Chapter 3 Key management areas
Introductory note. This Chapter sets out the key areas of management for a strata scheme, that is, the main responsibilities of an owners corporation for a strata scheme.
Introductory note. This Part provides an overview of the Chapter.
61 What are the key management areas for a strata scheme?
(1) An owners corporation has, for the benefit of the owners:(a) the management and control of the use of the common property of the strata scheme concerned, and(b) the administration of the strata scheme concerned.(2) The owners corporation has responsibility for the following:(a) maintaining and repairing the common property of the strata scheme as provided by Part 2,(b) managing the finances of the strata scheme as provided by Part 3,(c) taking out insurance for the strata scheme as provided by Part 4,(d) keeping accounts and records for the strata scheme as provided by Part 5.(3) Other functions of an owners corporation are included in Part 6.
Part 2 Maintenance, repairs, alteration and use of common property and fire safety inspections
Introductory note. This Part sets out the duties of an owners corporation to maintain and repair the property of a strata scheme and to arrange access for fire safety inspections. Certain powers are given to an owners corporation to recover money for work required to be carried out and to enter property to carry out certain necessary work. The Part also deals with certain powers of an owners corporation in relation to alterations or additions to common property and the granting of licences over common property.
62 What are the duties of an owners corporation to maintain and repair property?
(1) An owners corporation must properly maintain and keep in a state of good and serviceable repair the common property and any personal property vested in the owners corporation.(2) An owners corporation must renew or replace any fixtures or fittings comprised in the common property and any personal property vested in the owners corporation.(3) This clause does not apply to a particular item of property if the owners corporation determines by special resolution that:(a) it is inappropriate to maintain, renew, replace or repair the property, and(b) its decision will not affect the safety of any building, structure or common property in the strata scheme or detract from the appearance of any property in the strata scheme.Note. The decision of an owners corporation under subsection (3) may be reviewed by an Adjudicator (see section 138).
63 What power does an owners corporation have to carry out work and recover costs?
(1) Application of section
This section applies if a person who is required to carry out work as referred to in this section fails to carry out the work.(2) Work required by public authority
An owners corporation may carry out work that is required to be carried out by an owner of a lot under a notice served on the owner by a public authority and may recover the cost of carrying out the work from the owner or any person who, after the work is carried out, becomes the owner.(3) Work required to be carried out under term or condition of by-law
An owners corporation may carry out work that is required to be carried out by a person who is the owner, mortgagee or covenant chargee in possession, lessee (or, in the case of a leasehold strata scheme, sublessee) or occupier of a lot under a term or condition of a by-law and may recover the cost of carrying out the work from that person or any person who, after the work is carried out, becomes the owner of that lot.(4) Work that is duty of owner or occupier to carry out
An owners corporation may carry out work that is required to be carried out by a person who is the owner, mortgagee or covenant chargee in possession, lessee (or, in the case of a leasehold strata scheme, sublessee) or occupier of a lot in order to remedy a breach of a duty imposed by Chapter 4 and may recover the cost of the work from that person.(5) Work required to be carried out under order
An owners corporation may carry out work required to be carried out under an order made under this Act and may recover the cost of carrying out the work from the person against whom the order was made.(6) Recovery of costs as a debt
The costs incurred by an owners corporation in carrying out any work referred to in this section may be recovered by the owners corporation as a debt.
64 What power does an owners corporation have to carry out work at its own expense?
(1) An owners corporation may carry out such work as is necessary to rectify any of the following defects:(a) any structural defect in any part of a building comprised in a lot that affects or is likely to affect the support or shelter provided by that lot for another lot in the building or the common property,(b) any defect in any pipe, wire, cable or duct that provides, or through which passes, any water, sewage, drainage, gas, electricity, garbage, artificially heated or cooled air, heating oil or other service (including telephone, radio or television services) within a lot.(2) An owners corporation may carry out work referred to in this section at its own expense if the cost of the work cannot be recovered from some other person.
65 Can an owners corporation enter property in order to carry out work?
(1) An owners corporation may, by its agents, employees or contractors, enter on any part of the parcel for the purpose of carrying out the following work:(a) work required to be carried out by the owners corporation in accordance with this Act,(b) work required to be carried out by the owners corporation by a notice served on it by a public authority,(c) work required to be carried out by the owners corporation by an order under this Act.(2) An owners corporation may, by its agents, employees or contractors, enter on any part of the parcel for the purpose of determining whether any work is required to be carried out by the owners corporation in accordance with this Act.(3) In an emergency, the owners corporation may enter any part of the parcel for those purposes at any time.(4) In a case that is not an emergency, the owners corporation, may enter any part of the parcel for those purposes with the consent of any occupier of that part of the parcel or, if the occupier does not consent, in accordance with an order of an Adjudicator under section 145.(5) A person must not obstruct or hinder an owners corporation in the exercise of its functions under this section.Maximum penalty: 2 penalty units.
(6) An owners corporation is liable for any damage to a lot or any of its contents caused by or arising out of the carrying out of any work, or the exercise of a power of entry, referred to in this section unless the damage arose because the owners corporation was obstructed or hindered.
65A Owners corporation may make or authorise changes to common property
(1) For the purpose of improving or enhancing the common property, an owners corporation or an owner of a lot may take any of the following action, but only if a special resolution has first been passed at a general meeting of the owners corporation that specifically authorises the taking of the particular action proposed:(a) add to the common property,(b) alter the common property,(c) erect a new structure on the common property.(2) A special resolution that authorises action to be taken under subsection (1) in relation to the common property by an owner of a lot may specify whether the ongoing maintenance of the common property once the action has been taken is the responsibility of the owners corporation or the owner.(3) If a special resolution under this section does not specify who has the ongoing maintenance of the common property concerned, the owners corporation has the responsibility for the ongoing maintenance.(4) A special resolution under this section that allows an owner of a lot to take action in relation to certain common property and provides that the ongoing maintenance of that common property after the action is taken is the responsibility of the owner has no effect unless:(a) the owners corporation obtains the written consent of the owner to the making of a by-law to provide for the maintenance of the common property by the owner, and(b) the owners corporation makes such a by-law.(5) A by-law made for the purposes of this section:(a) may require, for the maintenance of the common property, the payment of money by the owner concerned at specified times or as determined by the owners corporation, and(b) must not be amended or repealed unless a special resolution has first been passed at a general meeting of the owners corporation and the owners corporation has obtained the written consent of the owner concerned.(6) The provisions of sections 52 (3), 54 (2) and (3) and 55 apply to a by-law made for the purposes of this section in the same way as those provisions apply to a by-law to which Division 4 of Part 5 of Chapter 2 applies.
