If you’ve been considering purchasing or renting a property in Australia, chances are you’ve bumped into the word ‘strata’. At its simplest, strata is a form of ownership of apartment blocks with shared amenities. Strata lots may be in the form of units, apartments or even townhouses. To find out even more about strata title, read or post: What is Strata?
LookUpStrata prides itself on updating you on all hot strata living topics ranging from the basics to the most complex concepts. We have been doing this for close to a decade now. In this glossary, we’ll break down the most used strata terms to ensure that the next time you’re in the market for a strata unit, you don’t just have the basic terms at your fingertips but also the jargon that comes with this type of property ownership.
Let’s jump right in!
NSW Strata Title Definitions
Adjudicator
In NSW, the Adjudicator was established in 1996 under the Strata Schemes Management Act to help resolve disputes and other issues directed by the Consumer, Trader and Tenancy Tribunal (CTTT). In 2015, NSW Civil & Administrative Tribunal (NCAT) replaced strata adjudication.
Administrative Fund
This fund is for daily recurrent expenses in the running of the common other types of property. Its budget is determined at an AGM and contributed by lot owners.
Agenda
Matters to be discussed or voted on in a gathering. An agenda is captured in a meeting notice and lot owners could be required to vote yes or no on a matter.
Aggregate Unit Entitlement
The aggregate of individual lot unit entitlements in a strata scheme. The schedule shows all lots in a strata plan.
AGM
An acronym for Annual General Meeting. Meeting held yearly by the unit owners.
Annual Fire Safety Statements (AFSS)
A document registered with local council and Fire and Rescue NSW (FRNSW) each year indicating that the fire safety measures put in place property comply. Servicing contractors are required to sign it and strictly abide by the Australia Standards.
BMC
An acronym for Building Management Committee. Established to enable multiple strata plans to be contained in one building area with common areas.
Budget
Owners of a strata scheme approve an annual budget by majority vote. The budget covers strata fees, outstanding bills, debt (including insurance premiums and levies) as well as the administrative fund and the capital works fund (previously known as the sinking fund).
Building Insurance
Building insurance covers domestic residence and property; examples are the common property building itself or other structures on the common property of the strata. Building insurance forms part of the strata insurance policy.
Building Manager
A Building Manager is a person who assists in exercising a number of functions for the strata scheme. The Building Manager’s usual duties include cleaning, maintenance, repairs and upkeep of the property (building and shared areas).
By-Laws
A strict set of rules established by the owners corporation in a strata scheme. The rules are meant to govern the management and use of individual lots and common areas.
Capital Works Fund (CWF)
Formerly the Sinking Fund. Strata Schemes must prepare a 10-year Capital Works Fund to cater to anticipated major expenditures such as replacing lifts or painting the building.
Caretaker
see Building Manager
Chairperson
The person that moderates strata committee meetings as well as other general meetings. In the chairperson’s absence, a strata manager can preside over meetings.
Committee
A group of owners elected in an AGM to represent the interest of all the other strata owners in meetings and carry out any other duties under the law. The committee is charged with, among other things, controlling and maintaining the property.
Common Property
Sections of the strata property or community that do not form part of owners individual lots. These sections may include driveways, fences, and common gardens. There is a lot of confusion around who owns what in a strata lot. This article contains a list of Q&As on this topic received from our audience: NSW: Q&A Where are my common property boundaries?
SCA has this handy Guide – Who’s Responsible. A guide to common property.
Common Property Memorandum
A document to specify who is responsible to repair and maintain certain items in the common property.
Common Property Rights By-Law
The common property shared between residents in a strata scheme can be regulated through the strata’s own by-laws; these are called Common Property Rights By-Law.
By-laws regulate the behaviour of owners, residents, tenants, visitors and also how to use the common property. An example of a by-law is the prohibition of smoking indoors.
The owners corporation of a strata scheme can decide on many different by-laws supporting their common lifestyle goals. But there are restrictions:
- It’s unlawful to create unconscionable or oppressive by-laws.
- A by-law must not restrict children occupying a lot.
- By-laws cannot prohibit or restrict residents from keeping an assistance animal.
Common Seal
The official stamp and forms part of the official signature of a scheme. Anyone who affixes a scheme’s seal on a document is taken to have done so on behalf of all the whole owners corporation.
Companion Animal
See this article: NSW: Q&A ‘No Animals Allowed’ – not even a companion animal
Development Application
Consent for carrying out a development activity. It is an application usually made to local council under the Environmental Planning and Assessment Act 1979.
