Skip to main content

Strata Essentials for Property Owners - Responsibility


If you talk to people who own apartments/units in NSW 99% of them will say something like "our strata is totally dysfunctional" and some of them might say "our strata management is quite good". Below I will explain what they mean by saying that, because what they are referring to may be quite different from what they say.

Term "strata" is used by majority as something that relevant to ownership, management and ongoing maintenance of a block of units. The concept of strata title was introduced in 1961 in Australia to deal with property rights of apartment blocks. Strata title allows individual ownership of "a lot" which is part of the building (apartment, unit, townhouse) together with shared ownership in the "Common Property" which is the remainder of the building that is not included in the individual lots (i.e. walls, roofs, foyers, planters, pathways, parking etc.).

This is a type of communal ownership and living. The keyword here is "communal". This usually causes various problems.

All owners of a strata title are responsible to:

1. Maintain all common property including the structure of any buildings on the land
2. Insure the whole of the property for the full replacement value
3. Administer the finances and common funds of the group of owners
4. Administer the secretarial functions including the conduct of meetings of members, documentation of minutes, and dealing with all correspondence
5. Resolve disputes involving unit owners and enforce the strata rules.

The keywords here are "all owners". For every strata there is established an "owners corporation" (some people call it "body corporate", "strata company" or "community association"). Owners corporation includes all owners.
For details see: Strata Schemes Management Act 1996 (NSW) s 8 and Strata Schemes Management Act 1996 (NSW) s 11

When somebody is buying into strata title it is also meaning buying into the responsibility of being an owner and part of owners corporation. In order to simplify the decision making process and to try to reduce involvement in building management for majority of strata lots (units) owners there is an "executive committee" – a group of owners who should make decisions in regards to the above-mentioned responsibilities on behalf of owners corporation. This, however, does not repeal the responsibilities of all owners (every owner).

Consider the following scenario. A property manager (a person who manages property of someone else, in this case real property) is writing an email to the strata manager (I will talk about those characters later) with the following contents:
"Upon going to the building to do my condition report, I was appalled at the condition of the maintenance on the outside of the property. Including the entrance, foyer, carpet and lifts. Could you please bring it to the attention of the company that cleans the building? I will also make a note to go and inspect the building within 1-2months."

In this case I think it may be a good idea to remind property manager that it's all owners responsibility to keep the building clean, including the owner of the lot in that particular case. Therefore the property manager or owner should be
a) involved in organising of cleaning process;
b) instructing the manager to do so.

It is problematic to run the strata title properly, because of various reasons among other things:
1. Different interests of strata lots owners
2. Overall reluctance to deal with strata matters
3. Absence of knowledge about strata title essence and how it works and should work
4. Incomprehension of the fact that strata is communal living and effort of everybody in the strata block is essential in order to achieve better results for all owners
5. In a situation of serious disputes or dealing with illegal activity people just don’t do anything and try to delay important decisions.

In order to try and improve the situation, owners get help from other people – property managers and strata managers. There is a perception that "strata managers" will do the job owners corporation should be doing. It is only partially true. I will explain why in the future posts.

Happy property ownership and investing!

Comments

Popular posts from this blog

Wine - 2011 Brown Brothers Crouchen Riesling

Very nice wine with fruity taste - peach and pear: Consumed with Hungarian salami. Tasting notes .

Scrum - Team Culture and Wall Manifesto

In the Scrum framework one of the key components is the wall and daily stand-up. In some organisations I worked with the whole concept of the wall is not accepted by many developers, because of the stand-up necessity and "time waste". Very often all that methodology is used for the sake of methodology and not to achieve what we actually do - adding or creating value to our customer (usually called "The Business"). I can understand frustration that is caused by the wall and stand-up process. From the software developer perspective it is really a waste of time for the following reasons: 1. In 95% of cases developers are head down working like hell delivering valuable outcomes that they are accountable for. Extra effort to go to the wall, staying there for 15-30 minutes and listening or not listening to what others were doing yesterday and will be doing tomorrow is annoying for them; 2. The mere fact of having to do something mandatory to do that looks like

Mastering The Multitasking

There is usually two distinct perspectives on multi-tasking: 1. Multitasking is counterproductive. We get distracted by multiple tasks that all get our way and fight for our scarce attention, time and resources. This leads to a common fallacy that if you do multiple activities “at a time” you are not doing good work in any of those. 2. Multitasking is a way of getting many things done in a short period of time or in a long run. Indeed it can be either a disaster or a great helper depending on how it is used and practiced. Most recent research shows that we don’t do multiple tasks purely in parallel or simultaneously. That means we don’t purely multi-task, but switch between tasks and execute them one at a time, but by spending very small timeframes on each task. A good example from the history is a story about Julius Caesar capabilities in that area. Plutarch writes, “Caesar disciplined himself so far as to be able to dictate letters from on horseback, and to give directi