65B Owners corporation may grant licence to use common property
(1) An owners corporation may grant a licence to an owner of a lot to use common property in a particular manner or for particular purposes if the owners corporation has approved the granting of the licence by special resolution passed at a general meeting of the owners corporation.(2) A licence may be granted subject to terms and conditions.Note. Division 4 of Part 5 of Chapter 2 enables owners corporations to make by-laws granting exclusive use rights and special privileges (including licences) in relation to common property.
65C What are the duties of an owners corporation in relation to fire safety inspections
(1) A person authorised to carry out an inspection under the Environmental Planning and Assessment Act 1979 of a building or premises for purposes relating to fire safety may give a notice in writing to an owners corporation for a strata scheme requiring the owners corporation to ensure that access is provided, within a period or at a time specified in the notice, to the common property of the strata scheme and, if so specified, some or all of the individual lots in the strata scheme.(2) An owners corporation must comply with a requirement of a notice given to the owners corporation under this section.Maximum penalty: 20 penalty units.
(3) It is a defence to a prosecution for an offence against subsection (2) consisting of a failure to ensure that access is provided to a lot in a strata scheme if the owners corporation establishes that the owner or occupier of the lot refused to allow the access or could not be contacted by the owners corporation.(4) For the purposes of the Environmental Planning and Assessment Act 1979, access to a building or premises or part of a building or premises given to a person in accordance with this section, or in accordance with an order of an Adjudicator made under section 145 for the purposes of this section, is taken to be a permission given to that person by the occupier of the building, premises or part to enter the premises and carry out the inspection concerned.
Part 3 Finances of strata scheme
Introductory note. This Part requires an owners corporation for a strata scheme to establish an administrative fund and a sinking fund and to levy contributions to those funds from owners of lots in the scheme. The administrative fund is generally used to meet recurrent expenses, such as expenses involved in maintaining the common property from day-to-day in good condition and insuring the property. The sinking fund is generally used to meet expenses of a capital nature, such as painting buildings or replacing fixtures or fittings.
Division 1 Administrative and sinking funds and account of owners corporation
66 Administrative fund to be established
An owners corporation must establish an administrative fund.
67 What money is to be paid into the administrative fund?
(1) An owners corporation must pay the following amounts into the administrative fund:(a) the contributions levied on, and paid by, owners for payment into the fund,(b) the proceeds of the disposal of any personal property of the owners corporation,(c) any fees paid to the owners corporation for inspection of its records and the provision of information and certificates relating to its records.(2) An owners corporation may pay into the administrative fund any amounts paid to the owners corporation by way of discharge of insurance claims.
68 What money can be paid out of the administrative fund?
(1) An owners corporation must not pay any money from its administrative fund except for the purpose of:(a) payments of the kind for which estimates have been made under section 75 (1), or(b) payments made in accordance with this Division on a distribution of a surplus in the fund, or(c) payments to a member of the executive committee in accordance with this Act, or(d) other payments in connection with carrying out its functions under this Act or the by-laws, except payments of a kind referred to in section 71 (1).(2) However, an owners corporation may pay money by transfer from its administrative fund to its sinking fund or by meeting from its administrative fund expenditure that should have been met from its sinking fund so long as the owners corporation complies with subsection (3).(3) The owners corporation must, not later than 3 months after the disbursement, make a determination under section 76 (1) of an amount sufficient to recoup the amount of the disbursement.
69 Sinking fund to be established
(1) An owners corporation must establish a sinking fund.(2) However, an owners corporation for a strata scheme comprising 2 lots need not establish a sinking fund if:(a) the owners corporation so determines by unanimous resolution, and(b) the buildings comprised in one of those lots are physically detached from the buildings comprised in the other lot, and(c) no building or part of a building in the strata scheme is situated outside those lots.
70 What money is to be paid into the sinking fund?
An owners corporation must pay the following amounts into its sinking fund:(a) the contributions levied on, and paid by, owners for payment into the fund,(b) any amounts paid to the owners corporation by way of discharge of insurance claims, unless those amounts have been paid into the administrative fund,(c) any amount received by the owners corporation that is not required or permitted to be paid into the administrative fund.
71 What money can be paid out of the sinking fund?
(1) An owners corporation must not pay any money from its sinking fund except for the purpose of:(a) payments of the kind for which estimates have been made under section 75 (2), or(b) payments made in accordance with this Division on a distribution of a surplus in the fund.(2) However, an owners corporation may disburse money by transfer from its sinking fund to its administrative fund or by meeting from its sinking fund expenditure that should have been met from its administrative fund if the owners corporation complies with subsection (3).(3) The owners corporation must, not later than 3 months after the disbursement, make a determination under section 76 (1) of an amount sufficient to recoup the amount of the disbursement.
72 Distribution of surplus money in administrative fund or sinking fund
(1) An owners corporation may, in accordance with a unanimous resolution, distribute between the owners any money in its administrative fund or sinking fund that is not, in the opinion of the owners corporation, required for the purposes of either fund.(2) A distribution to an owner of a lot or a person entitled to receive it under subsection (3) must be made in the same proportion as is borne by the unit entitlement for the lot to the aggregate unit entitlement.(3) Any money payable under subsection (1) in relation to a lot that is subject to a mortgage or covenant charge shown on the strata roll is to be paid:(a) in accordance with the joint directions of the owner of the lot and the mortgagee or covenant chargee, or(b) if they cannot agree—in accordance with an order of the court that, under subsection (4), has jurisdiction in the matter.(4) An application for an order to resolve a dispute under subsection (3) may be made:(a) in the case of a dispute where the amount of the payment does not exceed $500 and the title to land is not in question or is in question only incidentally—to such Local Court as may be agreed on by the applicant and the respondent or, in the absence of any such agreement, the Local Court nearest to the parcel, or(b) in the case of an application where the amount of payment does not exceed $500 and the title to land is in question otherwise than incidentally—to the District Court of New South Wales, or(c) in the case of an application where the amount of the payment exceeds $500 but does not exceed $10,000 and the title to land is not in question or is in question only incidentally—to the District Court of New South Wales, or(d) in any other case—to the Supreme Court.