Exclusive Use By-Law
An exclusive use by-law gives owners of a lot the right to the exclusive use (or special rights) to parts of the common property or asset.
Executive Committee
The executive committee is now known as the Strata Committee (please see below).
Extraordinary General Meeting (EGM)
Gatherings for all scheme members are called general meetings. Other important meetings to be attended by everyone are called extraordinary general meetings.
General Meeting
General meetings are meetings that deal with matters related to the strata; insurance, building defects, changes in the by-laws, funds etc.
Owners corporations are only legally required to hold one annual general meeting (AGM). For that reason, other general meetings typically only occur if a matter has not been settled or requires an urgent resolution.
Large Strata Scheme
A “large strata scheme” is a specific legal definition of an owners corporation with more than 100 lots (excluding parking and utility lots).
Large strata schemes are subject to more restrictive financial and accounting standards, such as requiring annual audits, forecasting on specific items, a minimum of two quotes on expenditure exceeding $30.000, as well as prohibiting exceeding the estimated expenditure for any budgetary matter by more than 10 per cent – unless authorised to do so at a general meeting.
Levies
Levies or strata fees are payments from owners that seek to cover the strata scheme’s running costs. They are agreed upon at the annual general meeting (AGM) as budgets are approved for the following 12 months.
Levy Arrears
A levy that is defaulted on – ie. has not been paid by the due date – is considered a “levy in arrears”.
If you fall behind on your levies you are an unfiancial lot owner. You risk incurring added costs such as interest, collection letters, and solicitors fees. Unfiancial lot owners are not able to vote at a meeting on a motion (other than a motion requiring a unanimous resolution) until the debt has been settled. If you repeatedly or continuously fail to pay your levies you risk losing the claim to your lot.
Lot
A strata lot not only includes your individual strata unit but also includes the common property and common assets owned by the strata corporation. An example of a common asset and property could be a common pool.
All strata owners in the corporation are allowed to use the pool. Likewise, every owner is also responsible for maintaining and repairing the common pool.
If you are unsure as to what areas, assets and properties constitute your individual ‘lot’ and what constitutes common strata property, check your specific strata plan.
Lot Property
See Lot
Minutes
Minutes are a written record of anything discussed or decided at general meetings. They must be taken – and be available for review two weeks after a meeting.
Model By-Laws
Model by-laws are a sample model for a strata scheme’s by-laws. Owners corporations can use or discard the model, however, they are required to produce a set of by-laws that have been approved by the owners corporation.
Motions
A motion is a proposal put forward at a general meeting by a strata lot owner, to be voted upon.
NSW Civil & Administrative Tribunal (NCAT)
Operationalised in 2014 to handle tasks previously meant for the CTTT and other NSW tribunals. Under the NCAT, the Consumer and Commercial Division resolves disputes arising in the scheme communities.
Office Bearers Liability Insurance
An insurance cover against wrong decisions and acts by the volunteer committee. This is a compulsory insurance for NSW strata schemes. This article may help: Understanding Office Bearers Liability Insurance
Ordinary Resolution
An ordinary resolution is a motion passed at a general meeting by a majority vote of the lot owners present and voting on the resolution.
Owners Corporation (OC)
An entity consisting of all owners of a strata scheme. It is established when a scheme is registered and each owner automatically becomes a part of the corporate scheme.
Poll Vote
A poll vote is a vote on a decision or motion at a general meeting. The poll vote differs from “a show of hands” as it is counted based on unit entitlement – how many units or lots a person owns.
Any member of an owners corporation can call for a poll vote.
Proxy
A person or company appointed to attend meetings on behalf of scheme owners. Depending on the rights delegated, a proxy can vote on behalf of an owner or make a range of other decisions on an owner’s behalf.
Public Liability Insurance
A scheme insurance cover for events such as injury, property damage, or death. The minimum cover amount is $20M. More details are contained in the Product Disclosure Statement and Insurance Certificate.
Quorum
A quorum is the minimal number of lot owners required to make a decision on behalf of all members of a strata scheme. All meetings are required to have a quorum present.
The requirement for quorums differ depending on the type of meeting.
Read more about quorum requirements at AGM here:
NSW: Q&A Quorum Requirements for the AGM
Resolution
A verdict based on a voted motion. Resolutions come in three types:
- unanimous,
- special,
- and ordinary.
This article contains more detail: Strata Resolutions – What is Required?
Secretary
An owners corporate scheme official with specific duties including writing meeting minutes and issuing notices. A secretary’s roles may be delegated to the scheme managing agent.
