Strata title is the term used to describe the way the legal ownership of a property has been divided up into lots. It is a way that individuals or companies can communally own properties such as units, townhouses, warehouses, factories, etc. Strata schemes can be used for both residential and commercial purposes. In NSW there are around 75,000 strata schemes. This ebook gives an overview of strata management statements in Australia. Our experienced property lawyers would be happy to work with you to achieve the best possible outcome in your circumstances. Call us today at 1800 770 780 or contact us via ohl@owenhodge.com.au.

1. Strata Management Statements
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2. INTRODUCTION
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Strata title is the term used to describe the way the legal ownership of a property has
been divided up into lots. It is a way that individuals or companies can communally
own properties such as units, townhouses, warehouses, factories, etc.
Strata schemes can be used for both residential and commercial purposes. In NSW
there are around 75,000 strata schemes. The process for setting up a strata scheme
usually involves a developer submitting a strata plan for approval and registration at
the NSW Land Titles Office.
Once approved and registered, the NSW Land Titles Office issues certificates of title for
each lot. There is also one certificate of title for the property as a whole, which is
owned by the Ownership Corporation (OC).

3. THE OWNERSHIP CORPORATION
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Anew homealsoincludesasubstantiallyrenovatedhomeandahomebuilt toreplacedemolishedpremises.
An OC for each strata scheme is formed on the formation of the strata scheme.
It is made up of all the lot owners.
Usually, the first owner is the developer of the scheme.
As people or companies buy lots in the scheme, they become members of the OC.

4. THE STRATA MANAGEMENT STATEMENT
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Once the OC is formed, it usually creates a strata management statement
(SMS). The SMS is a set of rules that outlines how people can use the property.
The purpose of the SMS is to try and help lot owners and/or residents to
live/work in relative harmony. Usually rules in an SMS cover how the common
parts of the property should be used, for example, where rubbish should be
collected or where washing should be hung.
SMS also usually cover the behaviour of residents, for example, noise levels or
pet ownership. In addition, SMS usually cover aspects such as the landscaping,
maintenance and upkeep of the property.

5. COPIES OF THE SMS
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All lot owners and potential lot owners should have a copy of the SMS. This is
especially important if you are considering buying a lot. You will need to read
through the SMS carefully to make sure you can live with and abide by the rules.
While the purpose of the SMS is to ensure that residents live in harmony, do not
rely on the idea that you will find all the rules reasonable. For example, if you are
a pet owner, you need to make sure that the SMS does not prohibit pet owner-
ship. Similarly, if you would like to make alterations to the lot you want to buy,
make sure you are fully aware of all the rules and restrictions surrounding the
alteration of the property.

6. COPIES OF THE SMS
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You should be able to get a copy of the SMS from the OC. If for some reason, the OC will
not provide you with one (which may be an indicator of problems), you should be able to
obtain a copy through the NSW Department of Finance and Services' Land and Property
Information Division.
The rules in the SMS can be changed or repealed. This is usually done in a general meet-
ings of the OC. If, as a potential purchaser, there is a certain rule that you cannot live with,
then do not buy the lot on the assumption that you will be able to change the rule.
Changing the rules requires voting – and changing certain rules can require a unanimous
vote of all the lot owners. If you cannot live with the rules as they stand, then you should
consider not buying the property.

7. DISPUTES AND COMPLIANCE
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Both tenants and owners must comply with the SMS.
The penalties for failing to comply can include fines.
In the first instance, resolution of disputes among lot holders
and/or the OC should be attempted by discussion. Failing that,
the NSW Office of Fair Trading provides a mediation service for
the resolution of strata scheme related disputes.
Finally, if a dispute cannot be resolved through mediation, an
application can be made to the NSW Civil and Administrative
Tribunal's Strata and Community Schemes adjudicator.

8. REFORM
The NSW Government is currently reforming the laws governing strata schemes.
This is the first major reform of the strata laws since the original strata laws were enacted in 1973. The
purpose of the reforms is to bring the scheme up to date; with reforms proposed to areas such as
enabling a strata scheme to keep and issue electronic records, communicate with lot owners via email,
allowing lot owners to attend meetings virtually, if they cannot attend in person.
The proposed reforms also streamline the management of strata schemes and the enforcement of the
SMS. The proposed changes have not yet been enacted into law. The final date for public comments on
the changes was 12 August 2015. If you wish to be kept informed about the changes, you can register
your email address with the NSW Government's Fair Trading Department.
We would be happy to work with you to achieve the best possible outcome in your circumstances.
1800 770 780
ohl@owenhodge.com.au.

9. INDIVID UAL AND COMMERCIAL LAW SPECIALISTS
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