73 Can money in administrative fund or sinking fund be invested?
(1) An owners corporation may invest any money in its administrative fund or sinking fund in any manner permitted by law for the investment of trust funds or in any prescribed investment.(2) Any interest received on an investment made under this section forms part of the fund to which the investment belongs.
74 Account of owners corporation
(1) An owners corporation must pay any amounts that are received by it and are not otherwise invested in accordance with this Act into an account established in a financial institution in the name of the owners corporation.(2) This section does not apply to an owners corporation that has appointed a strata managing agent to whom the duty of the owners corporation under this section is delegated in accordance with this Act.
Division 2 Levy of contributions
75 Estimates to be prepared of contributions to administrative and sinking funds
(1) An owners corporation must, not later than 14 days after the constitution of the owners corporation and at each annual general meeting after that, estimate how much money it will need to credit to its administrative fund for actual and expected expenditure:(a) to maintain in good condition on a day-to-day basis the common property and any personal property vested in the owners corporation, and(b) to provide for insurance premiums, and(c) to meet other recurrent expenses.Note. Recurrent expenses would include such regular expenses as insurance, water charges, electricity charges, carpet cleaning, lawnmowing services and the like and minor expenses relating to maintenance of the common property.(2) An owners corporation must, at each annual general meeting, estimate how much money it will need to credit to its sinking fund for actual and expected expenditure:(a) for painting or repainting any part of the common property which is a building or other structure, and(b) to acquire personal property, and(c) to renew or replace personal property, and(d) to renew or replace fixtures and fittings that are part of the common property, and(e) to replace or repair the common property, and(f) to meet other expenses of a capital nature.Note. Expenses of a capital nature would include expenses in relation to major repairs or improvements to the common property or personal property of the owners corporation, such as painting of a building or replacement of roofing, guttering or fences and the like.(3) When estimating amounts needed to be credited to the administrative fund or the sinking fund the owners corporation must have before it, and take into account, a statement of the existing financial situation of the strata scheme and an estimate of receipts and payments.(4) In estimating amounts to be credited to the sinking fund, an owners corporation that is required to prepare a plan under section 75A is to take into account anticipated major expenditure identified in the plan for the 10-year period to which the plan relates.(5) An owners corporation of a large strata scheme must include in the estimates prepared under this section at an annual general meeting specific amounts in relation to each item or matter on which the owners corporation intends to expend money, or on which the owners corporation is aware money will be likely to be expended, in the period until the next annual general meeting.
75A Owners corporation to prepare 10-year sinking fund plans
(1) This section applies to owners corporations established on or after the commencement of this section.(2) An owners corporation to which this section applies is to prepare a plan of anticipated major expenditure to be met from the sinking fund over the 10-year period commencing on the first annual general meeting of the owners corporation.(3) The initial plan is to be finalised by the end of the second annual general meeting of the owners corporation.(4) The plan is to be reviewed and (if necessary) adjusted no later than at the fifth annual general meeting of the owners corporation.(5) An owners corporation to which this section applies is to prepare a plan as referred to in subsection (2) for each 10-year period following the period referred to in that subsection and is to finalise and review the plan in accordance with the requirements of subsections (3) and (4) at the corresponding annual general meetings in the relevant 10-year period.(6) An owners corporation may engage expert assistance in the preparation of a plan under this section.(7) The regulations may extend the operation of this section to all owners corporations or to such classes of owners corporations established before the commencement of this section as are specified in the regulations.(8) A regulation referred to in subsection (7) may make necessary modifications to the application of any provision of this section to an owners corporation established before the commencement of this section.
76 Owners corporation to set levy for contributions to administrative and sinking funds
(1) The owners corporation must determine the amounts to be levied as a contribution to the administrative fund and the sinking fund to raise the amounts estimated as needing to be credited to those funds.(2) That determination must be made at the same meeting at which those estimated amounts are determined.(3) The owners corporation must levy on each person liable for it such a contribution.(4) If the owners corporation is subsequently faced with other expenses it cannot at once meet from either fund, it must levy on each owner a contribution to the administrative fund, determined at a general meeting of the owners corporation, in order to meet the expenses.(5) A contribution is, if an owners corporation so determines, payable by such regular periodic instalments as are specified in the determination setting the amount of the contribution.
77 Effect of use of lot on insurance premiums
If the use to which a lot is put causes an insurance premium for the strata scheme to be greater than it would be if it were not put to that use, so much of a contribution payable by the owner of the lot as is attributable to insurance premiums may, with the consent of the owner, be increased to reflect the extra amount of premium.Note. An owners corporation may apply for an order under section 149 (2) for a variation of contributions if an owner unreasonably refuses consent under this subsection.
78 Manner of levying contributions
(1) An owners corporation levies a contribution required to be paid to the administrative fund or sinking fund by an owner of a lot by serving on the owner a written notice of the contribution payable.(2) Contributions levied by an owners corporation must be levied in respect of each lot and are payable (subject to this section and section 77) by the owners in shares proportional to the unit entitlements of their respective lots.(3) If, at the time a person becomes owner of a lot, another person is liable in respect of the lot to pay a contribution, the owner is jointly and severally liable with the other person for the payment of the contribution and interest on the contribution.(4) A mortgagee or covenant chargee in possession of a lot (whether in person or not) is jointly and severally liable with the owner of the lot:(a) for any regular periodic contributions to the administrative fund or sinking fund together with any interest on those contributions, and(b) for any other contribution together with interest on that contribution if the mortgagee or covenant chargee has been given written notice of the levy of the contribution.(5) Subsection (4) does not affect the liability of an owner of a lot for any contribution levied under this section.(6) Regular periodic contributions to the administrative fund and sinking fund of an owners corporation are taken to have been duly levied on an owner of a lot even though notice levying the contributions was not served on the owner.
