The strata corporation

Every strata title property has its own strata corporation.

The role of a strata corporation is to administer and maintain the common property for the benefit of all unit holders, to administer all other property of the corporation, and to enforce the articles of the strata corporation [s 25 Strata Titles Act 1988 (SA)].

All unit holders are automatically members of the corporation [s 18(4)], but tenants are not.

Note that unit holders are guarantors of their corporation's liabilities, which means the corporation's debts are enforceable against each or any of the unit holders directly [s 21(1)]. If the corporation has a debt, the unit holders have, amongst themselves, the right of contribution to the debt based on their respective unit entitlements [s 21(2)].

The corporation must have a common seal [s 18(3)], which may be used for entering contracts, and must be used if the corporation wishes to amalgamate with another strata corporation.

The strata corporation can delegate some or all of its functions to a management committee and may appoint a strata manager or other such agent to assist with the management of the corporation.

The corporation can make rules which are binding on the corporation, unit holders and tenants regarding the use of common property and the units [ss 19, 20], providing that the rules do not contravene the Strata Titles Act 1988 (SA) or other laws.

Common property

The common property is held by the strata corporation in trust for all the unit holders [s 10 Strata Titles Act 1988 (SA)]. It is the responsibility of the corporation to maintain the common property, while it is the responsibility of individual unit holders to maintain what is not common property.

What is common property?

The question of what is and what is not common property is a difficult issue, and can cause many disputes. Generally speaking, common property is any land or space that is not within a unit [s 5(6)]. Unless a particular strata plan indicates otherwise, the boundary of a unit is the internal surface of the walls, floors and ceilings [s 5(5)]. In most strata corporations, the roof, guttering, external walls and foundations are common property. Internal walls are the owner's responsibility.

Common property also includes [s 5(6)]:

  • any pipe, cable, wire, duct or drain that is not for the exclusive use of a unit (any that service only one unit are considered part of that unit, not common property)
  • any structure that is not for the exclusive use of a unit installed before the deposit of the strata plan
  • any structure installed by a strata corporation as part of the common property
  • any other structure on the site committed to the care of a strata corporation as part of the common property.

In older strata plans that were deposited before 1 September 1988, the unit boundary was defined as midway between the surfaces of walls, floors and ceilings and this definition continues today, unless it has been changed by an amendment to the strata plan. Legal advice may be necessary to determine the correct boundaries of strata plans deposited before 1 September 1988.

A unit may also include an area defined on the unit plan as a 'unit subsidiary', which is not common property but an area for the exclusive use of a particular unit, for example a carport or garden [s 5(4)(e)]. Unless the strata plan explicitly states otherwise, a wall or fence between a building that forms part of a unit and a unit subsidiary to that unit is part of the common property [s 5(7)].

Powers of the strata corporation

Some of the powers of the strata corporation are to:

  • acquire, deal with and dispose of real and personal property (including an interest in a unit) and rights in relation to real and personal property [s 26(1)(a) Strata Titles Act 1988 (SA)]
  • borrow money, maintain bank accounts and invest surplus funds[s 26(1)(b), (c), (d)]
  • enter into contracts [s 26(1)(e)] (see Contracts below)
  • levy maintenance payments against unit holders [s 27(2)] (see Contributions below)
  • require a unit holder to carry out necessary work, such as internal plumbing repairs [s 28] (see Maintenance and repairs below)
  • do anything reasonable to enable it to fulfil its functions under the Act [s 26(1)(f)].

Contracts

The strata corporation may enter into any kind of contract [s 26(1)(e)]. It may do so either by using its common seal, or by authorising an officer of the corporation or an agent (such as a strata manager) to do so on its behalf [s 24].

Contributions

The corporation raises funds by levying contributions against all unit holders, in accordance with an ordinary resolution passed at a general meeting [s 27(2)]. The amount that each unit holder contributes to funds is normally calculated according to the 'unit entitlement' set out in the strata plan [s 27(3)(a)]. Put simply, a unit entitlement is the portion, or ratio, of the capital value of a unit as against the sum of the capital values of all the units [s 6]. The corporation may, by unanimous resolution, determine that contributions are paid on some other basis [s 27(3)(b)].

The corporation may, by an ordinary resolution at a general meeting, allow contributions to be paid in instalments, as specified in the resolution [s 27(4)(a)].

If contributions are not paid, they are recoverable as a debt [s 27(5)]; the corporation can sue the unit holder for the money.

An amount of interest payable on contributions or instalments that are in arrears may be imposed by the corporation, by ordinary resolution [s 27(4)(b)]. The amount of interest charged may not be more than 15% per annum, and interest cannot be charged on unpaid interest [reg 8A].

