STRATA TITLE -
RESPONSIBILTIES OF THE OWNERS CORPORATION
10/09
Record keeping
The
owners corporation must record all details of notices given under the
Strata Schemes Management Act or any other Act. Orders under these
Acts, or by a public authority, local council or a court, must also be
recorded and kept for at least five years. The following must be
recorded for each notice:
- the date
and manner of service
- the part
of the strata scheme it is about
- the date
for obeying the order
- the date
the order was obeyed.
The owners
corporation must keep the following information for at least five years:
- details
of motions passed
- copies
of all correspondence received and sent
- notices of
owners corporation and executive committee meetings.
Proxies given to
the owners corporation must be kept for at least 5 years after the
proxy expires.
Financial records and statements
The
owners corporation must keep accounting records and financial
statements for at least five years. These include:
- receipts
consecutively numbered
- a
passbook, a bank deposit book, or a statement of deposits and
withdrawals in order of date, that are bound or kept in a loose-leaf
folder
- a cash
book
- a levy
register.
The owners
corporation must prepare financial statements:
- for the
period beginning on the date the strata plan was registered and ending
no earlier than two months before the first Annual General Meeting
(AGM)
- for each period
beginning on the date the last statement was prepared and ending no
earlier than two months before the next AGM.
Strata roll
The owners corporation must prepare and keep a strata roll. The roll
must be kept by mechanical, electronic or other means. There must be
recorded for each lot:
- the
owner’s name and an Australian address for service of notices
- or the
owner’s agent and the agent’s Australian address for service of notices.
The following
information must be recorded for the common property and the strata
scheme in general:
- the
strata plan number and the address of the building
- the name
of the original owner and an Australian address for notices
- the name
of the managing agent (if there is one) and an Australian address for
notices
- the
total unit entitlements for the scheme and each lot
- insurance
details
- the
by-laws for the strata scheme.
Forms for the records of owners
corporations can be purchased from some law stationers.
Large schemes
A large scheme is one with more than 100 lots. Parking and utility lots
are not counted in the calculation. Some special provisions apply to
large schemes:
- financial
accounts must be audited every year
- annual
budgets must list amounts expected to be spent on specific items
- at least
two quotes must be obtained by the owners corporation for items of
expenditure over $25,000
- executive
committees of large schemes are not permitted to spend more than 10%
above the budgeted amount for any item, except for emergencies, eg
blocked sewer pipes (unless the owners corporation lifts the
restriction by a resolution)
- proxy
votes for a owners corporation meeting must be provided to the
secretary at least 24 hours before the meeting
- personal notice of all
upcoming executive committee meetings and the minutes of these meetings
must be given to all lot owners (notice may not be given via
noticeboards).
INSURANCES
Building insurance
The owners corporation must insure the building under a damage policy
with an approved insurer. This does not apply to an owners corporation
for a strata scheme comprising two lots if the owners corporation
decides by unanimous resolution, and the buildings in one lot are
physically detached from the buildings in the other lot, and no other
building in the scheme is on common property.
Approved
insurers are those authorised by the Australian Prudential Regulation
Authority for general insurance. A damage policy must
cover the building for:
- replacement
(where destroyed) or the reinstatement (where damaged) of the building
back to the same condition it was in when new, and
- payment
for removal of debris and the payment of architects and others whose
services are needed for the replacement or reinstatement.
The building
includes owners’ fixtures and fittings. Fixtures and fittings are items
like carpets in common areas, hot water systems, light fittings, toilet
bowls, sinks, shower screens, cupboards, internal doors, stoves, common
air conditioning systems and intercom systems.
The building
must be valued every five years and insured for at least that value.
Public liability insurance
The
owners corporation must insure, with an approved insurer, against
damage to property, death or injury for which the owners corporation
could become responsible. The minimum amount of cover is $10 million.
Workers compensation insurance
The owners
corporation must have workers compensation insurance, with an approved
insurer, where it is required under the Workers Compensation Act 1987.
Voluntary workers insurance
The
owners corporation must insure, with an approved insurer, against any
damage that it may become liable for when a person does voluntary work
for the owners corporation in the building or on the common property.
A voluntary worker is any person who
does work without any fee or reward, or without expecting any fee or
reward.
Levies and the administrative and sinking funds
The owners corporation must levy (charge) owners in the strata scheme
to raise enough funds to carry out its duties. All levies must be
worked out in proportion to the unit entitlements of each lot.
Administrative fund
The administrative fund is for day-to-day recurrent expenses. The
amount in it must be enough for the owners corporation to pay its
expenses:
- for the
cost of looking after common property and personal property of the
owners corporation
- for the
payment of insurance premiums
- for any
other recurrent expenses other than amounts covered by the sinking fund
or by a special levy.