79 Interest and discounts on contributions
(1) Any contribution levied by an owners corporation becomes due and payable to the owners corporation in accordance with the decision of the owners corporation to make the levy.(2) A contribution, if not paid at the end of one month after it becomes due and payable, bears until paid simple interest at an annual rate of 10 per cent or, if the regulations provide for another rate, that other rate.(3) However, an owners corporation may by special resolution determine (either generally or in a particular case) that a contribution is to bear no interest.(4) An owners corporation may, by special resolution, determine (either generally or in a particular case) that a person may pay 10 per cent less of a contribution levied if the person pays the contribution before the date on which it becomes due and payable.
80 How does an owners corporation recover unpaid contributions and interest?
(1) An owners corporation may recover as a debt a contribution not paid at the end of one month after it becomes due and payable, together with any interest payable and the expenses of the owners corporation incurred in recovering those amounts.(2) Interest paid or recovered forms part of the fund to which the relevant contribution belongs.
Division 3 Restrictions on spending
80A Limit on spending by executive committees of large strata schemes
(1) If a specific amount has been determined as referred to in section 75 (5) for expenditure on any item or matter, the executive committee of the owners corporation concerned must not, in the period until the annual general meeting next occurring after the determination was made, spend on the item or matter an amount greater than that determined amount for expenditure on the item or matter plus 10 per cent.(2) The owners corporation of a large strata scheme may by resolution at a general meeting remove the limitation imposed by subsection (1) generally or in relation to any particular item or matter.
80B Quotations to be obtained for certain items of expenditure by large strata schemes
An owners corporation of a large strata scheme must obtain at least 2 quotations in relation to proposed expenditure in respect of any one item or matter if the proposed expenditure will exceed an amount prescribed by the regulations for the purposes of this section.
80C Exceptions in relation to emergencies
Sections 80A (1) and 80B do not apply to expenditure undertaken for emergency purposes, including, for example, expenditure to remedy any of the following:(a) burst or blocked water or sewerage pipes,(b) serious damage caused by fire or by storm or any other natural disaster,(c) unexpected electrical or security system failure,(d) glass breakages that affect the security of any building in the strata scheme or could result in damage to the inside of any such building.
80D Legal action to be approved by general meeting
(1) An owners corporation or executive committee of an owners corporation must not seek legal advice or the provision of any other legal services, or initiate legal action, for which any payment may be required unless a resolution is passed at a general meeting of the owners corporation approving the seeking of the advice or services or the taking of that action.(2) The regulations may make provision for or with respect to exempting any type of legal service or legal action from the operation of this section.
Introductory note. This Part requires an owners corporation for a strata scheme for a building to take out insurance on the building. In the case of a strata scheme for a part of a building, the obligation to insure is placed on the owners corporation and the owner or owners of the rest of the building.The Part provides specific exceptions to the insurance requirements and enables an owners corporation to apply to an Adjudicator for an exemption from those requirements.
The Part also deals with other types of insurance that must or may be taken out by an owners corporation and contains miscellaneous provisions as to the taking out of insurance by an owners corporation or an owner of a lot.
In this Part, building includes:(a) owners’ improvements and owners’ fixtures forming part of the building other than paint, wallpaper and temporary wall, floor and ceiling coverings, and(b) a building consisting entirely of common property, and(c) anything prescribed by the regulations as forming part of a building for the purposes of this definition,but does not include:(d) fixtures removable by a lessee or sublessee at the expiration of a tenancy, or(e) anything prescribed by the regulations as not forming part of a building for the purposes of this definition.
(1) In this Part, a damage policy for a building means a contract of insurance providing for the matters referred to in this section in the event of the building being destroyed or damaged by fire, lightning, explosion or any other occurrence specified in the policy.(2) A damage policy is to provide for the rebuilding of the building or its replacement by a similar building in the event of its destruction so that every part of the rebuilt building or the replacement building is in a condition no worse or no less extensive than that part or its condition when that part was new.(3) A damage policy is to provide for the repair of damage to, or the restoration of the damaged portion of, the building in the event of its being damaged but not destroyed, so that the repaired or restored portion, is in a condition no worse or no less extensive than that portion or its condition when that portion was new.(4) A damage policy is to provide for the payment of expenses incurred in the removal of debris.(5) A damage policy is to provide for the remuneration of architects and other persons whose services are necessary as an incident to the rebuilding, replacement, repair or restoration.(6) A damage policy may provide that, instead of the work and the payments being carried out or made on the occurrence of any of the events specified in subsection (1), the liability of the insurer is, on the occurrence of any such event, limited to an amount specified in the policy that is not less than an amount calculated in the manner prescribed by the regulations.
Division 2 Insurance of buildings
83 Owners corporation to insure building
(1) The owners corporation for a strata scheme for the whole of a building must insure the building and keep the building insured under a damage policy with an approved insurer in accordance with this section.(2) The building is to be insured for at least the value of the building indicated by the last valuation obtained for the building in accordance with this Division.(3) The damage policy is to be in the name of the owners corporation.(4) This section does not apply to an owners corporation for a strata scheme comprising 2 lots if:(a) the owners corporation so determines by unanimous resolution, and(b) the buildings comprised in one of those lots are physically detached from the buildings comprised in the other lot, and(c) no building or part of a building in the strata scheme is situated outside those lots.(5) An owners corporation that breaches subsection (1) is guilty of an offence.Maximum penalty (subsection (5)): 5 penalty units.
