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Strata Terminology | Independent Unit Management
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Under the Strata Schemes Management Act 2015, the process of strata adjudication has been done away with. Instead, all strata applications are determined by the NSW Civil & Administrative Tribunal (NCAT).

ADMINISTRISTRATIVE FUND

Monies contributed are applied to regular recurrent expenses over a 1 Year period for common property, other property owned by the scheme, insurance premiums, and the management of the scheme. The budget is resolved at each the AGM.

AGENDA

A list of motions to be voted on or discussed at a meeting. It is contained within the notice of a meeting. Legislation specifies compulsory motions.

Aggregate Unit Entitlement

The total of all the individual lot unit entitlements in a strata scheme.

Annual Fire Safe Statements (AFSS)

Annual Fire Safety Statements registered each year with local council and NSW Fire and Safety confirming the fire safety measures in place. A motion to deal with the status of the AFSS is required on the AGM.

Annual General Meeting (AGM)

The AGM is held by the owners corporation. It is a yearly meeting of owners and other interested parties and is legally required to be convened once every financial year. Legislation defines the way the AGM is convened and the compulsory motions to be considered.

BUDGET

Sets out the estimated expenditure for the administrative fund and recommended goal of the Capital Works Fund for the scheme's coming financial years. It is adopted at the AGM. It is the approved budget that explains to owners how their levies will be raised and managed. The owners pay their portion of their levies in accordance with their Unit Entitlement based on the approved budget at the AGM.

Building Diagnostic

A report that explains the findings from a review of the state of the building, usually conducted by structural engineers.

Building Insurance

Compulsory insurance for damage or destruction to enable replacement or reinstatement of the building and common property back to the same condition as when new. Details are to be found on the Certificate of Insurance. Previously an insurance valuation was required at least once every five (5) years. This insurance valuation is still recommended but no longer legally required.

BUILDING MANAGEMENT COMMITTEE (BMC)

The Building Management Committee is formed to enable multiple strata plans to occupy a single building space and share common facilities. How the various entities interact in these schemes is set out in a document called the Strata Management Statement.

BUILDING MANAGER

The term Building Manager is often interchangeable with Facility Manager and Caretaker. A Building Manager is engaged by the owners at a general meeting by way of approval of a proposed contract or agreement. The service expectations can vary under these contracts, though generally the expectation is for a suitably experienced person to be on-site to supervise activities relating to repairs and maintenance of common property. This can also include security and workplace health and safety.

BY LAWS

A set of rules designed for the control, management, use and enjoyment of the common property and individual lots.

CAPITAL WOKS FUND

Previously known as the Sinking Fund. This fund is established by strata schemes to meet anticipated major expenditure. A 10-year Capital Works Fund must be: prepared; reviewed in five (5) years; discussed and implemented annually at each AGM.

CERTIFICATE OF CURRENCY

A document provided by the actual insurer and requested usually for mortgage purposes. The certificate states the insured details of a building.

CERTIFICATE OF INSURANCE

This certificate is issued by the insurance company or broker upon payment of the premium. This certificate, together with the Product Disclosure Statement and Financial Services Guide forms part of the books and records of the scheme.

Certificate of Title (CT)

A title deed issued by Land and Property Information NSW to prove ownership of a lot. The owners corporation is also issued with a title deed for the common property.

Chairperson

The chairperson's duty is to preside over general and strata committee meetings to ensure that due process is followed. A strata manager may be asked to fulfil this duty.

Committee

Responsible for the administration of an owners corporation. They are a group of owners elected at each Annual General Meeting who represent all the lot owners of the strata scheme and carry out duties required under the relevant laws. These include the control, maintenance and repair of the common property. The committee also has the responsibility of enforcing the by-laws of the scheme.

COMMON PROPERTY

Areas of a strata building or community which do not form part of a lot and that every occupier or owner shares.

Common Property Use and Common Property Use By-Law

A special right granted to an owner to use a part of the common property, at the exclusion of other lot owners. Previously referred to as Exclusive Use and Exclusive Use By-Law. An example would be the exclusive use of a car space located on common property.