Section 184 Certificate
A certificate that indicates the financial position of strata owners concerning a given lot, at a particular time. It can be requested for purposes of mortgage financing or by a conveyancing solicitor during the purchase stage. Information contained therein includes levies and outstanding amounts, representative agent, committee members’ addresses, and more.
Solicitors obtain the Form 4 – Section 184 Certificate or the Strata Information Certificate from the scheme secretary when a strata lot is sold. It helps to determine any outstanding amount for that particular lot.
Sinking Fund
See Capital Works Fund.
Small Strata Scheme
A “small strata scheme” is a specific legal definition of a strata with fewer than 100 lots (excluding parking and utility lots).
Special Levy
This occurs when a corporate scheme incurs unexpected expenditure for specific tasks. Special levies can be discussed in a general meeting.
Special Resolution
A special resolution is any resolution that changes or adopts new articles to the by-laws, makes alterations to the building or structure as well as changes to the external appearance of the building or structure.
Special resolutions require a greater number of votes than regular resolutions. It is passed if less than 25% of the total number of votes are cast against the motion.
Strata Committee
Representatives of scheme owners who engage in the daily operations of the community. It comprises a membership of up to 9 elected officials to oversee the day-to-day running of the scheme. The committee is selected during an AGM by the ordinary members and given powers that can be restricted as needed.
Strata Community Association (SCA)
The peak industry body for Strata and Community Title Management in Australia and New Zealand. It is both a professional institute and a consumer advocate for the strata community. SCA (NSW) has both strata professional and lot owner membership.
Strata Loan
A strata loan is a loan to the owners corporation of a building that funds improvement projects such as renovation, green and energy projects, maintenance, repairs and other improvements.
Strata Management Agreement
A strata management agreement is a written, legally binding agreement between an owners corporation and a strata manager. It details their responsibilities and other requirements for the management of the strata.
The maximum length of a strata management agreement is three years.
Strata Management Statement (SMS)
A statement detailing how shared facilities will be managed in a scheme. It features standards and applicable by-laws, meeting rules, costs sharing for shared areas as well as dispute resolution mechanisms.
A strata management statement is required because it ensures that owners agree to carry out their individual obligations – as detailed in the strata management statement.
Strata Manager
A Strata Manager is a professional responsible for the administration of a strata scheme. They are also referred to as owners corporation managers or strata managing agents.
The strata manager sets dates for meetings, distribute notices, organise repairs, arrange payment of invoices, ensure compliance with various regulations or handle other issues with the strata.
Strata Plan
A strata plan is a subdivision of parcels of Real Property land divided into separate lots and common property. Your strata plan details what is your lot and what is common property.
Strata Roll
A document with details about strata schemes and common areas together with information about lots including owners, mortgage partners and other creditors, and covenant charges.
Dispite misconceptions about breaches to privacy laws, the strata roll is the property of the owners corporation it can be accessed in accordance with legal principles.
Strata Scheme
A strata scheme is a collection of lots. Strata refers to a model of property ownership that allows for individual ownership of certain parts of a property or parcel of land (lots) as well as shared ownership of common property.
You can read more about strata schemes here: What is Strata.
Strata Schemes Management Act 2015 (SSMA)
Strata schemes are regulated by the NSW Strata Schemes Management Act 2015 and Strata Schemes Regulation 2016. The Act details the legal requirements for running a strata scheme in NSW.
The Strata Schemes Management Act 2015 was reformed in 2016 – and amended in 2021. The changes to the act are predominantly with respect to the installation of sustainability infrastructure, provide clarification on the “no pets” by-laws and address NCAT’s ability to impose penalties on people who breach orders.
Strata Search or Strata Inspection Report
Popularly referred to as a search of the records or books or simply a strata inspection. A strata inspection report is usually conducted by a professional firm before purchasing a unit in a scheme.
Strata Title
A popular Australian system of owning property. Each unit of ownership is called a ‘lot’ with shared ownership of common areas including playground, fences, and roads. Several strata scheme owners come together to form the owners corporation.
Title
A type of property ownership. Just like titles for stand-alone property, strata units come with titles for respective lots and their shared amenities.
Treasurer
The treasurer of a strata supervises the budget, financial performance and financial well-being of the scheme.
Unit Entitlement
Lots are valued based on several factors including registration value, size, and location. Unit entitlement for respective lots is used to evaluate owners’ voting powers and levy contributions.
Unfinancial
An unfinancial lot owner is an owner of a lot in a strata scheme who has not paid their levies.