84 Responsibility of owners corporation to insure where strata scheme is for part only of building
(1) Owners corporation and other owners of building to insure
The owners corporation for each strata scheme for part of a building and any other person in whom is vested an estate in fee simple in part of the building that is not included in a stratum parcel must insure the building and keep the building insured under a damage policy with an approved insurer in accordance with this section.(2) Building to be insured in accordance with last valuation
The building is to be insured for at least the value of the building indicated by the last valuation obtained for the building in accordance with this Division.(3) Damage policy to be in joint names
The damage policy is to be taken out in the joint names of the owners corporation and the other persons required to insure.(4) Calculation of proportions of premium for which each owner liable
The proportion of a premium for a damage policy for a building payable by the owners corporation or other person is the same proportion as the replacement value of the part (or parts) of the building subject to the strata scheme concerned or held in fee simple by the other person bears to the replacement value of the whole building.(5) Adjudicator may determine proportions of premium payable
On application made to it by an owners corporation or other person liable to pay such a proportion, an Adjudicator may determine the replacement value and proportion payable. The determination is binding on each person liable to pay such a proportion.(6) Action that may be taken if person fails to insure
If a person fails to comply with a requirement made by this section to insure a building or keep a building insured, any other person who has an obligation to comply with that requirement may:(a) apply to an Adjudicator for an order requiring the person who has failed to comply to join the applicant in taking out a damage policy for the building, or(b) take out a damage policy for the building in their joint names and recover as a debt from the person who has failed to comply the appropriate proportion, if any, of the amount of the premium for which that person is liable.(7) Proportions may be adjusted by Adjudicator in certain circumstances
If the use to which a part of a building is put causes an insurance premium under this section to be greater than it would be if it were not put to that use, a person liable to pay a proportion of the insurance premium may apply to an Adjudicator for an order adjusting the proportions payable so that the proportion payable by the person in whom is vested the estate in fee simple for that part of the building reflects the extra amount of premium.(8) Offence to breach insurance requirements
A person who breaches subsection (1) is guilty of an offence.Maximum penalty: 5 penalty units.
(9) Defence to offence of not insuring
In any proceedings for an offence under subsection (8), it is a defence to establish that the defendant was willing to join in the insurance of a building under a damage policy but that the policy could not be taken out because another person specified in subsection (1) was unwilling to join in the application for that policy.
85 Valuations to be obtained for the purposes of insurance
(1) A valuation of a building that is required to be insured under this Division must be obtained at least once every 5 years by:(a) if the whole building is the subject of one strata scheme, the owners corporation for that strata scheme, or(b) in any other case, the owners corporation for each strata scheme for part of the building and any other person in whom is vested an estate in fee simple in part of the building that is not included in a stratum parcel.(2) The valuation must be carried out by a person who has the qualifications prescribed by the regulations.(3) The proportion of the cost of a valuation that is payable by an owners corporation or other person referred to in subsection (1) (b) is the same as the proportion of the premium for the damage policy that is payable by the owners corporation or person in respect of the building concerned.
86 Can a person be exempted from the requirement to insure?
(1) A person required by this Division to insure a building may make an application to an Adjudicator for an order of exemption under this section, but an owners corporation may make such an application only in accordance with a unanimous resolution.(2) An Adjudicator may, on application and if of the opinion that compliance with the requirements to insure is unnecessary or impracticable, by order in writing:(a) exempt the applicant from compliance with those requirements unconditionally, or(b) with the consent in writing of the applicant, exempt the applicant from compliance with those requirements subject to a condition that the applicant takes out such insurance for the building concerned as may be specified in the order.(3) An Adjudicator must not make an order under this section unless each other person required to insure the building has consented in writing to the making of the order or has, before the making of the order, been given an opportunity to make representations to an Adjudicator with respect to the application for the order.(4) A consent for the purposes of this section may be given by an owners corporation only in accordance with a unanimous resolution.(5) If an owners corporation is required by a positive covenant to insure the building, an order must not be made under this section until:(a) at least 21 days after an Adjudicator has served notice on the authority having the benefit of the covenant of the intention to make the order, and(b) the Adjudicator has considered any representations made during the 21-day period to an Adjudicator by the authority in relation to the intended order.(6) A person to whom an exemption has been granted under this section is not under a duty to comply with a requirement to insure under this Division or any corresponding requirement of a positive covenant.(7) However, if the exemption was granted subject to a condition referred to in subsection (2) (b), the person is under the duty, if in breach of that condition.
87 What other insurance must an owners corporation take out?
(1) In addition to insurance taken out by an owners corporation in accordance with Division 2, the owners corporation must take out insurance:(a) in respect of any occurrence against which it is required by law to insure, including any insurance required by the Workers Compensation Act 1987 and the Workplace Injury Management and Workers Compensation Act 1998 to be taken out, and(b) in respect of damage to property, death or bodily injury for which the owners corporation could become liable in damages, and(c) against the possibility of the owners becoming jointly liable by reason of a claim arising in respect of any other occurrence against which the owners corporation, in accordance with a special resolution, decides to insure, and(d) against any damages for which the owners corporation could become liable by reason that, without fee or reward or any expectation of fee or reward, a person acting on behalf of the owners corporation does work in a building or on the common property in the strata scheme, and(e) of any other class prescribed by the regulations for the purposes of this subsection.Maximum penalty: 5 penalty units.
(2) Insurance taken out in accordance with subsection (1) (b) must be for a cover of not less than $10,000,000 for each event in respect of which any claim or claims may be made or, if the regulations provide for another amount, that other amount.(3) Regulations made for the purposes of subsection (2) may provide that the amount is to be calculated or determined in the prescribed manner.
88 What other insurance may an owners corporation take out?
(1) An owners corporation may insure any property that it is not required to insure by this Part and in which it has an insurable interest.(2) An owners corporation may take out insurance, at its own expense, in respect of either or both of the following:(a) damage to property, death or bodily injury for which a person holding the office of chairperson, secretary, treasurer or member of the executive committee of the owners corporation could become liable in damages because of an act or omission, committed or omitted in good faith, in performing the functions of that office,(b) misappropriation of money or other property of the owners corporation.
88A Insurance must be taken out with approved insurer
Any insurance that is taken out in accordance with this Division must be taken out with an approved insurer.