Sinking fund
The
sinking fund is to cover future capital needs. The amount in the fund
must be enough to cover all the owners corporation’s expenses:
- for
painting of common property
- for
obtaining personal property of the owners corporation (eg. mowers or
washing machines)
- for
renewing or replacing any fixtures on the common property and any
personal property owned by the owners corporation
- to
replace, repair or make good the common property
- for any
debts, other than amounts covered by the administrative fund
- for other
capital expenses.
Ten year sinking fund plans
All schemes that
came into existence on or after 7 February 2005 are required to have a
ten year sinking fund plan for the life of the scheme. The plan has to
be reviewed at least every five years.
Refer to the Sinking funds page on the Fair Trading website for
more information.
Transfer of money between funds
The
owners corporation can transfer money from one fund to the other, or
make a payment from one fund that should have been paid from the other.
But the owners corporation must make a levy to repay that fund within
three months after the transfer of monies.
Setting levies
Levies
must be set at each AGM. When a levy is to be set, a budget must be
given, showing the existing financial situation and an estimate of
receipts and payments. The budget can be given out with the notice of
the meeting or at the meeting before voting on the levy motion.
The motion to
set the levies must show the amount for each fund and be approved by a
majority vote.
The owners
corporation may decide to allow payments by instalments.
After the levies
are set, the Treasurer must write to the owners and tell them the
amount to pay and the date to pay. This notice only has to be given
once.
Extra levy
If the
owners corporation has to pay a debt that was not budgeted for in the
administrative or sinking fund estimates, a levy must be set at a
general meeting and the amount collected paid to the administrative
fund.
Interest and discounts on levies
An unpaid
levy gains interest at the rate of 10% simple interest a year if not
paid within one month after it is due. The owners corporation cannot
increase or decrease the interest but it can make a special resolution
to charge no interest. Unpaid levies, including interest, can be
recovered by the owners corporation as a debt in court.
An owners corporation may make a
special resolution to give a 10% discount where a levy is paid before
the day it is due. Payment made on the day it is due does not attract
the discount.
Legal action
Should an
owners corporation wish to commence legal action of any type in its
administration of the scheme, (including the obtaining of legal
advice), where payment of money is involved, specific steps must be
taken.
Firstly, the decision to
commence legal action will often have to be approved by a general
meeting of the owners corporation (by majority vote).
Secondly, where the estimated
costs of legal action have been disclosed under the Legal Profession
Act to the owners corporation this must be passed on to all lot owners
and executive committee members within seven days of this information
being given to the owners corporation.
When an owners corporation
undertakes residential building work and a contractual dispute
with the builder or tradesperson arises, the owners corporation can
take the matter to the Consumer, Trader and Tenancy Tribunal. This can
happen even if the builder or tradesperson invokes the Building and Construction Industry Security of
Payment Act 1999 to claim any money
they are owed under the contract.
Other responsibilities
Owners
corporations also have the following powers and obligations:
- To issue
a notice on a person to comply with a by-law, when the owners
corporation or its executive committee passes a resolution that there
has been a contravention of the by-law in question.
- Provide
strata scheme information as required by a Section 109 Certificate for
prospective purchasers within 14 days of written request.
- Allow
owner or a person with the owner's consent to inspect the records of
the strata scheme, and collect an inspection fee.
- Power to
grant, by special resolution, a licence to a lot owner to use common
property generally or for a ‘once only’ purpose. Adjudicators can make
decisions on disputes or complaints which have not been resolved by
mediation, and have power to settle disputes over the granting of
licences over common property.
- To
dismiss some or all of its executive committee.
- To notify
those holding a priority vote of all meetings where there are agenda
items where a priority vote may be exercised.
Strata scheme lot owners may be liable
for land tax. For more information, visit www.osr.nsw.gov.au.
Two-lot schemes
If owners
of two-lot strata schemes choose to have the scheme's accounts audited,
the audit is not necessarily
required to meet the Australian Auditing Standard.
Fire safety inspections
The
owners corporation is responsible for ensuring that access to all parts
of the scheme is provided for necessary fire safety inspections.
Pesticide notification
From
February 2007, the NSW Pesticides Regulation requires that residents of
multiple occupancy dwellings must be notified when licensed pest
controllers apply pesticides to the internal or external common areas
of their residence. The rules apply to
residential strata, community and company title schemes consisting of
three or more dwellings, retirement villages, and caravan parks with
long term residents.
The person
responsible for organising the pest treatment must make sure that
residents are given at least five working days notice. Notice of the
treatment can be given in person, by fax, by email or telephone, by
post, in letterboxes, under doors or by placing it on common notice
boards and near the main building entrance.
Full details, fact sheets and blank
notice forms are available from the Department of Environment and
Climate Change NSW at 13 15 55 or: www.environment.nsw.gov.au.