Common Seal

The scheme's common seal is the official stamp and thus part of the scheme's legal signature. A person who has affixed the seal of the owners corporation to any instrument or document is taken to have done so under the authority of a delegation.

COMMUNITY MANAGEMENT STATEMENT (CMS)

The CMS includes the rules, by-laws and standards that apply to a community scheme. It identifies; the scheme land, the name for the scheme, the regulation module applying to the scheme and bylaws for the scheme.

COMPANION ANIMAL

An animal kept primarily for a person's company or protection. They are required to be micro-chipped and be recorded on the official register under the NSW Companion Animals Act 1998.

Company Title

A person who buys a company title home unit receives shares in the company that owns the building. The share certificate and ownership of the shares allows that person to live in the unit. The Owner receive shares in the company that owns the building.

Development Application

Is an application under Division 1 of Part 4 of the Environmental Planning and Assessment Act 1979 for consent to carry out development.

EXTRAORDINARY GENERAL MEETING (EGM)

If a decision is required by all owners and could not not wait until the AGM, then the strata committee or the owners can call an EGM.

Fidelity Guarantee Insurance

Optional insurance cover for direct financial loss due to fraud or dishonesty.

Financial Services Guide (FSG)

The Financial Services Reform Act 2001 states that an FSG must be provided to the owners corporation at each renewal. It provides the name and contact details of the insurance broker or provider, describes the services provided by them, how their remuneration is determined, how complaints are handled and other prescribed information.

Financials

The trust accounting records and reports of the scheme defined by both the Strata Schemes Management Act (SSMA) and Property Stock and Business Agents Act (PSBAA).

First Annual General Meeting (FAGM)

The first meeting of all owners that must be convened within two months of the expiration of the initial period (which is when one third of unit entitlement is sold by the original owner as recorded at the LPI).

Fitting

Anything attached (not permanent) to common property or improvements to the land.

Fixture

Anything attached permanently (or otherwise) to common property or improvements on the land.

General Meeting (GM)

A meeting of all owners and other interested parties who have been advised by notice of a meeting to discuss specific matters pertaining to the scheme.

Home Warranty Insurance

An insurance that must be obtained by a home building contractor when the contract price for works is more than $20,000. This protects consumers if the builder becomes insolvent and cannot fulfil his obligations.

Initial Period

Upon registration of the strata plan, the owners corporation is formed, and the scheme enters into the initial period. The scheme continues in the initial period and expires on the day when the sum of lot owners, other than the original owner, exceed one-third of the aggregate unit entitlements.

Inspections

An inspection is also known as a search of books and records of the scheme. The process is set out in legislation and is usually carried out by a professional company.

LARGE STRATA SCHEME

Comprises more than 100 lots, excluding utility lots (storerooms and parking lots). Large schemes were established by legislation in 2004.

Levy

Levies are amounts paid into a trust account so that the scheme can fund and carry out its duties. Levies are the amounts that owners are bound by legislation to pay to the administrative fund and capital works to enable the communal management of the scheme. They are determined at the AGM. Each owner's portion is determined by the lot unit entitlement.

Levy Arrears

The owner is in arrears if the amount owed by them has not been received into the trust account by the due date.

LOT

A portion of a property that can be separately owned and sold.

Lot Liability

The proportion of the owners corporation expenses that a lot owner is required to pay.

Lot Property

Lot space within a strata scheme is commonly defined as; “the cubic air-space contained within the inner surface of the boundary walls, under surface of the ceiling and upper surface of the floor”.

MINUTES

A documented record of decisions made, instructions given.

Mortgagee

A company who lent money to a person to buy a property. The property is mortgaged to the mortgagee in case the person who borrowed the money does not repay it.

MOTION

A proposal put forward for consideration at a meeting.

NSW Civil & Administrative Tribunal (NCAT)

Began operation in January 2014 and oversees matters previously performed by the CTTT. The NCAT's Consumer and Commercial Division manages disputes occurring in strata and community schemes.