Division 4 Insurance claims and other matters affecting insurance
89 Can an owner take out insurance?
(1) Nothing in this Part limits any right of an owner to take out insurance.(2) Insurance taken out by an owner does not affect, and is not to be taken into consideration in determining, the amount payable to an owners corporation under a contract of insurance entered into between it and an insurer in accordance with this Part.(3) Subsection (2) has effect despite anything contained in the relevant contract of insurance.
(1) A person (including an owners corporation) is taken to have an insurable interest in the subject-matter of a contract of insurance entered into by the person in accordance with this Part.(2) The owner of a lot is taken to have an insurable interest in a building comprised in the lot while the building is subject to a determination referred to in section 83 (4).(3) This section applies despite the provisions of section 23 of the Imperial Acts Application Act 1969 or any other law relating to insurance.
(1) Insurance may be taken out by an owner of a lot in respect of damage to the lot in a sum equal to the amount secured at the date of the contract of insurance by mortgages of and any covenant charges affecting the lot.(2) Subject to the terms and conditions of the contract:(a) any payment to be made under the contract by the insurer in respect of damage must be made to the mortgagees and any covenant chargees whose interests are noted in the contract in order of their respective priorities, and(b) the amount of the payment must be the amount stated in the contract, the amount of the loss, or an amount sufficient, at the date of the loss, to discharge mortgages of and any covenant charges affecting the lot, whichever is the least amount, and(c) if the amount so paid by the insurer equals the amount necessary to discharge a mortgage of the lot, the insurer is entitled to an assignment of that mortgage, and(d) if the amount so paid by the insurer is less than the amount necessary to discharge a mortgage of the lot, the insurer is entitled to a sub-mortgage of that mortgage to secure the amount so paid on terms and conditions agreed on as provided by subsection (3) or, failing agreement, on the same terms and conditions as those contained in the mortgage by the owner.(3) For the purposes of subsection (2) (d), any insurer and mortgagee may at any time, whether before or after a contract of insurance referred to in subsection (1) has been entered into by an owner of a lot, agree on the terms and conditions of the sub-mortgage.(4) The contract of insurance is not liable to be brought into contribution with any other such contract of insurance except another contract of insurance that is in respect of damage to the same lot and relates to the same debt.
92 Insurance claim where owner at fault
If an insurer of an owners corporation accepts a claim by the owners corporation based on an act or omission by an owner of a lot, the insurer has no right of subrogation in relation to the owner based on that act or omission unless it is proved that the act or omission was wilful.
93 Action against owners corporation by owner
An owner of a lot may bring any action against the owners corporation of which the owner is a member that the owner might have brought against the owners corporation if the owner had not been such a member.
94 Owners corporation to rebuild
(1) If an owners corporation receives payment of money from an insurer in respect of destruction of or damage to a building, that money must be immediately applied by the owners corporation in rebuilding, replacing, repairing or restoring the building.(2) This section is subject to:(a) in the case of a freehold strata scheme, any order made under section 50 or 51 of the Strata Schemes (Freehold Development) Act 1973, or(b) in the case of a leasehold strata scheme, any order made under section 79 or 80 of the Strata Schemes (Leasehold Development) Act 1986.
(1) The Minister may, by order in writing, approve of any person or class of persons as an approved insurer for the purposes of this Part.(2) The Director-General must maintain a record of approved insurers.
Introductory note. This Part requires an owners corporation for a strata scheme to keep certain records and accounts in relation to a strata scheme. The Part also provides for certain persons to inspect those records and to obtain a certificate of an owners corporation in relation to certain matters affecting a lot in the strata scheme.
96 Owners corporation must keep a strata roll
The owners corporation must prepare and maintain a strata roll in accordance with this Division.Maximum penalty: 5 penalty units.
97 What is the form of the strata roll?
(1) The strata roll must be kept in a form that contains entries for each lot and entries for the common property and the strata scheme in general.(2) The information required to be entered in the strata roll may be recorded or stored by mechanical, electronic or other means.
98 What must be recorded in the strata roll?
(1) There must be recorded in the strata roll in relation to a particular lot:(a) the owner’s name and an Australian address for service of notices or the name of the owner’s agent appointed in accordance with Part 3 of Chapter 4 and the agent’s Australian address for service of notices, and(b) information provided under section 118 or obtained from the Register in connection with the lot, and(c) information provided under section 119.(2) There must be recorded in the strata roll in relation to the common property and the strata scheme in general the following:(a) the strata plan number and the address of the strata scheme building,(b) the names of the original owner and any strata managing agent of the owners corporation and their Australian addresses for service of notices,(c) the total unit entitlement of the scheme and the unit entitlement of each lot,(d) particulars of insurance taken out by the owners corporation, including the following:the name of the insurance company
the number of the insurance policy
the nature of the risk insured
the amount of the insurance
the due date for payment of the premium
the date on which the premium was last paid
(e) the by-laws for the time being in force for the strata scheme.
99 What information can the owners corporation rely on when making entries in the strata roll?
(1) The owners corporation may make or amend the entries in the strata roll on the basis of information contained in the Register or provided under section 118 (to the extent that information so provided is not inconsistent with information contained in the Register).(2) Information provided under section 118 may be presumed to be consistent with information contained in the Register until the contrary is evident.
Division 2 Other records and accounts required to be kept by owners corporation
100 What are the duties of an owners corporation to keep other records and documents?
(1) It is the duty of an owners corporation to keep records and documents in accordance with this Division.(2) The information required to be kept may be recorded or stored by mechanical, electronic or other means.
101 Notices and orders to be kept
An owners corporation must cause the following to be recorded:(a) particulars of any notice served on the owners corporation under this or any other Act, any order under this Act served on the owners corporation and any order made by a court or tribunal and served on the owners corporation,(b) the date on which it was served and the manner of service,(c) the part of the parcel to which it relates,(d) the date by which compliance is required,(e) the date on which it is complied with.Maximum penalty: 2 penalty units.
An owners corporation must keep minutes of its meetings that include particulars of motions passed at those meetings.Maximum penalty: 2 penalty units.
An owners corporation must keep the accounting records prescribed by the regulations.Maximum penalty: 2 penalty units.
