If you are planning to buy a community title scheme property (also known as strata or group title), there are some important legal matters that you should know.
A community title scheme is essentially an area of land that is divided into at least two lots or units and has common property. The scheme is a legal structure designed for apartment buildings and townhouses complexes and each owner owns a portion (called a lot) but every owner shares ownership of any common property (e.g. driveways, gardens, foyers). The multiple ownership are combined in a legal entity called the body corporate.
The body corporate is responsible for the good management of the community title scheme in the interest of all owners. For instance, the body corporate is responsible for:
- administering the common property and the body corporate assets for the benefit of the owners of lots included in the scheme
- maintaining common property to the extent it is in structurally sound condition
- enforcing the community management statement, including by-laws affecting the common property
- carrying out other functions given to the body corporate under legislation, such as keeping records about its operations, meetings and owners.
Decisions about the community title scheme are made by owners at a general meeting or at a meeting of the committee for the body corporate. No one owner can make a decision affecting the community tile scheme on behalf of all the owners.
A body corporate may engage a body corporate manager to assist in administering the scheme, including managing the day to day financial, maintenance and other administrative duties.
What are the benefits and disadvantages of a community title scheme?
Community living offers many benefits but it does not suit everyone. Before you buy a unit or lot, think carefully about what is involved.
The list below, while not exhaustive, sets out a few considerations for prospective buyers of a community titled scheme.
- you will be living in close proximity to others, sharing walls, common areas and some facilities.
- each community title scheme, no matter how big or small, has a body corporate, which is a legal entity like a company. All owners are automatically members of the body corporate, and are bound by the rules of their body corporate.
- the body corporate is responsible for the maintenance and repairs of the common areas.
- every owner is required to make contributions to the body corporate, known as levies. The contributions are pooled to maintain the community and common areas. The amount and frequency of the contributions to effectively run the body corporate are decided by all owners at an annual general meeting.
- every owner is still required, in addition to levies, to pay council and local service fees, which are based on the property’s value. However, because the owner only owns one portion of a building or community title, rates are less than that of an owner of a freehold property.
- owners have access to common space and shared amenities such as swimming pools, gyms, covered BBQs and shared laundry facilities.
- owners will need to comply with the body corporate by-laws. These are rules and regulations applicable to the community title scheme such as pet ownership, rubbish disposal and everything else that is an essential part of a building or community’s safety and security.
Before buying a property within a community title scheme contact our experienced property lawyers to ensure that you fully understand the structure, risks and costs that are associated with community titles. Seeking advice before signing a contract can reduce stress and assist in avoiding unexpected pitfalls so you can focus on enjoying your new property. Reach out to us, we’re here to help.