Office Bearers Liability Insurance

Compulsory insurance cover to provide compensation for alleged wrongful acts or decisions of the volunteer committee members.

OFFICE BEARERS

The chairperson, secretary and treasurer.

Ordinary Resolution

Most matters considered at general meetings require an ordinary resolution. This means that at least half of those present (either in person or by proxy) who are entitled to vote must vote in favour of the motion.

Owner (Original Owner)

The owner of the entire strata or community titled complex when the strata or deposited plan is first registered.

Owners Corporation (OC)

The legal entity consisting of all the owners of the lots in a strata scheme. It is formed when a strata plan is registered. Each lot owner is automatically part of the owners corporation and has a right to take part in the decision making.

Parking lot

A non-residential lot designed primarily for storage of motor vehicles also known as a utility lot.

Plant Item Registration

There are certain types of plant items that require registration with Safe Work NSW.( lifts etc )

POLL

A method of voting at a general meeting, where each owner's vote has a value based on the lot unit entitlement. Units with larger entitlements have a greater voting power

POLL VOTE

Can be demanded by any owner on any motion at a general meeting. This method of voting is counted by unit entitlement.

Pre-meeting electronic voting

Voting by electronic means such as email, website, etc. before the meeting at which the matter is to be considered by owners or committee members.

Product disclosure statement (PDS)

The PDS contains all information relevant to the insurance policy held and must be provided to the insured.

Property Stock and Business Agents Act 2002 (PSBAA)

The activities of real estate agents, stock and station agents, strata managers and business agents are governed by the Property, Stock and Business Agents Act 2002 (NSW) and its Regulation.

PROXY

A person appointed, in writing, by an owner, company or mortgagee to attend a meeting and vote on their behalf.

PROXY VOTING

An owner who is unable to attend a meeting may authorise another person to exercise their vote.

Public Liability Insurance

Compulsory insurance cover for a scheme which could become responsible for events such as damage to property, death or injury. The minimum amount of cover is $20 million

Quorum

The minimum number of owners required for a meeting to proceed. At a general meeting it is one quarter of people entitled to vote. A quorum can now be established after 30 minutes of the intended start time of the meeting if the chairperson declares a quorum. For a committee meeting, a quorum is at least one half of the members.

Renewal of Plant Item Registration

Registration of individual plant items must be renewed annually.( Lifts etc ).

RESOLUTION

There are three types of resolutions — ordinary, special and unanimous resolutions.

WHS AUDIT

An audit or inspection undertaken to determine possible Work, Health & Safety (WH&S) exposures for the scheme.

Search of the books and records

This activity is also referred to as a strata inspection. The process is set out in legislation and is usually carried out by a professional.

Secretary

An office bearer whose duties are usually delegated to the strata managing agent. These duties include issuing notices and minutes, maintaining the strata roll, and answering scheme correspondence.

Section 184 Certificate

A certificate obtained by solicitors from the secretary when a lot is sold to determine a number of settlement issues.

SECTION 22 CERTIFICATE

An address for service of notices may be an Australian postal address or an electronic address, including an email address.

Sinking Fund now known as the Capital Works Fund

Money raised to this fund is for the cost of future capital expenses such as painting common property, renewing and replacing any fixtures, replacing, repairing or making good the common property, structural problem rectification and other capital expenses.

Special Levy

When a scheme has an unexpected, unbudgeted expense, then an additional (special) levy for a specific purpose can be resolved at a general meeting.

Special Resolution

A resolution passed at a general meeting of the owners corporation against which no more than one-quarter of the votes cast vote against the motion as calculated by unit entitlements.

Statutes of Limitations

Statutes of limitations are written laws passed by a Legislative body in common law systems to restrict the maximum time after an event that legal proceedings may be initiated.

Strata Committee (SC)

The elected representatives of the owners who make the day-to-day communal management decisions throughout the year. Election takes place at the AGM. The election of office bearers occurs at the SCM which usually follows the AGM.

Strata Committee Meeting (SCM)

A meeting of the SC where, if duly convened, the decisions made by the SC are considered decisions of all owners.