Maintenance and repairs - entry to premises

The corporation’s articles will usually impose a duty on a unit holder to maintain and repair their unit. If a unit holder does not do so, the strata corporation may give a unit holder written notice requiring them to carry out specific work by a certain time. If the work is not done in the set time, the strata corporation may, after giving at least two days notice in writing to both the unit holder and the occupier (for example, any tenant), authorise workers to enter the unit to do the work. [s 28(1), (2), (3)]

Similarly, the corporation may require and enforce work on a unit to remedy a breach of the Act or the articles even if the breach was by a former unit holder, an occupier (tenant) or former occupier [s 28(1)].

If an officer of the corporation or a person authorised by the corporation (such as a strata manager) is satisfied that urgent action is necessary to avert a risk of death, injury or significant damage to property, the officer or authorised person can, after giving whatever notice (if any) to the unit holder and occupier they consider reasonable in the circumstances, authorise entry to a unit for the performance of work reasonably necessary to deal with the risk. To enter the unit, such force as is reasonably necessary may be used [s 28(3a), (3b)].

The individual unit holder is liable to the corporation for the reasonable cost of work done [s 28(4)]. If the need for the work arose because of someone else, for example a tenant or previous owner, the unit holder can recover the cost as a debt from that person [s 28(5)].

Return of property

A strata corporation may require anyone in possession of any record, key, or other property of the corporation to return it to an officer of the corporation by a specified time. The person in possession of the property must be given written notice to return the property, and the specific person it must be given to must be stated in the notice [s 39].

Insurance

A strata corporation must have building insurance [s 30 Strata Titles Act 1988 (SA)] and public liability insurance [s 31]. A strata corporation with an administrative or sinking fund must have fidelity guarantee insurance from 27 October 2014 [reg 9(2)(b)], s 31(2a)]. It may also, by special resolution, decide to insure against other potential liabilities, for example, office bearer liability.

A unit holder, a mortgagee of a unit or a prospective purchaser or mortgagee of a unit may, by contacting the secretary of the strata corporation, request to see any or all of the insurance policies currently held by the corporation [s 32].

Building insurance

The strata corporation must insure buildings and building improvements to replacement value [s 30], which includes any costs associated with replacement, such as demolition, surveying, architectural or engineering work. The insurance must cover damage caused by the events, apart from subsidence, listed in regulation 10 Insurance Contracts Regulations 1985 (Cth) [s 30(3)]. Under no circumstances can a corporation permit each unit holder to take out their own individual building insurance instead of the corporation.

The corporation’s building insurance will not usually cover the contents of a unit, so occupiers may need to take out their own contents insurance.

Public liability insurance

The strata corporation must have public liability insurance for an amount specified in the regulations, which at November 2013 is at least $10 million [s 31, reg 9].

Fidelity guarantee insurance

A strata corporation with an administrative or sinking fund [reg 9(2)(b)] must have fidelity guarantee insurance [s 31(2a)] from 27 October 2014. A policy of fidelity guarantee insurance covers the risk of theft or fraud of the corporation’s funds by any person authorised to handle the corporation’s funds, including a manager. Although the requirement to have fidelity guarantee insurance is a new requirement from 27 October 2014, a strata corporation may already have fidelity guarantee cover included with its building insurance policy. The insurance cover must be for the amount of the maximum total balance of the corporation's bank accounts at any time in the preceding three years, or $50 000, whichever is higher [reg 9(2)].

Officers of the strata corporation

At all times a strata corporation must have a presiding officer, a secretary and a treasurer, who are appointed at a general meeting. One person may hold two or more of these positions. These officers must be unit holders (unless all the units in the corporation are non-residential). The strata corporation commits an offence if any of these positions is allowed to remain vacant for more than six months [s 23 Strata Titles Act 1988 (SA)].

Secretary

The secretary of a strata corporation has the following functions [reg 25]:

  • to prepare and distribute minutes of meetings of the corporation;
  • to submit a motion for confirmation of the minutes of any meeting of the corporation at the next meeting of the corporation;
  • to give the notices required to be given under the Act by the members of the corporation and the management committee;
  • to answer communications addressed to the corporation;
  • to convene meetings of the management committee; and
  • to deal with administrative and secretarial matters for the corporation and the management committee.

