Purchasers regularly asked the question “What is the difference between a Community Title and Strata Title”. Here are the comparisons that should assist with this query.
Prior to 1996 properties that were divided into units were set up as Strata Title. A unit in a Strata Plan is defined by the structural sections of the building where the interior linings are owned by the proprietor on the title but the exterior walls and roof of each unit are owned by the Strata Corporation along with the Common Property. The Common Property is usually a shared driveway, service area, gardens, gates and landscaping. Each Unit in the Corporation will usually have ‘unit subsidiaries’ attached for the unit owner’s exclusive use, the most common being the front or back yards and carports. Articles of the Association are set up at the time the Corporation is established. These may be either standard Articles or more specific rules which the Unit owners or Occupants must abide by.
Large Strata Corporations are usually administered by a Strata Manager who is responsible for the maintenance and upkeep of the Common Property and shared components of the land, as well as collecting the quarterly levies for maintenance funds and insurance. Smaller schemes of two or three units may be self-managed.
All unit owners are automatically members of the corporation and each year have the right to attend the Annual General Meeting. Owners will have a say and a vote for any works that may be required to take place in the future, what insurance is required and all other items that may arise in the general upkeep and management of the Strata Corporation.
Building and Public Liability Insurance is taken out by the Strata Corporation to cover the buildings and the common property over the land. The owners should take out either their own contents insurance or landlords insurance if the property is being rented out.
Each year administration fees are calculated along with a sinking levy (for future maintenance items such as painting) and these contributions are paid by each of the members on a quarterly basis. The contributions are calculated on a unit entitlement value which is usually based on the area or size of each individual unit. Insurance, garden maintenance, driveway and lighting maintenance are some of the items these fees are used for. Water use may also be paid as part of these fees by the Corporation if the scheme has a single shared water meter but usually these divided in accordance with the Unit entitlement (based on the Unit size) and are paid by the individual owners. Water rates are always sent direct to the Owner on an individual unit basis.
In 1996 the Community Titles Act came into existence and the Strata Titles Act ceased to be in effect. In a Community Title the land is held similarly to a Strata Unit but the boundaries are not related to the structural sections of the buildings but rather to the land itself. When subdivided in a Community Division the land is divided into Lots (rather than Units) which are specified on the plan. There is still Common Property and this can be a simple as a shared driveway and the service infrastructure or landscaping, gates, corridors and lifts.
A Community Corporation is created and the owners of each Lot are responsible for the administration the rules of the corporation called By-Laws. These By-Laws are similar to the Articles of the Association but are specific to each Community Corporation.
If the Community Corporation only has two Lots then a Manager is not required and annual meetings are not required to be held. The owners generally share the cost for the insurance over the common property according to their lot entitlement. In a Community Corporation the Owners are responsible for the maintenance and insurance of any structures on their own Lot. No Owner is required to provide funds for maintenance to other Lot owners buildings
If the Community Corporation is larger two Lots then a Community or Strata Manager (this name has not necessarily changed with the changes to the Act) is usually appointed and they have the responsibility of organising the maintenance and insurance of the Common Property. Water use is calculated on the Lot Entitlement which is based on the Lot size and is usually paid by the individual owner.
COMMUNITY STRATA TITLE
An example of a Community Strata property are apartment blocks where there are multiple storeys. The ownership is similar to the old strata titles as the floors of one apartment are the ceiling to the one below therefore the there is no definitive boundaries as in the new community titles. It basically is a mix between the two and the Corporation is responsible for the insurance which is for the building and common areas including the stairwells, lifts, rooftop access and swimming pools. The Corporation is also responsible for the maintenance of the common areas and the Lot Owners pay administration fees to the Corporation towards this.
As in the Strata Title each Unit in the Corporation will still have ‘subsidiaries’ for the Lot owner’s exclusive use which in this case is usually car parks and balconies. The Corporation has By-Laws which are set up at the time the Corporation is established and these are the rules that the Owners or Occupants must abide by.
Unless separately metered the water use is calculated and paid the same as a Strata Title property.
Just to keep things interesting prior to Strata Titles land such as flats and units were often held in what was called a moiety title. This form of ownership is rare these days but does crop up from time to time. The land is owned by an entity which could be a person or a company and they have a lease over the whole of the land. The ownership of each unit is then setup as an under lease in the individual owners’ names for the portion of the land that they own. Alternatively a company was the registered proprietor on the Title and each owner was granted a share certificate for their portion of the land.
BUYING A STRATA OR COMMUNITY TITLE PROPERTY?
If you are purchasing a property in SA that belongs to a Strata Corporation or Community Corporation it is important that the Artlcles of Association or By-Laws, any Scheme Descriptions and Development Contracts and the Minutes of any meetings are carefully read. These documents can inform you of vital information relating to the property which may affect you as purchaser. There may be additional costs that are due after settlement for maintenance works such as painting or replacement of gutters. Common property insurance must also be in place even if it is a new development.
This is where a good SA Conveyancer can assist you by reading through these and explaining what they mean. It is also a good idea to have your conveyancer read these BEFORE you sign the contract or in the Cooling Off period. Don’t get caught out – once you own the property it becomes your obligation to contribute to the corporation.
The team at McKay Business Services are all members of the AICSA and are proud Adelaide conveyancers