Horizontal Subdivision

Strata title is also part of the Torrens title system. It permits the horizontal subdivision of land into separate titles for separate “strata” lots or units, which is something that the former torrens system was not set up to do. Each lot or unit represents a separate apartment.

The title or ownership rights in land continues, in theory, along imaginary lines from the centre of the earth up though the boundary on the surface and then upwards to the sky. However, the owner of a strata title home unit has title to that cube of air bounded by the inner skin of the boundary walls of the unit vertically and by the ceiling height above and the floor level below horizontally.

Strata title law is regulated mainly by the Strata Schemes (Freehold Development) Act, 1973 which was substantially amended in 1996, but which began its life known as the Strata Titles Act in 1973 and the Strata Schemes Management Act, 1996. This legislation allows, among other things, for ownership of common (or shared) property, the management and maintenance of that common property and for regulating the social interaction of all the building occupants. 

Owners Corporation

The legal title to the land and building structure is owned by the “Owners Corporation” being a corporate body comprising and representing the owners of all the units in the building. There can be several separate stratas in the same building and in major developments there often are.

In your typical flat building, however, the Owner’s Corporation owns the land and building and is obligated by law to maintain all necessary records, maintain and repair the building, look after the gardens and keep current insurance policies protecting the owners corporation’s interest. The individual unit owner cannot insure the structure but must rely on the owner’s share of the common insurance. Of course, the owner can and should insure the contents of the apartment including the carpet on the floor and the paint on the walls. 

Example of Common Problems

A common problem is a good example. If the unit on the first floor is water damaged from above it may be the unit owner above who is liable if for instance he leaves his bath taps running and the overflow goes through to the unit below. However, if the pipe in a common wall breaks and causes the damage it becomes the owners corporation’s responsibility. 

Common Property

As the common parts of the property are owned by the owners corporation the individual unit owners may use and enjoy the common property (unless all the owners have agreed in the by laws, or “house rules” generally regulating things that can and cannot be done by the residents of the units, to restrict those rights by, for example, granting exclusive possession to, say, a particular garden area nearby a unit for that unit owner). 

Title Record

A title deed or “Certificate of Title” will issue to and in the name of the owners corporation for all of the common property areas and a separate Certificate of Title will issue in the name of each particular unit owner in strata subdivision. For new developments, the Certificate of Title for each unit will initially issue in the name of the Developer. Once the unit is sold and the contract of sale is completed, the Certificate of Title will be changed to record the name of the purchaser of the unit, on registration of the transfer document at the Land Titles Office. 

Books and Records

The owners corporation must also, by law, keep certain records and registers of its own. So the purchaser will also need to notify it in writing of the completion of the purchase transaction, to enable the purchaser to be registered as the new unit owner in the owners corporation’s register. This registration process, however, although still important, is not crucial from the perspective of achieving ownership of the unit. That will be done by registration at the Land Titles Office, in any case. It is that registration which secures indefeasibility of title. 

Unit Entitlement

The owners corporation’s title (or “Common Property Certificate of Title”) will disclose what unit entitlement each unit owner will have in the owners corporation. The number of unit entitlements will depend on the various values of each unit. Assume a 4 lot unit building with 3 approximately similar ground floor units each worth $200,000.00 and a large penthouse on level 2 with a value of $400,000.00. In this case the penthouse owner would have the benefit of say 4 entitlements out of a total of 10 and each of the ground floor owners would have 2 each out of 10.

The Unit entitlement regulates the proportion of levies that an owner must pay and also the voting rights of each unit owner.

The costs of insuring, maintaining, repairing and managing the common property is shared by all the owners in the proportion of their respective unit entitlements. These are collected by the owners corporation making levies on each owner. There are normally three types of levies: one to cover the day to day expenses (administrative fund levies); one to be used in the future for long term repair and maintenance (sinking fund levies) and, special levies for either unexpected repairs or unprovided for repairs such as “concrete cancer”. 

Car Spaces

Car spaces and storage areas are often important for unit dwellers. In modern strata schemes the allocated car or storage space is generally marked on the strata plan and therefore actually forms part of the unit title even though on a different level. In older buildings these rights were often granted by giving an owner exclusive rights to use a specifically marked space, but these car spaces were not owned and did not form part of the title. 

Meetings

The Strata titles law provides that there must be at least one meeting of the unit owners every year (called “Annual General Meeting or “AGM”) and that certain officials should be elected at these meetings as the governing body of the particular Strata Scheme. There are a number of things which must be canvassed at the AGM, including a budget and striking the levies mentioned earlier. If an emergency arises, any owner can require an Extraordinary General Meeting to be held, provided set procedures are followed. 

Comparisons with Company Title

• There are no restrictions on transfer.
• You have a torrens title or government guaranteed title (in the absence of fraud).
• No one has to approve of you.
• You can lease to whoever you decide.
• You have absolutely defined exclusive possession of your lot.
• The common areas and shared facility are all clearly defined.
• There are obligatory insurance obligations on the owners corporation.
• You have good security for the raising of loan funds.
• You have a set of rules (by laws) which you and everyone in the building must comply with.

FURTHER INFORMATION

This Information Outline is provided courtesy of Yandell Wright Stell who are experienced in this area of law. They are located at Level 5, 139 Macquarie Street SYDNEY NSW 2000 or call them on (02) 9252-2278 if you would like more information on this legal topic, or you wish to obtain formal advice regarding your situation.

Yandell Wright Stell Lawyers is a result oriented firm as distinct from a procedurally-oriented firm. The result is achieving your goals as quickly and efficiently as possible and to your best advantage. Our firm through its professionals and support team supply legal services in the following areas of law: *Property law including conveyancing, property development and planning matters. *Commercial dispute resolution and litigation. *Immigration law including all visa applications. *Banking and finance law. *Intellectual property law including trade marks, copyright, designs and patents. *Telecommunications and information technology law. *Insolvency and bankruptcy law. *Corporate, commercial and business law matters. *Family law. We are centrally located in Macquarie Street, Sydney from where we are able to deliver first class results and personal service to all our clients.