The owners corporation must record all details of notices given under the Strata Schemes Management Act or any other Act. Orders under these Acts, or by a public authority, local council or a court, must also be recorded and kept for at least five years.
The following must be recorded for each notice:
The owners corporation must keep the following information for at least five years:
Proxies given to the owners corporation must be kept for at least 5 years after the proxy expires.
The owners corporation must keep accounting records and financial statements for at least five years. These include:
The owners corporation must prepare financial statements:
The owners corporation must prepare and keep a strata roll. The roll must be kept by mechanical, electronic or other means. There must be recorded for each lot:
The following information must be recorded for the common property and the strata scheme in general:
Forms for the records of owners corporations can be purchased from some law stationers.
A large scheme is one with more than 100 lots. Parking and utility lots are not counted in the calculation. Some special provisions apply to large schemes:
The owners corporation must insure the building under a damage policy with an approved insurer. This does not apply to an owners corporation for a strata scheme comprising two lots if the owners corporation decides by unanimous resolution, and the buildings in one lot are physically detached from the buildings in the other lot, and no other building in the scheme is on common property.
Approved insurers are those authorised by the Australian Prudential Regulation Authority for general insurance.
A damage policy must cover the building for:
The building includes owners’ fixtures and fittings. Fixtures and fittings are items like carpets in common areas, hot water systems, light fittings, toilet bowls, sinks, shower screens, cupboards, internal doors, stoves, common air conditioning systems and intercom systems.
The building must be valued every five years and insured for at least that value.
The owners corporation must insure, with an approved insurer, against damage to property, death or injury for which the owners corporation could become responsible. The minimum amount of cover is $10 million.
The owners corporation must have workers compensation insurance, with an approved insurer, where it is required under the Workers Compensation Act 1987.
The owners corporation must insure, with an approved insurer, against any damage that it may become liable for when a person does voluntary work for the owners corporation in the building or on the common property.
A voluntary worker is any person who does work without any fee or reward, or without expecting any fee or reward.
The owners corporation must levy (charge) owners in the strata scheme to raise enough funds to carry out its duties. All levies must be worked out in proportion to the unit entitlements of each lot.
The administrative fund is for day-to-day recurrent expenses. The amount in it must be enough for the owners corporation to pay its expenses:
The sinking fund is to cover future capital needs. The amount in the fund must be enough to cover all the owners corporation’s expenses:
All schemes are required to have a ten year sinking fund plan for the life of the scheme. The plan has to be reviewed at least every five years.
Refer to the Sinking funds page on the Fair Trading website for more information.
The owners corporation can transfer money from one fund to the other, or make a payment from one fund that should have been paid from the other. But the owners corporation must make a levy to repay that fund within three months after the transfer of monies.
Levies must be set at each AGM. When a levy is to be set, a budget must be given, showing the existing financial situation and an estimate of receipts and payments. The budget can be given out with the notice of the meeting or at the meeting before voting on the levy motion.
The motion to set the levies must show the amount for each fund and be approved by a majority vote.
The owners corporation may decide to allow payments by instalments.
After the levies are set, the Treasurer must write to the owners and tell them the amount to pay and the date to pay. This notice only has to be given once.
If the owners corporation has to pay a debt that was not budgeted for in the administrative or sinking fund estimates, a levy must be set at a general meeting and the amount collected paid to the administrative fund.
An unpaid levy gains interest at the rate of 10% simple interest a year if not paid within one month after it is due. The owners corporation cannot increase or decrease the interest but it can make a special resolution to charge no interest. Unpaid levies, including interest, can be recovered by the owners corporation as a debt in court.
An owners corporation may make a special resolution to give a 10% discount where a levy is paid before the day it is due. Payment made on the day it is due does not attract the discount.
Should an owners corporation wish to commence legal action of any type in its administration of the scheme, (including the obtaining of legal advice), where payment of money is involved, specific steps must be taken.
Firstly, the decision to commence legal action will often have to be approved by a general meeting of the owners corporation (by majority vote).
Secondly, where the estimated costs of legal action have been disclosed under the Legal Profession Act to the owners corporation this must be passed on to all lot owners and executive committee members within seven days of this information being given to the owners corporation.
When an owners corporation undertakes residential building work and a contractual dispute with the builder or tradesperson arises, the owners corporation can take the matter to the Consumer, Trader and Tenancy Tribunal. This can happen even if the builder or tradesperson invokes the Building and Construction Industry Security of Payment Act 1999 to claim any money they are owed under the contract.
Legal advice, services or action that concern the recovery of unpaid levies is exempt from the requirement for approval.
Owners corporations also have the following powers and obligations:
Strata scheme lot owners may be liable for land tax. For more information, visit www.osr.nsw.gov.au.
If owners of two-lot strata schemes choose to have the scheme's accounts audited, the audit is not necessarily required to meet the Australian Auditing Standard.
The owners corporation is responsible for ensuring that access to all parts of the scheme is provided for necessary fire safety inspections.
From February 2007, the NSW Pesticides Regulation requires that residents of multiple occupancy dwellings must be notified when licensed pest controllers apply pesticides to the internal or external common areas of their residence.
The rules apply to residential strata, community and company title schemes consisting of three or more dwellings, retirement villages, and caravan parks with long term residents.
The person responsible for organising the pest treatment must make sure that residents are given at least five working days notice. Notice of the treatment can be given in person, by fax, by email or telephone, by post, in letterboxes, under doors or by placing it on common notice boards and near the main building entrance.
Full details, fact sheets and blank notice forms are available from the NSW Office of Environment and Heritage on 13 15 55 or at www.environment.nsw.gov.au.
If a strata scheme has a swimming pool on the premises it is the responsibility of the owners corporation to ensure that the pool is fenced and meets pool fencing requirements. Please visit the Pool fencing requirements page on the Fair Trading website for further information.
Additionally, in 2012 a number of amendments were made to the Swimming Pools Act 1992 to improve the safety of children around swimming pools in NSW. These changes provide that from 29 April 2013, pool owners register their swimming pool with the Division of Local Government. Registration must be done by 29 October 2013. From 29 April 2014, all multi occupancy developments will require a valid compliance certificate.
Owners corporations must ensure that their property complies with these new requirements. No action needs to be taken by individual lot owners, unless they have a pool or spa within their lot that is required to be registered. Registration of each pool only has to be done once. If required, a strata managing agent can organise this on behalf of the scheme. Please visit the Swimming pools page on the Fair Trading website for further information on the changes.
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