Strata titles

Contributed by Ann-Margaret Walsh and Piercy Porter and current to 1 September 2005

TYPES OF PROPERTIES AND TITLES

The green title

The green title is the most common title in Western Australia. It is the traditional title of most stand alone houses.

The purple title

There are a small number of properties that are held under what is known in Western Australia as a purple title. A property held under a purple title is held by a number of owners as tenants in common. Financial institutions will not take this property as security for a loan. This is a major factor affecting the value of this type of property.

The strata title

It is common for buildings (usually units, flats or duplexes) to be subdivided into lots and common property on a single Strata Plan. In this situation, the building is said to be the subject of a strata title.

The law governing strata titles in Western Australia is the Strata Titles Act 1985 (WA) and the Regulations to that Act. It should be noted that a contract for the sale of a strata lot may also incorporate the 2002 Joint Form of General Conditions for the Sale of Land (see above).

LOTS AND COMMON PROPERTY

The lots on a strata plan are usually the individual flats or units. Prior to the Act being amended in 1997, a lot extended to the inner surfaces of the walls, the upper surfaces of the floors and the lower surfaces of the ceiling. There is now a distinction between single tier strata schemes (those schemes where largely no part of a lot is above or below another lot) and other strata schemes. Where the scheme is a single tier strata scheme, legislation now provides that the lot extends to the external surfaces of the building and anything that is attached to or projects from the building.

THE LEGAL OBLIGATIONS OF A SELLER OF A STRATA PLAN LOT

The obligations of a seller of a strata plan lot change depending on whether the strata plan has been registered or not, and whether the seller owns, or did own, the land at the time the plan was registered. There are certain obligations to ensure that the plan is approved and registered within time limits.

BUYING A STRATA TITLE LOT

An intending buyer of a strata title lot should be aware of their entitlement to disclosure statements and other documents. The entitlements include:

• the purchase of the lot will be effected using Offer and Acceptance Forms slightly different to the Contract for Sale of Land by Offer and Acceptance used for other sales;
• the buyer should obtain a copy of the registered strata plan before making the offer;
• the buyer should examine the by-laws and search any recent amendments to such before making the offer;
• every seller is required to provide the purchaser with a “Section 69 statement”.

The form of the statement is set out in the regulations and essentially provides details of strata levies, insurance, any management contracts and proposed by-laws and regulations. If a seller does not provide the statement, a buyer is entitled to terminate the contract;

• a buyer is also provided with a Form 29 statement. This specifies that the buyer is buying a strata lot and what that entails;
• an intending buyer should obtain from the strata company a section 43 certificate which provides the position of the company, particularly the following:

– the names and addresses of the strata company council members;
– the amount of the strata levies and any special levies;
– any outstanding amounts due to the proprietor;
– that inspection can be made of the records and documents in the custody of the strata company, including minutes of meetings, records of resolutions passed, by-laws currently in force, insurance policies and books of account;
• clause 10 of the 2002 Joint Form of General Conditions for the Sale of Land deals with strata lots. In particular, the clause details various representations made by the seller, including representations that there are no unpaid contributions levied upon the seller and that there are no facts or circumstances relating to the common property (which are not apparent upon inspection) which would materially affect the buyer’s use of the property.

MANAGING STRATA TITLE – THE DUTIES OF A STRATA COMPANY

On registration of a Strata Plan, a Strata Company is deemed to come into existence. This company is not subject to the laws relating to companies in Western Australia. The members of the Company are the owners of the lots on the Strata Plan.

The main duties of the Strata Company are to enforce the by-laws, control and manage the common property, maintain common property in a good state of repair, collect a levy from all the unit holders to establish a fund to pay common expenses and to take any necessary collective action.

The operation and conduct of Strata Companies is governed by the Act, the regulations and by-laws. Those involved in the management of Strata Companies are strongly urged to be familiar with sections 32-52 of the Act together with the associated by-laws and regulations.

Specific obligations and entitlements are imposed upon the Company and its members. For instance, all records, minutes, books, Referee orders, meeting notices etc must be kept for a lengthy period (12 years or more) or until the company is wound up. The Strata Titles Act also provides for substantial fines for failure of the original owners to hold an annual meeting within 3 months of registration of the Strata Plan, and the Strata Company must hold a meeting within 15 months of the registration. Under the Act, the Strata Company is specifically authorised to recover the cost of work undertaken to a lot by the Strata Company and payable by the owner.

STRATA COMPANY BY-LAWS

By-laws are the rules and regulations governing Strata Companies and are set out in Schedules 1 and 2 of the Act. These model by-laws are deemed to be the by-laws of the Company but may, in accordance with certain procedures, be amended, repealed or added to by the Company. Schedule 1 deals with issues such as general meetings of the company, division of expenses, keeping of pets, noise levels and washing on balconies. Schedule 2 deals with usage.

The effect of by-laws can be quite significant. For instance, by-laws can limit the age of lot occupiers to those older than 55 years.

MAINTENANCE AND REPAIRS

Generally, lot owners are levied an annual fee to cover the various costs including insurance, maintenance and general administration. The total fee payable is apportioned amongst lot owners according to their unit entitlement.
Essentially there are 3 types of levies which are set at the Strata Company’s AGM:

• an administrative levy to cover the ongoing common expenses such as cleaning and maintenance of common property;
• lot owners’ contribution to a sinking fund to meet capital expenditures such as painting buildings and replacing fixtures;
• special levies designed to meet any urgent expenses not otherwise provided for.

DECISIONS MADE BY THE STRATA COMPANY

Decisions in relation to the running of the Strata Company and the maintenance and alterations to the buildings are made at meetings of the Strata Company by resolutions of the Strata Company. In voting, each lot owner has one vote for each lot of which the lot owner is a registered proprietor. Some decisions of the Strata Company require the unanimous consent of the lot owners, who are all members of the Strata Company.

Therefore in such cases, if one person refuses to consent to a proposal, then that proposal cannot be effected.

DISPUTE RESOLUTION

Communal living and co-ownership rights can often give rise to disputes. The State Administrative Tribunal (“SAT”) has wide powers to resolve disputes and enforce provisions of the Act. For example, the SAT can order the Strata Company to give access to books and records, or can order that a Strata Company consent to a proposal by a lot owner to effect alterations to the common property if that proposal is not unreasonable. For details on how to apply to the SAT, see CHALLENGING GOVERNMENT DECISIONS . In summary, the subject of Strata Titles is very complicated and if a person is unclear about their rights and entitlements a solicitor should be consulted.