Join Australia's most dynamic and respected property investment community

Tenancy Tip Thursday - Strata / Community title

Discussion in 'Property Management' started by D.T., 22nd Oct, 2015.

  1. D.T.

    D.T. Adelaide Property Manager Business Member

    Joined:
    13th Jun, 2015
    Posts:
    5,595
    Location:
    Adelaide, SA
    Hiya,

    Since quite a few of you have IPs that are units, apartments, townhouses, etc, I figured it would be good to know what disputes can come up and how to resolve them. Feel free to contribute disputes you've had and hopefully the forum collectively some provide some insight. But first, a little background information...

    Strata title and community title in SA (or called built strata and survey strata respectively in WA, or just called strata title for both in Victoria I think) is a means of dividing a building or a lot (respectively) into separate ownership, often with shared sections for the use of all owners. These shared sections can be car parks, utility connections, stairwells & lifts, gyms & sporting facilities, driveways & roads or just grounds & gardens. There will be detailed plans which show the boundaries involved.

    A strata / community corporation, or called a body corporate in some places, is an organisation made up of all the unit / lot owners. A strata manager, similarly to a property manager, manages that organisation on behalf of the corporation for a fee if they so wish. Many are self managed.

    The corporation is similar to a company, in that it has rules it must follow (the Act) and rules it must enforce (Articles and Bylaws). It must budget for ongoing expenses (known as the Administrative Fund, including management fees, insurances, maintenance of common areas, utility bills for water & electricity in common areas, etc) and must also save up for capital expenses (known as the Sinking Fund, to cover planned upgrades, re-concreting, repainting etc). There are rules (in both the Act and the Articles/Bylaws) that govern when, how and by who the budgets must be completed and when meetings should be held which give direction on them. To sum up the whole Act - it says the corp must administer and maintain common property - everything else stems from that.

    Majority of disputes all stem from a misunderstanding of who owns what. Here are a three examples:

    The blue water supply pipe is owned by the corporation and the red pipe is owned by each of the units. Why does the blue pipe stop at unit 3 then? Because beyond that it is for the exclusive use of unit 4; ie, it's not a shared resource. So, if there's a water supply issue (broken pipe etc) it should be fairly obvious who should fix it then, based on it's colour. An exception would be if an owners pipe is broken by something on common grounds (eg a tree root) and it'd be up to the plumber to provide their diagnosis so that the correct party can be invoiced.

    [​IMG]

    In the below electrical diagram for the same units are displayed. The red section (usually a meter box for electricity or a Main Distribution Frame [MDF] for telephone) is for the shared use of all units. A yellow line would typically run from this to each of the units separately (only one of them is shown here). Again, this shows who should be responsible for problems, based on which colour it is. It's important to note that even if a break happens to unit 4's line in the roof space of unit 1, that's still unit 4's problem as its not based on location but rather by usage.

    [​IMG]

    The next example is the sewer line. The black line is the corporations issue and the yellow is the owners' issue. Notice that this is different to the water example because unit 4 is on the corp's line now. Why? Because there's a vent pipe at unit 4 for gas pressure to escape, which all units utilise, therefore it's not for the sole use of unit 4.

    [​IMG]


    Here are some common disputes:

    Problem: Tenant calls their PM to say their toilet is not working.
    Solution: Depending on urgency, either PM calls plumber or advises Corp to send their plumber. Plumber fixes it and reports back on what the problem was. If it was caused by tenant putting things they shouldn't into the toilet then they should pay, otherwise the invoice gets handed to either the Corp or the owner based on the above diagram. Edit - reason for Corp sending their plumber is that he's previously been provided with the detailed strata plans that show where everything goes as opposed to introducing someone new to this.

    Problem: PM is doing a routine inspection and notices termite damage.
    Solution: The Corp is supposed to maintain the grounds where termites emerge with regular treatments and inspections, therefore they're liable to treat infestations.

    Problem: A tenant in a group of units is being a nuisance
    Solution: The PM can't do much here if they're not breaking any lease conditions. Their neighbors however, can apply to rental tribunal for eviction, if they collect evidence in the form of a timeline/diary or video or sound recordings.

    Problem: Corp doesn't maintain grounds adequately
    Solution: Corp can be sent breach notices by any of the unit owners for not fulfilling their duties. This can go to magistrates court (not tribunal) where they'll be told to maintain stuff. This would probably stem from Corp not affording it (budgets not done properly) or from disagreeing on whose responsibility it is (from not understanding ownership).
     
    Last edited: 22nd Oct, 2015
    Blacky, joel and Nemo like this.
  2. Nemo

    Nemo Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    265
    Location:
    Somewhere
    Interesting. I don't have any properties in a body corp, however I got the impression from ss that anything inside the unit was the owners responsibility and anything from the walls out was the body corp.
     
  3. D.T.

    D.T. Adelaide Property Manager Business Member

    Joined:
    13th Jun, 2015
    Posts:
    5,595
    Location:
    Adelaide, SA
    It depends if strata or community title (or their equivalents in other states).

    In strata, the buildings are the boundaries :

    [​IMG]


    With community the lots are the boundaries:

    [​IMG]


    Perhaps worth noting that strata has been discontinued in SA. All dev projects will be community from now onwards.
     
  4. Blacky

    Blacky Well-Known Member

    Joined:
    25th Jun, 2015
    Posts:
    1,104
    Location:
    Bali
    D.T maybe you can advise, but when developing one of these 'community' projects it is the responsibility of the developer (owner) to set up a Strata plan? Im pretty sure I had to have one in place about 60days after title issuance. It wasn't a big deal for me, as I own all of the properties - however, if I was to sell one (or more) it could cause problems if not well written.

    Blacky
     
  5. D.T.

    D.T. Adelaide Property Manager Business Member

    Joined:
    13th Jun, 2015
    Posts:
    5,595
    Location:
    Adelaide, SA
    Yes, and I assume plans would have been done as part of the approval process so you should have these already?

    The corp (which is you and your reflection if you own all the units :p) can engage someone to do up new plans if needed. In some states the plans and bylaws have to be provided to buyer or PM upon sale/purchase.