Treasurer

The treasurer of a strata corporation has the following functions [reg 25]:

  • to notify unit holders of any contributions to be raised from them in accordance with the Act;
  • to receive, acknowledge, bank and account for any money paid to the corporation; and
  • to keep accounting records and prepare financial statements.
Records

The strata corporation has a responsibility to maintain proper records. It must keep:

  • a register of the names of the unit holders (showing the unit holder's last contact address, telephone number and email address known to the corporation, and the unit holder's unit entitlement) for 7 years [s 39A Strata Titles Act 1988 (SA), reg 23];
  • minutes of meetings (both general meetings [s 40] and management committee meetings [s 35(8)]) for 30 years [reg 10]
  • accounting records relating to receipts and expenditure (of both the corporation [s 40] and the management committee [s 35(8)]) for 7 years [reg 10];
  • notices and orders served on the corporation for 7 years [s 40, reg 10];
  • copies of correspondence received or sent by the corporation for 7 years [reg 10];
  • notices of meetings of the corporation and its management committee for 7 years [reg 10];
  • documents received by the strata corporation from the original registered proprietor under s 38(3)(b) and (c) for 30 years [reg 10].

A strata corporation must ensure that a statement of accounts is prepared for each accounting period [s 40], and must keep each statements of account for 7 years [reg 10].

Access to information by unit holders

Insurance policies

A unit holder, a mortgagee of a unit, or a prospective purchaser or mortgagee of a unit may, by contacting the secretary of the strata corporation, request to see any or all of the insurance policies currently held by the corporation [s 32 Strata Titles Act 1988 (SA)]. No fee is applicable.

If the applicant wishes to have copies of the current insurance policies, the request may be made either to the secretary or a member of the management committee [s 41(1)(b)]. If the applicant is the owner of a unit, a $5 fee applies [reg 11(2)(b)(i)]. If the applicant is a mortgagee of a unit, or a prospective purchaser or mortgagee of a unit, a $35 fee applies [reg 11(2)(b)(ii)].

The corporation must make the information available within five business days after the request [s 32, s 41]. Failure to do so is an offence with a maximum penalty of $500.

Bank statements

On the request of a unit holder made through the secretary or a member of the management committee, a corporation that does not have a strata manager must provide a unit holder with quarterly bank statements for all accounts maintained by the corporation, and must continue to provide the statements until the person ceases to be a unit holder or revokes their application [s 41(1a)]. Failure to do so is an offence with a maximum penalty of $500.

If a corporation has a strata manager, application can be made to the strata manager for quarterly financial statements (see Duties of strata managers).

Other information in relation to a unit or the corporation

A unit holder, a mortgagee of a unit, or a prospective purchaser or mortgagee of a unit (or someone on their behalf) may apply to the strata corporation, through the secretary or a member of the management committee, for access to the following information or documents [s 41(1)]. The information or documents must be provided within five business days after the request [s 41(1)]. Failure to do so is an offence with a maximum penalty of $500.

The corporation may reduce or waive any of the specified fees [reg 11].

Information to be provided:

  • particulars of any contribution payable in relation to the unit, including details of any arrears of contribution related to the unit;
  • particulars of the assets and liabilities of the corporation; and
  • particulars of any expenditure that the corporation has incurred, or has resolved to incur, and to which the unit holder of the unit must contribute, or is likely to be required to contribute.

If the applicant is the owner of a unit, no fee applies [reg 11(2)(a)(i)]. If the applicant is a mortgagee of a unit, or a prospective purchaser or mortgagee of a unit, a $25 fee applies [reg 11(2)(a)(ii)].

Copies of documents to be provided:

  • the minutes of general meetings of the corporation and meetings of its management committee for such period, not exceeding two years, specified in the application;
  • the statement of accounts of the corporation last prepared by the corporation; and
  • the articles for the time being in force.

If the applicant is the owner of a unit, a $5 fee applies [reg 11(2)(b)(i)]. If the applicant is a mortgagee of a unit, or a prospective purchaser or mortgagee of a unit, a $25 fee applies [reg 11(2)(b)(ii)].

Documents to be made available for inspection:

  • a copy of the accounting records of the corporation;
  • the minute books of the corporation;
  • any documents received by the strata corporation from the original registered proprietor under s 38(3);
  • a copy of any contract with a strata manager; and
  • the register of unit holders.

No fee applies to inspecting a copy of the contract with a strata manager or the register of unit holders. If the applicant is the owner of a unit, no fee applies to inspect other documents [reg 11(2)(c)(i)]. If the applicant is a mortgagee of a unit, or a prospective purchaser or mortgagee of a unit, a $5 fee applies [reg 11(2)(c)(ii)] in relation to accounting records, minutes and s 38(3) documents.

The strata corporation  :  Last Revised: Sat Oct 26th 2013
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