Strata Committees and Body Corporates in Australia: What You Need To Know

If you own an apartment, townhouse, or unit, you're likely part of a strata scheme. As well as owning your individual unit, you'll probably also have shared ownership of common areas. But who manages this shared environment?

Enter the strata committee, a group elected by owners to oversee the day-to-day running of shared property and facilities.

What is a strata committee?

First up, let's be clear on what a strata committee is. The term is often used interchangeably with 'body corporate' or 'owners' corporation' but they are, technically, a little different.

A body corporate (or owners corporation) is the legal entity that includes all lot owners in a strata scheme while the strata committee is often a smaller group of elected owners who represent the interests of all owners and manage day-to-day operations.

Bodies corporate - and strata committees - must operate under the rules and regulations set down by state and territory governments.

What is a strata scheme?

While we're on the topic, let's also be clear what a strata scheme is. In simple terms, it's a system of property ownership where the property is divided into individually owned 'lots' (typically apartments or townhouses).

Owners also have shared ownership of communal spaces such as grounds, hallways, elevators, external walls, rooves, pools, and barbecues which, in legal terms, is called 'common property'. Such properties are purchased under strata titles.

Residential properties are not the only ones that exist under a strata scheme. Commercial buildings, retail establishments, mixed-use developments, resorts, serviced apartments, retirement villages, and caravan parks may also have a strata arrangement.

What decisions do strata committees make?

The strata committee focuses on day-to-day matters that keep the strata scheme running smoothly and can make recommendations for owner approval on larger issues.

It's important to remember that some bigger decisions, such as setting or changing levies or undertaking major renovations, typically require approval from all the owners at a general meeting.

Here's a breakdown of a strata committee's key areas:

Maintaining the property

• Authorising repairs and upkeep for common areas and facilities (like hallways, gardens, pools)

Managing finances

• Overseeing the budget for the strata scheme

• Approving spending for everyday operations (e.g., hiring cleaners, gardeners)

• Collecting strata levies from owners (fees used to maintain the property)

• Paying bills for the scheme (utilities, insurance)

Enforcing the rules

• Approving applications related to by-laws (e.g., requests for pet ownership, minor renovations to individual lots)

• Addressing breaches of by-laws and issuing notices to comply (e.g., noise complaints, parking violations)

• Hiring and overseeing contractors for services like cleaning, gardening, and security

Important to remember

• Bigger decisions, such as major capital works or expenditure, typically require approval from all owners at a general meeting

• The strata committee focuses on day-to-day matters but can make recommendations for owner approval on larger issues

Limitations on strata committees

Strata committees in Australia have certain limitations to ensure they act in the best interests of all owners and comply with a legal framework.

Here's a breakdown of some key restrictions:

• Spending limits: Strata committees can't spend freely. They have a set spending limit, which may be determined by the strata scheme's by-laws or default legislation in the relevant state or territory. They need owner approval for expenses exceeding this limit.

• Major decisions: Big issues will require a vote by all owners, typically at a general meeting. These may include major maintenance or upgrading products, amending by-laws, or dissolving the strata scheme altogether.

• Financial transparency: Committees are obligated to be transparent with finances. This means providing regular reports to owners on the budget, income, and expenditure of the strata scheme.

• Compliance with by-laws and legislation: Decisions must comply with the strata scheme's by-laws and relevant state or territory strata legislation. The committee can't make unilateral changes that contradict these regulations.

• Conflicts of interest: Committee members must avoid conflicts of interest. If a decision directly affects them financially, they should abstain from voting or discussions.

• Fairness and reasonableness: Committee decisions should be fair and reasonable, considering the best interests of all owners. They can't make arbitrary choices that unfairly disadvantage certain property owners.

See also: Pros, cons, risks, and considerations when buying a strata property

Who makes up a strata committee?

The number of people on a strata committee is decided at each annual general meeting (AGM). It can range from one to nine members, with the owners corporation making the final decision (as long as it stays under nine).

There are a few exceptions:

• Two-lot schemes: In these small buildings, the committee must have at least two members, one from each property.

• Large schemes (over 100 properties): These require a minimum of three members on the committee.

Who is eligible to be a member of a strata committee?

Each property owner within the scheme has the right to nominate one person per property for election. Nominees can be the owner themselves, another property owner, or a non-owner, such as a tenant or a tenant representative who lives there.

However, certain individuals are ineligible for nomination to the strata committee, including:

• The building manager

• Any agent responsible for leasing properties within the scheme

• Anyone affiliated with the scheme's original owner (developer) or building manager, unless they have disclosed this affiliation in writing prior to the election

• Any owner who has outstanding debts to the scheme at the time of the AGM

Office-bearer jobs in strata committees

Chairperson

The strata committee chairperson takes the helm of the group and presides at general and committee meetings. The role gives power to the bearer to decide on issues and procedural matters. However, the chairperson does not have a casting vote.

This role requires leadership and management skills - those who aspire to take the lead should be people-oriented and diplomatic. Self-confidence is also a must to be able to handle the pressure that can come with the role.

Secretary

The secretary of the strata committee has the role of convening meetings. This position entails preparing, taking, and distributing the minutes of all meetings and conventions. The secretary also has the responsibility to keep records and answer queries addressed to the owners' corporation.

For those who wish to be a successful strata committee secretary, attention to detail and organisation are two of the much-needed skills.

Treasurer

Perhaps the most complicated role, the treasurer is in charge of all finance-related matters. Being a treasurer involves sending notices of levies, receiving and recording payments made to the corporation, keeping accounting records, and preparing financial statements.

Given the complexity of the role, the treasurer should be organised and trustworthy. Having a background in accounting or finance is also a big asset.

What do strata managers do?

Bearing in mind that those on strata committees are volunteers, the owners corporation may choose to appoint a professional strata manager. They can provide varying levels of support to the owners corporation and/or strata committee.

The owners corporation will decide the specific responsibilities to delegate to a strata manager, which can include:

• Organising and facilitating meetings

• Collecting levies, managing banking, and securing insurance

• Providing advice on asset management

• Maintaining the scheme's financial records

Strata managers are typically appointed by the owners' corporation during an AGM.

Do you need a strata manager?

Hiring a professional strata manager is certainly not a legal requirement. However, many strata schemes, especially larger ones, opt to appoint one. Many strata committees can benefit from the managerial support and specialist knowledge of strata laws and regulations that a manager can offer. A strata manager's services are paid for from body corporate fees.

But if issues arise with a strata manager, it is advisable to discuss any concerns with the owners corporation, which has the authority to terminate their services. This can be accomplished by:

• Choosing not to renew their contract upon expiry

• Voting to dismiss them at the next general meeting

• Filing a petition with the relevant authority in your state or territory

It's up to each owners' corporation to determine whether a strata manager is needed or whether the responsibilities can be handled 'in-house'.

Photo by Isaac Quesada on Unsplash