FAQ's

What is an Owners Corporation?

An Owners Corporation is the legal term used for the entity which owns the common property in a strata plan i.e., the land, buildings and equipment in which the various units are located. The structure of a strata plan can be likened to a company. In a strata plan the shares are called 'unit entitlements', the Board of Directors is called the 'Executive Committee' and the shareholders are the owners of the lots in the strata plan.

As an owner, do I belong to the Owners Corporation?

Yes. All owners belong to and have unit entitlements (shares) in the Owners Corporation. The number of unit entitlements an owner has is generally determined by the value of the lot at the time of registration of the strata plan and determines the share of levies the owner pays.

As an owner, do I have a say in the running of the Owners Corporation?

The owners of the building elect an Executive Committee of up to nine people at the Annual General Meeting. The Executive Committee is in charge of running the building for the next 12 months in the same way that a Board of Directors runs a company. In most buildings there is a mix of owner/occupiers and investors on an Executive Committee.

Who runs the daily activities of a home unit building?

Large home unit buildings have on-site managers who look after the day-to-day running of the building. The Building Manager reports to the Executive Committee and is either a contractor or a direct employee of the Owners Corporation.

What role does a Strata Manager play in the management of a home unit building?

The Strata Manager is responsible for maintaining the records (both secretarial and accounting) for the Owners Corporation. This includes addressing incoming and outgoing correspondence, arranging insurance for the Owners Corporation, receiving and paying all accounts, maintaining financial records and arranging the lodgment of GST returns and income tax returns on behalf of the Owners Corporation. The Strata Manager also prepares agendas and minutes for Executive Committee Meetings, and usually attends Executive Committee Meetings. The Strata Manager advises the Owners Corporation on by-law issues and issues certificates for new owners and levy notices to all owners to collect money to pay for the running costs of the building.

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Levies

Who determines the budget required by the Owners Corporation to run the building?

The Strata Schemes Management Act requires that two funds be maintained by an Owners Corporation - an administration fund and a sinking fund. The Act provides that only a general meeting (annual or extraordinary) of all owners may determine the amount of money to be raised for each fund. A budget prepared by the Strata Manager, in association with the Building Manager and the Executive Committee, is presented at this meeting.

What is an administration fund?

An administration fund is designed to meet the day-to-day running expenses of a building, such as electricity, cleaning, maintenance, servicing of equipment, insurance, and payment of wages or contractors.

What is a sinking fund?

A sinking fund is a fund into which money must be paid each year by an Owners Corporation to meet non-recurrent expenses. Expenditure from a sinking fund is generally for items of a capital nature, such as painting, re-carpeting and replacement of equipment.

What is the difference between a lot and a unit?

'Lot' is the term used in the Strata Schemes Management Act and on the strata plan to describe the area which an owner owns e.g., if you own a unit in a large strata building this may be described as "Lot 1 SP123456". Strata records are kept in lot numbers not unit numbers. Our computer system cross-references unit and lot numbers. In smaller buildings, the lot number and unit number may be the same.

How often are levies payable and how is my share calculated?

Levies are payable quarterly in advance. If levies are not paid within 30 days of the due date interest is charged on the amount unpaid at a rate of 10 per cent simple interest. The share payable by each owner is calculated by using the unit entitlement of each lot against the aggregate of the unit entitlements.

If I own a strata unit, what do I own?

Generally you own the space from the inner surface of the boundary walls and the underside of the ceiling of your unit. You also own the airspace on the balcony.

Do you have any questions which you would like answered?

If so, send an email to info@mccormacks.com.au and we will respond promptly.

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