What is a Units Plan?
A Units Plan is created with the subdivision of land into various individual allotments, such as residential units or townhouses, commercial spaces and retail and/or industrial spaces.
Each owner owns their individual portion (called a ‘lot’ or ‘unit entitlement’) and any subsidiaries such as car parking spaces, balconies and storage cages. Your unit is defined by the midpoint of the floor, walls and ceiling, and any services which are independent to your unit. The individual unit owner is (in most cases) responsible to repair and maintain everything within the defined boundaries.
Each owner also shares ownership of the common property areas, such as lifts, foyers, driveways, gardens and any common facilities such as pools and gyms.
In the ACT, Units Plans are governed by the Units Titles (Management) Act 2020 and the Unit Titles Act 2001.
In some cases, these entities are registered as a Community Title Plan, which has an effect on the roles and responsibilities of the Owners Corporation.
A Community Title in the ACT is governed by the Community Titles Act 2001.
What is an Owners Corporation?
An Owners Corporation, historically known as a Body Corporate, is the legal entity created when a Units Plan is established and consists of all owners of units/lots in the Units Plan. An owner automatically becomes a member of the Owners Corporation when they purchase a unit or lot within the Units Plan.
The Owners Corporation is responsible for the management of the Units Plan in the mutual interest of all owners.
Functions of the Owners Corporation are far reaching, and include setting budgets, collection of levies, arranging for repairs and maintenance, and management of Rules and Rules Infringements, to name a few.
Many of these functions are managed by the Executive Committee and the appointed Strata Managing Agent.
What is an Executive Committee?
An Executive Committee is a group of volunteer owners, typically between 3 and 7, who are elected at each Annual General Meeting (AGM). Members are predominantly self-nominated; however, you can be nominated by another owner within the Owners Corporation.
The Executive Committee dissolves and members are re-elected at each AGM.
The Executive Committee represent all owners and are responsible for the day to day decision making of the Owners Corporation, to the extent that delegation and legislative framework allow. They must act as the Owners Corporation directs by resolution at the Annual General Meeting or a General Meeting, or as they consider fit (within parameters) in the absence of any resolution.
Executive Committee members are subject to a Code of Conduct and must act in the interest of the Owners Corporation as an entity.
A list of elected Executive Committee members is published in the minutes of each AGM.
What is a Strata Manager?
Strata Managers are individual employees of a Strata Managing Agency. The Agency is engaged by the Owners Corporation to manage the day-to-day affairs of the Units Plan under direction of the Executive Committee and Owners Corporation.
The role of the Strata Manager varies depending on the complexity of the Units Plan and the involvement of the Executive Committee. In some cases, many of the functions are delegated by the Executive Committee to the Strata Manager, whereas some Executive Committees take on more responsibility themselves and give direction to Strata Manager as needed.
Strata Agencies provide services and guidance on:
Clerical and administrative support and follow up
Routine maintenance and contract support
Management of Rules and Breaches of the Rules
Strata resident and relationship management
How do you appoint a Strata Managing Agency?
A Strata Managing Agency can only be appointed by the Owners Corporation by ordinary resolution at the AGM or a GM.
If you are changing Strata Managing Agencies it is important that the terms and conditions of the contract are considered, along with any termination clauses.
To ensure due diligence, the service should be placed to tender.
When considering a new Strata Managing Agency, things to consider are;
Knowledge of the relevant legislation
Depth and experience of personnel to service the building
Management fees - The fee structures of some Strata Managing Agencies may be separated into various other expense items, so it is important to consider any additional fees which may apply, such as access to an owners portal, additional financial management costs and IT costs
References from established clients
A lot of Owners Corporation’s choose their Strata Managing Agency based on price, but this is not necessarily the best way of appointing a Managing Agency. The most appropriate way to make the selection is based on experience, qualifications and reputation.
What is the benefit of having a professional Strata Managing Agency, rather than self-managing the Owner’s Corporation?
The legislation governing Owners Corporations and the compliance requirements are complex. Self-managed Owners Corporations are expected to perform the role of a Strata Manager, with the expertise of a lawyer, valuer, insurance broker and accountant on tap.
In addition, Owners Corporations are required to make short- and long-term plans for ongoing, periodic, routine, and urgent maintenance management. This can be a large amount of work on top of a full-time job and coming to terms with the complexities and requirements can be daunting.
That is why most Owners Corporations turn to professional Strata Agencies to assist with finances, insurance, administration, meetings and maintenance functions.
Experienced Strata Managers have expertise in the administration of all aspects of an Owners Corporation. They work to ensure Owners Corporations are compliant with their legal responsibilities and strive to protect owner assets.
SCA is currently introducing an accreditation program where members will be able to gain a certain level of accreditation according to their training and experience in Strata. This will make it easier for Owners Corporations to determine if their Strata Manager has the appropriate qualifications and experience to manage their property.
By choosing a Strata Managing Agency with SCA accredited Strata Managers, Owners Corporations are also choosing someone who adheres to a code of ethics and undertakes regular training.
How are decisions of the Owners Corporation made?
Decisions of the Owners Corporation are made in a number of ways.
By the Executive Committee – The Committee have defined functions under the legislation, which allow them to make a range of decisions between each AGM. There remain restrictions on what decisions the Executive Committee can make, which in some cases must be deferred to the next AGM or GM.
An Executive Committee can regulate its meetings as it considers appropriate, provided that the requisite notice is provided to members.
