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An introduction to strata: what is it and why is it important?

June 12, 2019

We’re going to call it. Strata is probably among the most widely misunderstood concepts in the real estate industry. Few seem to ‘get it’ and fewer seem to know just how necessary it is to be actively involved in the dealings of their owners corporation and/or executive committee.

Strata isn’t just some random fee you have to pay once per quarter. It’s important to know why you’re paying that fee and what it entitles you to. To help explain, we spoke with Tarnee Lamb, New Business Manager here at Civium. 

What is strata?
When we use the word ‘strata’ we are referring to a specific type of land title that allows a larger property to be divided into smaller properties. These smaller properties are called lots.

“In the example of an apartment block, an apartment would be a lot, while the common property would include spaces like the car parks, shared courtyards and gardens” says Tarnee.

Originally an Australian invention (go us!), strata title gives owners the ability to be part of an owners corporation and have a say in how the common areas are maintained.

Who is involved?
Every person who buys a lot within a strata-titled building automatically becomes part of the owners corporation. The owners corporation can also elect members to form an executive committee who will represent all owners and look after the running of the strata scheme. The executive committee can also (and usually does) select a Strata Manager to handle the legalities of running the building as well as budgets, reports, and secretarial responsibilities.

“A strata manager is primarily an administrator - and although we are there to guide, support and advocate for owners, we are ultimately facilitators. This means we take instructions from the owners corporation and advise them of their limitations under law” says Tarnee. 

“It’s a great idea to have a strata manager involved, as most owners don't understand the laws and can find themselves in some serious hot water in certain situations - for example, if a building doesn’t have enough insurance, the owners might be forced to have an extra levy issued to pay the difference.”

Why should I care?
In a nutshell: you’re paying for it! And wouldn’t you prefer to have a say in exactly how your strata fees are distributed?

As Tarnee points out “A lot of owners don’t know that the executive committee and the owners corporation have direct control over strata money and how it is spent. Strata managers have access to owners corporation funds but it is not our money, so we need approval to spend it.”

Think about it: the garage door that’s constantly broken—that’s something you could potentially have a hand in fixing, rather than having thousands spent on replacing the perfectly good shrubbery that lines the front perimeter. Or you could help overcome the long-running issue of the broken intercom that means you have to walk downstairs every time there’s a visitor or delivery guy present.

There are a variety of other reasons why it’s beneficial to take an active role in the management of the overall property, too: 

It’s your responsibility: As part of an owners corporation, you’re jointly responsible (along with the other owners) for maintaining the common areas.

Have a say in the pet policy: Whether or not you’re a fan of furry friends, it’s going to be pretty important to know your owners corporation’s thoughts on keeping them at the property. It’s also up to you and your fellow owners to create policies that are reasonable and fair to all with regard to pets and their behaviour.

Build a sense of community: We bet you’ve lived in complexes (or even some suburban streets) where you’ve never so much as sighted your neighbours. It’s a weird trend that seems to be particularly present in apartment buildings, where neighbours simply no longer talk to one another. So being an active part of your owners corporation could be one way to bring back the community spirit and work together towards common goals.

Two heads are better than one: Well, okay, it’s more than two heads—but you get the picture. Decisions made with as many owners as possible will have a much better chance of reflecting the needs of a greater sample of people. So really, your involvement in your owners corporation is about bettering the living environment for everyone who lives there, including both owners and tenants.

Protect the value of your property: By being an active member of your owners corporation and having influence over how funds are spent on the upkeep of common areas, you’ll also have a more direct influence over the value of your property over time, and may even feel more of a sense of pride towards it. Your property is probably the biggest investment you’ll make in your entire life, so it’s a great idea to be aware of what decisions are being made about it.

We hope this article has helped you to see the value in participating actively in the dealings of your owners corporation. We think involvement is always better than apathy, especially when it comes to one of the biggest investments you’ll ever make.