nsw-strata-glossary

Strata Glossary

The intention of our NSW strata glossary is to assist our owners by providing a basic definition of terms used in our sector. Information guides on a number of topics are available in the strata resources section. Please contact us if there is a topic you would like us to cover.

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Administrative fund

Money raised to this fund is for day-to-day recurrent expenses related to common property, other property owned by the scheme, insurance premiums, and the management of the scheme. The budget is resolved at the AGM and is raised by levies on owners.

 

Agenda

 

Annual Fire Safety Statements (AFSS)

Annual Fire Safety Statements registered annually with local council 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)

A meeting of owners and other interested parties (as noted on the strata roll) that must be convened once a year in accordance with legislation. Legislation also defines the manner in which the AGM is convened, as well as the compulsory motions to be considered.

 

By-laws

The rules of occupation in a strata or community scheme to which occupiers and owners must abide. Whilst mandatory by-laws do not exist, there are model by-laws set out in legislation. The by-laws are registered by the original owner, and can be changed, repealed or amended at a general meeting to meet the needs of the scheme.

 

Budget

A budget sets out the estimated expenditure for the administrative fund and recommended goal of the sinking fund /capital works fund for the scheme’s coming financial year. It is adopted at the AGM. It is usually prepared by the strata managing agent, though it may be also a requirement of the facilities manager and/or treasurer of the scheme to be actively involved. It is the approved budget that explains to owners what their levies are for. The owners pay their portion of the aggregate Unit Entitlement.

 

Building diagnostic

A report that explains the findings from a review of the state of the building. The review is usually conducted by structural engineers. The quantum of these reports varies depending on where a building is in its life cycle.

 

Building manager

The term is often interchangeable with facility manager and caretaker. A building manager (usually a company) 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 experience 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.

 

Building management committee (BMC)

A BMC is created via a strata management statement (SMS) to manage and operate shared facilities on behalf of the members. The members can be strata schemes, owners of torrens title, and government bodies. A BMC is not a legal entity, cannot engage employees, and is not bound by strata or community title legislation.

 

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 and in the Product Disclosure Statement. Previously a valuation was required at least once every 5 years. This is still recommended.

 

Capital works fund

Previously know 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 5 years; discussed and implemented annually at each AGM.

 

Caretaker

This was a term used in previous legislation to mean an onsite person, or company, who often performs cleaning services, meets tradespersons and controls some aspect of common property i.e. a reception desk or concierge.

 

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, and usually does not specify the date of payment nor the amount of the premium paid. It is not a document that is necessary to the management of insurances for the scheme, though Strata Plus does assist owners in obtaining a certificate when needed.

 

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. The details of the insurance are confirmed at the AGM.

 

Certificate of title (CT)

A CT for common property is issued by NSW Land & Property Information (LPI) and shows ownership details, including the registered address for correspondence and the nominated by-laws as well as any registered change of by-laws.

 

Chairperson

The chairperson’s duty is to preside over general and strata / executive committee meetings to ensure that due process is followed. A strata manager may be asked to fulfil this duty. The chairperson does not have a casting or deciding vote.

 

Common property

Common property is all the areas of the land and building not included in any lot. It is jointly owned by all owners, and the scheme (owners corporation or community association) is responsible for its management and maintenance.

 

Common seal

The scheme’s common seal is the official stamp and thus part of the scheme’s legal signature. It should only be signed by a person with authority under Section 273 of the Strata Schemes Management Act 2015 and with a proper minuted resolution.

 

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, by-laws for the scheme, the proposed future development if the scheme is to be developed in stages, the structure or proposed structure of the layered arrangement, if the scheme forms part of a layered arrangement the contribution schedule, the interest schedule lot entitlements for the scheme and an explanation of the contribution schedule.

 

Community scheme

The name of a scheme registered under the Community Land Management Act (CLMA). The lot owner owns and maintains any buildings constructed on their lot, though shares the use and the maintenance costs of common property facilities such as a tennis court, marina, golf course, gym, parklands and gardens. This can also include roadways and other infrastructure that usually is maintained by local council.