Strata financial Information Certificate ( Unders Section 184 )

The certificate provides the financial position of an owners corporation at a point in time specifically in relation to a lot. It is requested by the conveyancing solicitor as part of the purchase process or new mortgage. It includes the names and addresses of the committee members, the managing agent, the levies, any outstanding levies, any unregistered by-laws, and other specified information.

Strata Loan

When a scheme has an unexpected, unbudgeted expense then a strata loan might be considered. A loan agreement needs to be executed thus a general meeting resolution is required.

Strata Manager

A licensed, professional agent appointed by the owners corporation to manage the affairs of a strata scheme.

Strata Plan (SP)

Created by a registered surveyor and registered with Land and Property Information (LPI).

STRATA ROLL

Contains information about common property and the strata scheme as well as a register of all lot details.

Strata Scheme

A system of multiple ownership of a building. Each owner owns a 'lot', but also share ownership of any common property. The multiple owners combine to form a legal entity, known as the owners corporation.

Strata Schemes Management Act 2015 (SSMA)

The management of every strata scheme in NSW is governed by the NSW Strata Schemes Management Act 2015 and Strata Schemes Regulation 2016. The legislation provides the legal requirements for the operation of every type of strata scheme in NSW.

Strata Committee

A group of between 1 to 9 owners or owner's nominees elected at each Annual General Meeting, who are responsible for assisting in the day to day administration of the strata scheme.

TENANT

A person who occupies land or property rent from a landlord. A tenant's rights are governed by the Residential Tenancies Act 2010 and Residential Tenancies Regulation 2010.

Term Deposit

A term deposit is an investment where the interest rate is guaranteed not to change for the nominated term.

TITLE

A system of ownership of property.

TORRENS TITLE

Torrens Title registers the horizontal division of the piece of land only, while Strata Title also includes cubic air space which allows the building to be divided above and below ground, allowing for parts of it to be owned by different owners. Any part of the building not forming part of any apartment forms the Common Property

TREASURER

The duties of the Treasurer include preparation of budgets for administrative and Capital Works Funds; issuing levy notices and receipts; banking; maintaining all scheme accounting records; preparation of financial certificates, statements and reports, preparation and lodgement of tax reports.

Unanimous Resolution

A resolution where no one votes against the motion. If a unanimous resolution is required, all owners can vote at the meeting or by proxy, even if their levies are not paid up to date.

Unit Entitlement (UE)

Each lot has a comparative value base on several factors, such as the size and value at registration of the lot. The unit entitlement of each lot is shown on the strata plan.

Utility Lot

A lot designed to be used primarily for storage or accommodation of boats, motor vehicles or goods and not for human occupation as a residence, office, shop or the like.

VALUATION

The term replacement cost or replacement value refers to the amount that an entity would have to pay to replace an asset at the present time.

Voting by Technology

This form of voting cannot be used for the election of office bearers. Strata committees can pass resolutions to adopt any of the following ways of voting; voting by teleconference, video-conferencing, email or other electronic means by a member while participating in a meeting from a remote location, or voting by email or other technological means before the meeting at which the matter is to be determined by the committee.

Voting Entitlements

Voting rights of an owner is defined by the unit entitlement of their lot.

Voting in writing

The strata committee can vote on a motion in writing even if a meeting was not held. For this to be a valid vote, the correct procedure for giving notice of the meeting must be followed and a copy of the motion to be voted on should be given to each committee member. The motion is approved if the majority of strata committee members, other than any tenant member, approve the passing of the motion in writing.

Workers Compensation Insurance

Compulsory insurance cover required under the Workers Compensation Act 1987. The coverage is for anyone carrying out services for a scheme who is not a registered company. This person is deemed an employee for the purpose of determining the amount of coverage required.

WORKPLACE HEALTH & SAFETY (WHS)

SafeWork NSW is responsible for compliance relating to work health and safety legislation aimed at protecting the welfare of people engaged in work or employment. While there are some schemes that may have exemptions, obtaining a safety audit report is the best method to utilise qualified persons to identify possible risks or hazards.