Annual General Meeting (AGM) – The AGM is one of the most important functions of the Owners Corporation. At the AGM, decisions are made for the coming year, including reviewing and approving the past years financial reports, approval of a proposed budget and collection of levy contributions, appointment of an Executive Committee, confirmation of insurances, amendments to Rules and any other matters which require consideration of the Owners Corporation.
The AGM is held following the financial year end and must be held within 15 months of the last AGM.
General Meeting (GM) – In some cases, it is necessary for a GM to be convened throughout the year, to consider any matters for which the Executive Committee do not have jurisdiction or that cannot wait until the next AGM. This allows matters to be considered by all unit owners.
All owners are encouraged to participle in the AGM and any GM and can appoint a proxy to attend on their behalf or complete an absentee voting paper if they are unable to attend.
Only financial owners (owners who have paid all levy contributions due in full) are entitled to vote at the AGM and any GM, unless there is a unanimous resolution presented.
It is important to note that all decisions of the Owners Corporation must be made by the Owners Corporation or the Executive Committee. Decisions cannot be made by individual unit owners in isolation.
How is the Units Plan Funded?
The Units Plans’ obligations, including insurance, maintenance and repairs, utilities, cleaning, gardening, management fees etc, are funded through levies, paid by individual unit owners who form the Owners Corporation.
At each AGM, the Owners Corporation approve a budget and determine the levy contributions for each unit (in accordance with Unit Entitlement), including the frequency of those contributions.
There are two distinct funds to which owners contribute:
Administrative Fund – is used for the day to day operation of the Owners Corporation and covers routine expenditure for items including but not limited to, those listed above.
There is an obligation on the Owners Corporation to establish an annual Administrative Fund budget sufficient to meet the operational needs of the Owners Corporation from year to year.
Sinking Fund – is used for capital expenditure and must be raised in accordance with an approved 10 year Sinking Fund Plan.
In some Units Plans, expenditure is divided into additional budgets to allow for more accurate apportionment of costs between varying unit types within the Units Plan, such as units, townhouses and commercial or retail units.
Some Units Plans may also operate an additional “Special Purpose Fund” to differentiate expenditure for a specific purpose.
Special Levy – It is sometimes necessary to raise an additional “Special Levy” if insufficient funds are available to meet the obligations of the Owners Corporation. This must be determined at an AGM or GM.
How are levy contributions calculated?
Levy contributions are determined based on Units of Entitlement, which is a numerical value placed on each unit at the time of registration. The Entitlement apportioned to each unit is loosely based on unit value, unit subsidiaries and takes into consideration various factors including unit size, aspect, floor level, amenities etc.
All owners have an obligation to pay their levy contributions by the due date.
Unpaid levies accrue interest at a rate of 10% as defined by Unit Titles (Management) Act 2011 (or up to 20% if passed by special resolution at an AGM or GM) and may also be subject to additional arrears recovery fees if they remain unpaid.
How do I get information about my Units Plan?
The best place to gain information about the Units Plan is by reading the minutes of meetings. Meeting minutes are distributed to owners following each meeting and can also be obtained by accessing the online owners’ portal (if available) or by contacting your Strata Manager.
Do I need to take out an insurance policy for my unit?
The Owners Corporation takes out an insurance policy to cover all buildings on the land for their replacement value, as well as public liability insurance over the common property areas.
The Owners Corporation’s public liability policy does not cover individual owners nor does it extend to any accidents or incidents within individual unit entitlement therefore owner occupiers should take out their own contents insurance policy to cover the fittings, furnishings and liability within the unit and any subsidiaries. If your unit is rented, a landlords’ insurance policy should be placed.
Can I have pets?
The Unit Titles (Management) Act 2011 states that with Owners corporation consent (If the animal is not an assistance animal and not kept in accordance with a pet friendly rule), A unit owner or occupier may keep an animal, or permit an animal to be kept within the unit or the common property, subject to various conditions. The Act also states that the Owners Corporation may only withhold consent on reasonable grounds.
Conditions can be amended by Special Resolution of the Owners Corporation, and you should check the Rules relevant to your individual Owners Corporation to ensure awareness of any conditions relevant in your circumstance.
Unless otherwise amended, Default Rule 1.5 as set out in the Unit Titles (Management) Regulations 2001 requires the pet owner to notify the Owners Corporation, in writing, within 14 days of the day the animal is first kept within the unit, that the animal is being kept within the unit.
Can I undertake renovations to my unit?
Any structural erections and alterations are governed by the Rules registered to the Owners Corporation.
You should contact your Strata Manager before undertaking any erections or alterations to the unit if you are unsure of the parameters.
You will need to submit a formal application, which will be distributed to the Owners Corporation or Executive Committee for consideration. Some applications may need to be referred to the next Annual General Meeting.
If you cannot wait until the next Annual General Meeting, you can request the Owners Corporation convene a General Meeting, which will incur additional charges (for which you will be liable to pay).
Approval is not automatically granted and can be conditional.
Are there any rights of appeal against decisions of the Owners Corporation?
If you are unhappy with any of the decisions made by the Owners Corporation or Executive Committee, it is recommended in the first instance that you contact your Strata Manager to discuss your concerns.
If after communicating your concerns to the Strata Manager and Executive Committee, you still feel aggrieved you can make an application to the ACT Civil & Administrative Tribunal (ACAT) seeking resolution.
Further information about ACAT can be obtained from their website.
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