 

Company nominee

A person authorised by a company in writing to act on it’s behalf on scheme matters, predominantly to vote at meetings on the company’s behalf.

 

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

Is another form of title that is neither strata nor community 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. Unlike strata title, a person who purchases a company title home doesn’t hold any official title in real estate. Instead, they receive shares in the company that owns the building.

 

Covenant chargee

Any charge on land created under section 88F of the Conveyancing Act 1919 for securing the payment of money.

 

CTTT

The former Consumer, Trader and Tenancy Tribunal which was integrated, along with 20 separate NSW tribunals, in January 2014 to form the NSW Civil and Administrative Tribunal (NCAT).

 

Deposited plan (DP)

Deposited plans define legal boundaries of land and often record subdivisions, easements and resumptions. The deposited plan is prepared for the purposes of the Community Land Development Act 1989, thus community schemes have a DP reference.

 

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.

 

Exclusive use by-law

Also referred to as a common property rights by-law. The special right granted to a lot to use part of the common property. It gives the occupiers of a lot a right to something above others. An example would be the exclusive use of a car space located on common property. This is registered on the common property certificate of title and usually attracts an exclusive use levy to cover the maintenance costs for the related common property.

 

Extraordinary general meeting (EGM)

Meetings where all owners are invited are termed general meetings. If a decision is required by all owners and should not wait until the AGM, then the EC / SC or owners can call an EGM.

 

Facility manager

The role of a facility manager is defined by their contract with the owners corporation or community association. It can include regulatory compliance and cost management. Often the responsibilities include workplace health and safety, fire safety, security, maintenance, testing and inspection, cleaning, management of quotations and the sign off of works of engaged trades.

 

Fidelity guarantee insurance

Optional insurance cover for direct financial loss due to fraud or dishonesty. Details to be found on the certificate of insurance and in the Product Disclosure Statement.

 

Financials

The trust accounting records and reports of the scheme. What is included in the records and the reports is defined by both the SSMA and PSBAA.

 

Financial services guide (FSG)

The Corporations 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.

 

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). The agenda is set by legislation.

 

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 Building Act 1989

The legislation governing the licensing, contracts and insurance provisions for the residential building industry.

 

Home Building Amendment Bill 2014

Current proposed reforms to the Home Building Act that will have an effect on the responsibilities and rights of owners, owner corporations, investors and developers.

 

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 fulfill his obligations.

 

Initial period

Commences when the strata or deposited plan is registered and ends when one-third of the unit entitlements has been sold. The length of the period is dependent on the sale of lots.

 

Inspection

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 engaged by a conveyancing solicitor prior to the purchase of a lot in a scheme.

 

Large strata scheme

Comprises more than 100 lots, excluding utility lots and parking lots. Established by legislation in 2004, there are different treatment measures for such schemes with the ultimate aim being the assurance of equity for all owners.

 

Levies

A levy is what is paid into a trust account so that the scheme can carry out its duties. Levies are the amounts that owners are bound by legislation to pay to the administrative fund and sinking fund / capital works to enable the communal management of the scheme. They are determined at AGM via the approval of a budget and the decision of payment due dates. Each owner’s portion is determined by the lot UE as a proportion of the aggregate UE.

 

Levy arrears

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

 

Lot

Is a parcel where there is a right of ownership. It can be a unit, town house, garage, office, shop, storage cage or a house if part of an association. In a strata scheme it is made up of cubic air space formed by the inner surface of the boundary walls, the under surface of the ceiling and the upper surface of the floor.

 

Machinery breakdown insurance

Optional insurance cover for financial loss due to shutdown of machinery. Details are to be found on the certificate of insurance and in the Product Disclosure Statement.

 

Minutes

A documented record of decisions made, instructions given, and relevant proceedings for meetings held.

