individual property and common property fall can depend on the strata plan and relevant legislation.
This is why owners should not assume that responsibility for something simply depends on where it is physically located.
If you are unsure whether an area, fixture or item is part of your unit or common property, check the relevant strata documentation and obtain appropriate professional advice where necessary.
This distinction can be particularly important when determining who is responsible for maintenance and repairs.
Why Should Apartment Owners Attend General Meetings?
General meetings are an important part of strata governance.
A strata corporation must hold an annual general meeting at least once each calendar year and within 15 months of the previous annual general meeting. At least 14 days’ written notice must generally be provided to unit holders.
Meetings provide owners with an opportunity to participate in decisions affecting their building.
This can include matters relating to:
- Budgets and expenditure
- Levies
- Insurance
- Maintenance
- Contracts
- Management
- Committee appointments
- Building projects
- Other matters requiring owner approval
If owners do not participate, decisions can still be made.
Having a voice means turning up, asking questions and voting when important decisions are being considered.
What Are Strata Articles or Rules?
A strata corporation has articles that establish rules governing the corporation and the use of the strata property.
These rules can deal with matters affecting the way owners and occupiers use their units and common property.
Apartment owners should take the time to understand the rules applying to their particular building.
Rules can be particularly important when an owner wants to renovate, alter part of a property, keep a pet, make changes affecting common property or undertake another activity that may require approval.
Never assume that because something is permitted in a neighbouring apartment building, it is automatically permitted in yours.
What Records Should a Strata Corporation Keep?
Good record keeping is an essential part of effective strata governance.
South Australian requirements include keeping records such as the register of unit holders, meeting minutes, accounting records, notices and orders, correspondence and other relevant documents for specified periods.
Financial records are particularly important.
Owners should be able to understand the financial position of their corporation and how funds are being collected and spent.
This is one reason prospective purchasers should investigate the financial and administrative history of a strata corporation before buying an apartment.
Buying an Apartment? Look Beyond the Apartment Itself
One of the biggest mistakes a prospective apartment buyer can make is concentrating entirely on the individual apartment.
The apartment might look perfect.
But what is happening with the building?
Before purchasing a strata property, prospective buyers should investigate matters including:
- Current strata levies
- Outstanding contributions
- The corporation’s financial position
- Existing or proposed major works
- Building maintenance
- Insurance
- Meeting minutes
- Existing disputes
- Articles
- Planned expenditure
- Any significant liabilities
The Legal Services Commission of South Australia specifically recommends that prospective purchasers understand the operations and finances of the strata corporation before signing a contract. Information that can be requested includes financial records, meeting minutes, articles, insurance policies, assets and liabilities and details of expenses incurred or proposed.
You are not just buying an apartment – you are buying into a strata corporation.
Strata Living Works Best When Owners Get Involved
A successful strata community requires more than a good strata manager.
It requires informed owners who understand their responsibilities and participate in the governance of their building.
Owners who attend meetings, read the information provided, ask questions and take an interest in their building can make a valuable contribution to the community.
For those who volunteer to serve on a management committee, understanding the responsibilities involved is particularly important.
Good governance can help buildings make better decisions, manage finances responsibly, address maintenance issues and create a better environment for everyone who lives there.
Where Does the Adelaide Apartment Owners Association Fit In?
The Adelaide Apartment Owners Association (AAOA) exists to advance the interests of apartment owners in the City of Adelaide.
We believe that informed apartment owners are better equipped to participate in their strata communities and to have their voices heard on broader issues affecting apartment living.
AAOA provides a collective voice for apartment owners and seeks to encourage better understanding, informed discussion and advocacy around the issues that matter to Adelaide’s apartment communities.
As Adelaide continues to grow and more people choose apartment living, it is increasingly important that apartment owners understand the systems governing their homes and have an opportunity to contribute to the conversation about the future of apartment living.
A Final Word for Apartment Owners
Strata living comes with shared responsibilities, shared costs and shared decision-making.
It can sometimes be complicated, but understanding how your strata corporation operates is one of the best ways to protect your interests as an apartment owner.
Know your rights. Understand your responsibilities. Take an interest in your building. And have your voice heard.
The Adelaide Apartment Owners Association is committed to helping build a stronger, better-informed community of apartment owners across Adelaide.
Join AAOA and add your voice to the conversation about the future of apartment living in Adelaide.
This article provides general information only and is not intended to constitute legal advice. Strata arrangements and individual circumstances can vary. Owners should obtain independent professional advice where appropriate.