In my previous blog, I described the fundamental functions of a
Strata Scheme, the Owners Corporation and the Executive Committee.
In Part 2, it's time to delve deeper into the specific
responsibilities of the Owners Corporation and the Executive
Committee, as well as explaining the various types of levies that
may apply to members of the Owners Corporation.
Responsibilities of the Owners Corporation
Under the NSW Strata Schemes Management Act 1996 the Owners
Corporation is responsible for the upkeep and maintenance of all
common areas in the Strata Scheme. These common areas may include
lobbies, lifts, hallways, shared laundry facilities and even luxury
assets such as golf courses and swimming pools. They must also
ensure that fire safety measures are maintained throughout the
building. In addition to these responsibilities, the legislation
also dictates that the Owners Corporation must make a record of all
meetings that are held and must retain accounting and financial
statements of all transactions that take place for a minimum of
On the administration side, the Owners Corporation must also
keep a Strata Roll recording the name of each lot owner in the
scheme. The Strata Roll contains general information regarding the
Strata Scheme including the postal address and Strata Plan Number
of the Scheme, the names of any people renting a lot in the Strata
Scheme, building insurance details and any rules that the Owners
Corporation has agreed to put in place to maintain harmony amongst
the residents such as parking restrictions and noise curfews
Responsibilities of the Executive Committee
Many of the Executive Committee's responsibilities are
similar to those of the Owners Corporation. However, while the
legislation holds the Owners Corporation responsible for the
completion of the duties outlined above, the majority of these
day-to-day duties are delegated to the Executive Committee.
The only additional responsibilities of the Executive Committee
are the administrational duties fulfilled by the Chairperson, the
Secretary and the Treasurer, as outlined in
Part 1 of my blog series.
Levies and Special Levies
In addition to the original purchase price of the lot, members
of the Strata Scheme are also required to pay levies that
contribute to the upkeep of the common areas in the building. If
you're a lot owner, it's in your best interests to pay as
without them, the building would fall into disrepair and
consequently the market value of your lot would fall.
Levies are usually paid quarterly and are divided into two types
Administrative Fund – This fund is allocated to
pay the day-to-day running expenses of the Strata Scheme such as
water and electricity bills, repairs, gardening, etc.
Sinking Fund – This fund is used to pay both
expected and unexpected large-scale maintenance costs. Ideally, the
amount retained in this fund should be large enough to cover any
unexpected expenses – for example, termite damage.
In some circumstances the funds raised in the quarterly levies
may not be enough to cover unexpected, essential expenses. If this
occurs, a third type of levy must be raised in addition to the
previous two levies:
Special Levies – This levy is issued when the
administrative fund and sinking fund don't contain the required
funds to pay for an essential expense such as weather damage to the
roof or a termite infestation. If the expense is non-essential, it
may be postponed until the next quarterly levy is issued.
My third and final instalment in this blog series will discuss
the benefits of preventative maintenance, dispute resolution
strategies and strata management solutions that are available to
the Owners Corporation.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Warranties can be risk-shifting mechanisms when the party giving the warranty is not the party at fault for the defect.
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