 

Motion

A proposal put forward for consideration at a meeting. A well written motion will enable the lot owner or committee member to vote yes (for) or no (against) on the matter.

 

Neighbourhood, precinct & community associations

These schemes are deposited plan developments spread out over parcels of land with shared community facilities such as roads, parks, drive way access, security, extensive sports facilities such as marinas, golf courses or bike-ways. While each single property is registered under a Torrens Title, it is part of the precinct, neighbourhood or community scheme for the ongoing maintenance of the community facilities.

 

Neighbourhood management statement

A statement that is registered with a neighbourhood plan as a statement of the by-laws and other particulars governing participation in the neighbourhood scheme.

 

NSW Civil & Administrative Tribunal (NCAT)

Began operation in January 2014 and oversees matters previously performed by the CTTT and other NSW tribunals. The NCAT’s Consumer and Commercial Division provides mediation and manages disputes occurring in strata and community schemes.

 

NSW Fair Trading

A government body that safeguards the rights of consumers and advises businesses and traders on fair and ethical practice. It is charged with issuing licences and certificates of business.

 

Office bearers

Three elected members of the strata / executive committee who have undertaking more specific duties – the chairperson, secretary and treasurer.

 

Office bearers liability insurance

Compulsory insurance cover to provide compensation for alleged wrongful acts or decisions of the volunteer committee members. Details are found on the certificate of insurance and in the Product Disclosure Statement.

 

Ordinary resolution

A resolution passed by simple majority vote of eligible owners or representatives present at a general meeting.

 

Original owner

The owner, usually the builder or developer 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 and formed when a strata plan is registered. The management framework of the OC is set out by the Strata Schemes Management Act 2015. The OC is sometimes referred to the body corporate.

 

Parking lot

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

 

Poll vote

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

 

Pre-meeting electronic voting

Voting by electronic means of email or other electronic means before the meeting at which the matter is to be considered by owners or committee members. To enable this as an option a resolution has to be passed at general meeting.

 

Product disclosure statement (PDS)

The PDS contains all information relevant to the insurance policy held and must be provided to the insured as per the provisions of the Financial Services Reform Act 2001.

 

Proxy voting

An owner who is unable to attend a meeting may authorise (give their proxy) to another person to have their vote. This is achieved via proper completion of the prescribed form.

 

Public liability insurance

Compulsory insurance cover for which the scheme could become responsible in the event of damage to property, death or injury. The minimum amount of cover is $10 million. Details are to be found on the certificate of insurance and in the Product Disclosure Statement.

 

Precinct association

The entity established under Section 6 and constituted by section 25 of the Community Land Development Act 1989 on the registration of a precinct plan.

 

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, or owners (and/or proxies) holding 25% of more of unit entitlement. A quorum needs to be established within 30 minutes of the intended start time of the meeting else the meeting must be adjourned for at least seven days. If not, the meeting must be adjourned for at least seven days, or the chairperson can declare that the persons present will be considered a quorum. For a committee meeting, a quorum is at least one half of the members.

 

Resolution

A decision made at a meeting based on a motion raised. There are three types of resolutions – ordinary, special and unanimous resolutions.

 

Safety audit

An audit or inspection undertaken to determine possible WH&S exposures for the scheme.

 

Search of the books and records

This activity is also referred to as an inspection. The process is set out in legislation and is usually carried out by a professional company engaged by a conveyancing solicitor prior to the purchase of a lot in a scheme.

 

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.

 

Shared facility

A term used in relation to BMCs. Shared facilities are items owned and maintained by more than one entity (such as strata plan, torrens title, hotels etc). Examples can be roads, community centres, carparks.

 

Sinking fund (now referred to as a 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. The budget for the forthcoming 12 months is usually the recommendation in the forecast, it is resolved at the AGM and is raised by levies on owners. A term that is now only used for community title schemes. Strata schemes now use the term “capital works fund”.

