What is Strata

A strata title is a form of property ownership. It allows someone to buy and own part of a larger building or property with subdivisions called lots, for residential, commercial, or industrial use. 

Typically, the buyer purchases their own lot (for example, one of several apartments, units, townhouses, offices, or warehouses in a property complex), and partly purchases into the common property or shared areas like driveways, lobbies, fences, gardens, and lawns. What a strata title covers is based on the strata ‘scheme’ (meaning ‘registered plans’) of the strata title property.

There are two types of strata schemes in WA

Strata Scheme (Built Strata)

A built strata scheme refers to registered plans that provide information on individual and shared ownership of property, typically multi-lot property like townhouses, duplexes, apartments, or villas. Before 30 June 1985, built strata referred to lots only within a building, but since then, land outside the building could also be covered in the lot (for example, courtyards.)

Survey Strata Scheme

A survey strata scheme contains land boundaries marked by a licensed land surveyor but may not contain information on boundaries and locations of actual buildings or walls.

What is common property?

Common property means all parts of land and buildings in a strata scheme that are not lots, like shared driveways, common foyers or communal gardens. Common property is jointly owned by lot owners and managed by the owners’ corporation.

The difference between Strata and Survey Strata

You may be wondering what the difference is between the types of strata plans. Here is a summary:

Aspect of Dwelling Strata Survey Strata
Position Can be used for multi-storey developments with lots on top of each other Single-storey with side by side lots
Age Recommended for new dwellings
(builder handles all service connections, unlikely to change)
Recommended for existing dwellings
(easier to change or demolish in future)
Approval Need approval by WA Building Commission on building requirements. Need to be approved by WA Building Commission, and local and state authorities (e.g. for utilities).
Unit Entitlement A licensed valuer is needed to determine the relative portion of each owner’s share for voting rights, area shared, and responsibility for costs and contributions for strata management.

Recent changes to the Strata Titles Act

On 1 May 2020, amendments were made to the Strata Titles Act 1985 (the Act) and Strata Titles (General) Regulations 2019 after a two-year State Government review of strata title legislation and regulation with community consultation. 

The intent was to make it clearer and fairer for people, professions, and industries involved with residential and commercial strata to buy and sell property, resolve disputes, improve strata management, terminate schemes, and make changes to property and ownership.  

Key issues that arise from the changing nature of strata schemes were addressed, and a new form of land ownership (leasehold strata title schemes) was introduced.

What has changed that is relevant to selling a strata property?

Here are some highlights:

  • Reduction in cost, time, and effort needed to solve strata disputes.
  • Improvement in the maintenance of strata schemes.
  • Increased options for subdividing strata and survey strata schemes.

What to consider when selling a strata-titled property?

The process of selling any property can be a very daunting and complex process, especially when selling a strata property can be quite different from selling a regular freehold property.

There are strict disclosure requirements around strata properties to maintain transparency and accountability.

First, sellers must provide buyers with the following info BEFORE they sign the contract. Sellers should collate all of this from the strata manager at the time of listing the property for sale, and provide a copy of the real estate agent.

  • Copy of the full Strata Plan, scheme notice, scheme plan, scheme by-laws (including those not yet registered), exclusive-use by-laws if any, management statements, and entitlements including Unit Entitlement (the Real Estate Agent can order this from Landgate);
  • Documented minutes from the latest AGM and EGMs (if any), as well as the most current statement of accounts;
  • Any information about termination proposals that have been put to the strata, and strata lease documentation for the lot (if it is a leasehold scheme);
  • The amount and due date(s) of any determined strata levies;
  • Details of any debt the seller has to the strata company (including how the debt arose, the date and the amount outstanding);
  • The seller’s name and address;
  • The name and address for service of the strata company; and
  • Any other information required by the regulations.

Every transaction is different, and sellers must be mindful of the additional information they need to provide in special circumstances like the following:

  • Where the lots have not been created yet;
  • Where the Strata or Survey Strata Plan is not registered yet;
  • Before the first AGM is held;
  • Strata title ownership by the scheme developer is 50% or more;
  • Aggregate unit entitlements of lots are more than 50% of the scheme.

Additional information that must be given to the buyer include:

  • strata company income and expenditure estimate (for 12 months after settlement date);
  • any disclosures from the scheme developer  to the strata company;
  • any service or amenities provision contracts actual or intended;
  • the terms of any lease or licencing agreement;
  • any related contractual benefit or remuneration; and
  • any relevant contractual court or tribunal proceedings.

If a notifiable variation is needed after signing the contract, the seller

  • must inform the buyer in writing as soon as practicable (within 10 working dates of knowing, or up to 15 days before settlement).
  • must provide a reasonable amount of information for the buyer to make an informed decision whether they are materially prejudiced by it.
  • must prove that enough notice was given to the buyer if the matter should be raised in a court or tribunal proceeding.

The worst-case scenario that could happen (if the seller does not meet the disclosure conditions set out in the Strata Title Regulations or provide enough information when there are notifiable variations), is when the contract is declared void, and the buyer is entitled to recover any deposit or money held under the contract.

Why is this important for sellers?

The reforms potentially give the buyer more power to claim damages, delay settlement, or refuse to complete it altogether. The seller needs to know that this could happen if they don’t comply with their obligation to disclose information on strata properties before they sign the contract to transfer ownership.

Before listing their property for sale, the seller must get all required information stated above from the strata manager, and share it with the real estate agent. There will then be less risk of the seller wasting time and preparatory costs, or the buyer raising a dispute after settlement.

Need more information on selling your strata titled property?

Strata can be a complex component when selling your property, with far more things to understand compared to a stand-alone property without strata.

For more information, contact KDD Conveyancing agents to gain a better understanding of how we can facilitate selling your property.

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