104 Certain records to be retained for prescribed period
An owners corporation must cause the following to be retained for 5 years or such other period as may be prescribed by the regulations:(a) the records, notices, orders, minutes of meetings and accounting records required to be kept under this Division,(b) its financial statements,(c) copies of correspondence received and sent by the owners corporation,(d) notices of meetings of the owners corporation and its executive committee,(e) proxies delivered to the owners corporation,(f) voting papers relating to motions for resolutions by the owners corporation and to the election of office holders and the executive committee,(g) records served on the owners corporation by the strata managing agent relating to the exercise of functions by the agent,(h) such other documents as may be prescribed by the regulations.Maximum penalty: 5 penalty units.
105 Owners corporation may require certain persons to produce records, accounts and property of the owners corporation
(1) If the executive committee of an owners corporation gives a notice to a person who has possession or control of property (including records) of the owners corporation requiring the person to deliver the property to the executive committee, the person must, within 7 days after receiving the notice, deliver that property to a member of the executive committee specified in the notice.Maximum penalty: 20 penalty units.
(2) If the executive committee of an owners corporation gives a notice to a person who has possession or control of property (including records) of the owners corporation advising of the decision of the owners corporation to terminate the person’s appointment as strata managing agent, the person must, within 7 days after receiving the notice, deliver that property to a member of the executive committee specified in the notice.Maximum penalty: 20 penalty units.
(3) This section does not take away or affect any just claim or lien which a strata managing agent may have against or on any records or other property of an owners corporation.(4) This section does not affect the operation of the Property, Stock and Business Agents Act 2002.Note. The Property, Stock and Business Agents Act 2002 contains requirements relating to the keeping of records under that Act.
Division 3 Preparation and auditing of financial statements
106 Owners corporation must prepare financial statements
(1) An owners corporation must cause to be prepared financial statements for:(a) the period that commences on the date of registration of the strata plan and ends on a date that is not earlier than 2 months before the date of the first annual general meeting, and(b) each period that commences on the date up to which those statements were last prepared under this paragraph and ends on a date that is not earlier than 2 months before the next succeeding annual general meeting.(2) The financial statements are to comprise only the following matters:(a) a statement of income and expenditure for the administrative fund,(b) a statement of income and expenditure for the sinking fund.(3) Each financial statement must specify the fund, and the period, for which it is prepared.(4) If the period is a period referred to in subsection (1), the financial statement for a fund must also specify the following:(a) the balance carried forward in the fund from the previous period,(b) the particulars and amount of each item of income of the fund received during the current period,(c) the particulars and amount of each item of expenditure from the fund during the current period,(d) the amount of the contribution to the fund determined for each person liable to make such a contribution,(e) the balance outstanding for each such contribution,(f) the cash in the fund at the end of the current period,(g) the balance of the fund,(h) in respect of each liability to contribute to the fund—any unpaid arrears and any balance outstanding,(i) the extent to which, at the end of the current period, the fund is in debit or credit.Note. The financial statements of an owners corporation prepared under this section can deal only with income and expenditure from the administrative and sinking funds and are therefore separate from any other financial statements that might be prepared in relation to the strata scheme, for example, financial statements in relation to the provision of services for a retirement village.
107 Auditing of accounts and financial statements
(1) An owners corporation may determine that the accounts and financial statements of the owners corporation are to be audited.(2) However, the owners corporation of a large strata scheme must ensure that the accounts and financial statements of the owners corporation are audited before presentation to the annual general meeting.(3) Any auditing of the accounts and financial statements of an owners corporation under this section must be carried out in accordance with the Australian Auditing Standards, unless the strata scheme concerned comprises not more than 2 lots.
Division 4 Inspection of records and issue of certificates
108 Inspection of records of owners corporation
(1) Who may inspect records?
An owner, mortgagee or covenant chargee of a lot, or a person authorised by the owner, mortgagee or covenant chargee, may request the owners corporation to allow an inspection to be carried out under this section.(2) Form of request
The request must be in writing and be accompanied by the fee prescribed by the regulations.(3) Items to be made available for inspection
The owners corporation must make the following items available for inspection by the person who makes the request or the person’s agent:(a) the strata roll,(b) any records or documents required to be kept under Division 2,(c) the plans, specifications, certificates, diagrams and other documents required to be delivered to the owners corporation at its first annual general meeting by the original owner or lessor,(d) if in its custody or under its control, the certificate of title comprising the common property or, in the case of a leasehold strata scheme, the certificate of title for the lease of the common property,(e) the last financial statements prepared,(f) every current policy of insurance taken out by the owners corporation and the receipt for the premium last paid for each such policy,(g) any other record or document in the custody or under the control of the owners corporation,(h) if the duties of the owners corporation under this subsection have been delegated to a strata managing agent, such other records (including records of the strata managing agent) relating to the strata scheme as may be prescribed by the regulations,(i) if a caretaker agreement is in force or has been entered into but has not yet commenced, a copy of the caretaker agreement.Maximum penalty: 2 penalty units.
(4) Inspection to take place at agreed place and time
The inspection is to take place at such time and place as may be agreed on and, failing agreement, at the parcel at a time and on a date fixed by the owners corporation under subsection (5).(5) Time and place of inspection if agreement not reached
If an applicant and the owners corporation fail to reach an agreement within 3 days after the owners corporation receives the application, the owners corporation must immediately send by post to the applicant a notice fixing a specified time (between 9 am and 8 pm) on a specified date (not later than 10 days after the owners corporation receives the application).(6) Copies of documents may be taken
A person entitled to inspect a document under this section may take extracts from, or make a copy of, the document but must not, without the consent of the owners corporation, remove the document from the custody of the owners corporation.
109 Certificate by owners corporation as to financial and other matters relating to lot
(1) Who may request certificate?