 

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 scheme

Strata scheme is a generic term that encompasses the owners corporation, their communal management obligations, the building, and all related common property. Strata schemes are legislated under the Strata Schemes Management Act 1996. Strata managing agents also have obligations under the Property Stock and Business Agents Act 2002.

 

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 and owners can limit the committee powers if they wish. Nominees should consider any possible conflicts of interest or vested interests they may have in taking the position. The election of office bearers occurs at the SCM which follows the AGM.

The elected representatives of the owners who make the day-to-day communal management decisions throughout the year. Election takes place at the AGM and owners can limit the committee powers if they wish. Nominees should consider any possible conflicts of interest or vested interests they may have in taking the position. The election of office bearers occurs at the SCM which 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 (owners corporation).

 

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. Pending the size of funds needed will determine whether this a once off payment or a series of payments.

 

Special resolution

A resolution that requires not more than 25% vote of eligible owners or representatives present at a general meeting vote against the motion. The vote is based (calculated) on unit entitlement.

 

Strata information certificate

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. 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. It is to be provided in the form prescribed by the Regulations. Under the previous legislation it was referred to as a Section 109 Certificate.

 

Strata manager

A strata manager, also referred to as a “body corporate manager”, is the allocated relationship manager responsible for all duties listed in the strata agency agreement.

 

Strata managing agent

A licensed and qualified, professional entity (or person) appointed by the owners corporation or association, to manage the scheme in accordance with the strata agency agreement and within the proper regulatory framework.

 

Strata management statement (SMS)

A document relating to the management of shared facilities within a BMC. It contains the meeting rules, by-laws and standards that apply, apportionment of costs of the shared facilities, and methods of dealing with disputes between related parties.

 

Strata plan (SP)

Created by a registered surveyor and registered with Land and Property Information (LPI). It contains two parts; the administration sheets that include the name and address for service of notices, by-laws and schedule of unit entitlement, approvals for the plan (i.e. strata certificate and surveyor certificate), signatures and seals, the location plan and floor plans showing the individual lots and common property.

 

Strata roll

Contains information about common property and the strata scheme as well as a register of all lot details such as the names of owners, other interested parties such as mortgagees, covenant charges, lessees.  Information is provided via a strata interest notice or a tenancy notice.

 

Strata Schemes Management Act 2015

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 search

This activity is also referred to as an inspection or a search of the books and records. The process is set out in legislation and is usually carried out by a professional company engaged by a conveyancing solicitor prior to the purchase of a lot in a scheme.

 

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.

 

Term deposit

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

 

Tenant

A person who occupies land or property rented from a landlord. A tenant’s rights are governed by the Residential Tenancies Act 2010 and Residential Tenancies Regulation 2010. Whilst a strata managing agent does not have a contractual relationship with the tenant, they are occupiers of a scheme and should be provided with appropriate direction on any common property related matter. If a tenancy notice has been provided for a strata scheme then the tenant is entitled to certain information about the scheme.

 

Title

A system of ownership of property.

 

Treasurer

One of the three office bearers of the committee. The duties of the treasurer include: preparation of budgets for administration & sinking / capital works funds; issuing levy notices and receipts; banking; maintaining all scheme accounting records; preparation of financial certificates, statements & reports, preparation and lodgement of tax reports. These duties are usually delegated to the strata managing agent.

 

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)

 

Utility lot

A lot designed primarily for storage or accommodation of motor vehicles or goods. It is not for human occupation as a residence, office, shop or similar.

 

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, according to its current worth. It must be obtained at least every five years for insurance purposes. Previous legislation specified that it must be obtained at least every five years for insurance purposes. This is still recommended.

 

Voting entitlements

Voting rights of an owner is defined by the unit entitlement of their lot and established via a strata interest notice. The normal process is one vote per one lot unless for a special resolution or where a poll is requested.

 

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)

Workcover NSW is responsible for compliance relating to work health and safety legislation aimed at protecting the welfare of people engaged in work or employment. Whilst 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.