In Australia, owners’ corporations are a common form of strata title. This document will explain the purpose of an owner’s corporation and outline some important points to remember about them if you ever own a unit in a strata scheme.
What is an owner’s corporation?
An owner’s corporation is a body that manages communal property owned by all the individual unit-owners – that’s you – who have purchased units in a strata scheme. The body corporate has three primary purposes:
1) Collecting levies from all unit owners. These funds are used to carry out maintenance on common elements such as gardens, pools, tennis courts, lift lobbies, etc., as well as for significant repairs or replacement of those assets; 2) Organising insurance for the worst-case scenarios of a fire, storm damage, etc.; 3) And most importantly, keeping strata plan up-to-date.
This is an owners corporation meeting in action.
The body corporate keeps the place ticking over. It’s responsible for all sorts of maintenance not just on common elements but in every unit owner’s space. As you can imagine, this is an essential job and to do it properly there are usually rules in place which must be obeyed.
Rules exist to maintain property standards. Owners of corporations have broad-reaching powers to make rules that allow them to manage communal areas effectively. These rules may deal with how you get access to your top floor apartment (you might need a key to get into your apartment or a swipe card); how you park at night (it’s been known to be part-time residents only, no cars on weekends, etc.); whether you can put up a clothesline; and what type of pets you may keep in your unit.
There are also rules about the contents of your property, and these vary significantly in strata schemes depending on local community standards and expectations, e.g. ‘no washing machines’; ‘no dark colors in lounge room’; ‘no timber floors’; and so on. Sometimes, there is even a rule requiring all blinds/curtains to be drawn when using the microwave.
Owners corporation have specific governance responsibilities such as appointing caretakers, auditing accounts, preparing budgets, etc. The owner’s corporation must also be provided with money to pay for any of these things, and this comes from two sources: levies and insurance premiums.
Levies and insurance sound complicated, but they’re not, so don’t fear! Levies are collected each quarter by the real estate agent acting as strata manager, and insurance is usually taken out centrally by the strata managers. You get a quarterly statement that tells you how much you owe towards all of this stuff, and then once every three months, the agent takes it out of your account or bills you directly. Easy-peasy.