An owner, mortgagee or covenant chargee of a lot or a person authorised by the owner, mortgagee or covenant chargee may request the owners corporation to give a certificate under this section in relation to a particular lot.(2) Form of request
The request must be in writing and accompanied by the fee prescribed by the regulations.(3) Information relating to lot to be included in certificate
The certificate must specify the following information in respect of the relevant lot:(a) the amount of any regular periodic contributions determined by the owners corporation under Part 3, the periods for which those contributions are payable and any discounts applicable for early payment,(b) whether there is any amount unpaid of any other contributions determined under Part 3 and, if so, the amount unpaid and, in the case of a contribution levied in respect of the sinking fund, the date on which any such contribution was levied,(c) whether there is any amount unpaid by an owner under a by-law to which Division 4 of Part 5 of Chapter 2 applies,(d) whether there is any amount unpaid of any contribution levied under section 76 (4) and, if so, the amount unpaid and the date on which it was levied,(e) whether there is any amount recoverable from the owner of that lot for work carried out by the owners corporation,(f) any amount and rate of interest payable in relation to any unpaid contribution referred to in this subsection,(g) whether there is any fine unpaid under this Act that is a charge on the lot,(h) such other information as is required to complete the certificate.(4) Information relating to management of strata scheme to be included in certificate
The certificate must state, as at the date of the certificate, the name and address of each member of the executive committee and of any strata managing agent and caretaker appointed under this Act for the strata scheme.(5) Extra information required in relation to community schemes
If the strata scheme is part of a community scheme, the certificate must also include:(a) the amount of any regular periodic contributions required to be made to the administrative fund, and the sinking fund, of the community association and the respective periods to which they relate, and(b) the amount of any such contribution that has not been paid, and(c) the date on which any regular periodic contribution to the administrative fund, and the sinking fund, of the association was levied, and(d) if the strata scheme is also part of a precinct scheme—the same information in relation to the precinct scheme as is required by paragraphs (a), (b) and (c) in relation to the community scheme.(6) Form of certificate
The certificate must be in the form prescribed by the regulations.(7) When must certificate be given
An owners corporation must give a certificate under this section not later than 14 days after receipt by it of an application for the certificate.Maximum penalty: 2 penalty units.
(8) Certificate is evidence of matters stated in it
A certificate given under this section is conclusive evidence, as at the date of the certificate, of the matters stated in it in favour of a person (whether or not the applicant for the certificate or a person referred to in the certificate) taking for valuable consideration:(a) an estate or interest in a lot in a freehold strata scheme to which the certificate relates, or(b) an estate or interest in a lease of a lot in a leasehold strata scheme to which the certificate relates.
Part 6 Other provisions relating to functions of the owners corporation
Introductory note. This Part sets out miscellaneous matters relating to the carrying out of the functions of an owners corporation.
110 What powers does an owners corporation have to borrow money and otherwise deal with property?
(1) An owners corporation may borrow money and secure the repayment of the money and of any interest in such manner as may be agreed on by the owners corporation and the lender, otherwise than by charging the repayment on the common property.(2) An owners corporation may dispose of or otherwise deal with any lot vested in the owners corporation as a result of a subdivision effected under section 9 of the Strata Schemes (Freehold Development) Act 1973 or section 11 of the Strata Schemes (Leasehold Development) Act 1986.(3) Section 50 (1) (d) of the Interpretation Act 1987 does not apply to an owners corporation.Note. Section 50 (1) (d) of the Interpretation Act 1987 provides that a statutory corporation may, for the purpose of enabling it to exercise its functions, purchase, exchange, take on lease, hold, dispose of and otherwise deal with property.
111 Can an owners corporation provide amenities and services to a lot?
An owners corporation may enter into an agreement with an owner or occupier of a lot for the provision of amenities or services by it to the lot or to the owner or occupier of the lot.
112 Agreement for payment to owner of consideration on transfer or lease of common property
An owners corporation may, in accordance with a special resolution, make an agreement with an owner for the payment to the owner of:(a) the whole or any part of the consideration under any transaction proposed to be entered into by the owners corporation under Division 2 of Part 2 of the Strata Schemes (Freehold Development) Act 1973 or of the Strata Schemes (Leasehold Development) Act 1986, or(b) any money payable to the owners corporation under a by-law to which Division 4 of Part 5 of Chapter 2 applies.
113 Restrictions on powers of owners corporation during initial period
(1) An owners corporation must not, during the initial period, do any of the following things unless the owners corporation is authorised to do so by an order of the Tribunal under section 182:(a) alter any common property or erect any structure on the common property otherwise than in accordance with a strata development contract,(b) incur a debt for an amount that exceeds the amount then available for repayment of the debt from its administrative fund or its sinking fund,(c) appoint a strata managing agent or a caretaker or other person to assist it in the management or control of use of the common property, or the maintenance or repair of the common property, for a period extending beyond the holding of the first annual general meeting of the owners corporation,(d) borrow money or give securities.(2) An owners corporation may recover from the original owner:(a) as a debt, any amount for which the owners corporation is liable because of a contravention of subsection (1) (b), together with the expenses of the owners corporation incurred in recovering that amount, and(b) as damages for breach of statutory duty, any loss suffered by the owners corporation as a result of any other contravention of subsection (1).(3) An owner may recover, as damages for breach of statutory duty, any loss that has been suffered by the owner as a result of a contravention of subsection (1) (other than paragraph (b)).(4) It is a defence to an action under this section in debt or for damages if it is proved that the original owner:(a) did not know of the contravention on which the action is based, or(b) was not in a position to influence the conduct of the owners corporation in relation to the contravention, or(c) used due diligence to prevent the contravention.(5) A remedy available under this section does not affect any other remedy.Note. Section 50 places restrictions on the making, amendment and repeal of by-laws during the initial period.
114 Owners corporation to construct and maintain letterbox
(1) An owners corporation must construct and maintain at or near the street alignment of the parcel a letterbox suitable to receive mail and other documents.(2) The name of the owners corporation is to be clearly shown on the letterbox.
115 What effect does a strata development contract have on the functions of an owners corporation?
The exercise by an owners corporation of functions under this Act is subject to the provisions of any strata development contract affecting common property for the strata scheme concerned and to the operation of this Act in relation to the strata development contract.
115A Owners corporation to give information on contributions payable
An owners corporation of a strata scheme for a retirement village (within the meaning of the Retirement Villages Act 1999) must, if requested by the operator of the retirement village, give a statement in writing specifying the amount of current contributions levied on a particular lot in the strata scheme.