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Strata and community scheme villages 

Some retirement villages are set up as strata or community schemes. They are covered by additional laws and there are some additional rights and obligations. Residents need to understand their rights and obligations under both sets of laws.

Some of the things that residents in a strata or community scheme retirement village need to know are discussed below.

Relevant laws 

The Strata Schemes Management Act 2015 applies to strata scheme retirement villages. The Community Land Management Act 1989 applies to community scheme retirement villages. The rules under these two Acts are similar. They operate side by side with the Retirement Villages Act 1999.

The main differences for strata/community scheme retirement villages are:

  • individual residents own their units and the capital items in them, and are responsible for repairs and maintenance of their own property - this is not covered by recurrent charges
  • residents jointly own the common property in the scheme and each owner is automatically a member of the owners corporation or community association
  • the owners corporation or community association is responsible for repairing and maintaining the common property and must raise levies from the owners to pay for this.

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Levies and recurrent charges 

In a strata or community scheme retirement village, residents who own a unit pay levies to the owners corporation or community association. The levies cover the cost of managing, maintaining and insuring the common property and administering the scheme. Levies are approved by the owners each year at their annual general meeting.

In addition and separate to this, residents may pay recurrent charges to the village operator for general or optional services they provide, as set out in the resident's village contract that they signed with the operator. For example, recurrent charges may cover an emergency call system, advertising, the village bus and auditing of the village accounts. Optional services may include meals, cleaning and laundry.

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Owners' meetings and residents' meetings 

In a strata or community scheme retirement village, an annual general meeting of the owners must be held. At this meeting, owners vote on a range of matters, such as the annual administrative and capital works fund budgets, election of the executive committee, appointment of a managing agent or building manager, changes to by-laws any other matters relating to management of the strata or community scheme.

Separate meetings of village residents can be called to vote on any matter for which their consent is required under the retirement village laws. For example, residents may need to vote on the annual village budget or to establish a residents committee or change the village rules.

Owners' meetings and village meetings can be held on separate days or one after the other, but not at the same time.

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Strata committees and residents committees 

Each scheme must have a strata committee appointed by the owners. There is no need to also elect a residents committee for the village, however residents may do so if they wish. Separate committee elections must be held, as different voting rights apply. The strata committee is elected at the annual general meeting of the owners corporation or community association. The residents committee is elected at a village residents' meeting.

If there are two committees, they can have the same or different members, so long as the person is entitled under the laws to be a member of each committee. Non- residents, such as the operator, cannot be on a residents committee but can be on the strata committee if nominated by an owner.

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Voting rights 

In a strata or community scheme general meeting, there is one vote for each lot. Non-residents may vote if they own a lot or are nominated by an owner, or if they hold a proxy for an owner. In certain cases a vote's value is based on the lot's unit entitlement.

In a retirement village residents' meeting, only residents can vote. Lot owners in the strata or community scheme who are not village residents, such as the operator, cannot vote at a residents' meeting. Voting is based on one resident, one vote.

Voting at each meeting can only be about matters under the relevant laws. For example, a general meeting of the owners corporation or community association can elect a strata committee but not a residents committee. The owners corporation or community association votes on administrative and capital works  fund, levies, but not on recurrent charges increases or village budgets.

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Proxies can be given under both sets of laws. However, there are different proxy forms for residents' and owners' meetings.  You must ensure thatyou use the correct form. A proxy given under one Act has no effect at a meeting under the other Act. This means a retirement village proxy cannot be used at the annual general meeting of the owners corporation or community association.

Proxies under the retirement village laws cannot be given to the operator or a close associate of the operator, such as an employee or agent, and no person can hold more than two proxies in any village at any one time.

The total number of proxies that may be held by one person (other than proxies held by the persons as the co-owner of a lot) voting on a resolution under the strata legislation, is one, if the strata scheme has 20 lots or less; and a number no more than 5 per cent of the total number of the lots, if the strata scheme has more than 20 lots.

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The budget processes under the two sets of laws are different. Under the strata and community scheme laws, a notice of the proposed annual levies for the scheme is sent to owners before being voted on at the annual general meeting.

Under the retirement village laws, the operator must give each resident a copy of the village's proposed annual budget at least 60 days before the start of the village's financial year. The budget must detail the proposed recurrent charges income and expenditure. If residents' consent for the budget is required, then the proposed budget must be considered and voted on at a meeting of residents. This cannot be done at the owners corporation or community association annual general meeting.

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Financial accounts 

In a strata or community scheme retirement village, there must be two separate sets of annual accounts - the retirement village accounts and the owners corporation/community association accounts. In strata schemes, owners also receive a Statement of key financial information in relation to the administrative fund, the capital works fund, and any other funds administered by the owners corporation.

The retirement village accounts generally have to be audited (except in certain small villages). Auditing is optional for the owners corporation/community association accounts (except in the case of a strata scheme of more than 100 lots).

There should be no duplication between the two sets of accounts. For instance, the village accounts cannot contain details of income from owners' levies. The strata or community scheme accounts cannot include income from recurrent charges or expenditure on services funded by them.

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By-laws and village rules 

Retirement villages usually have village rules that deal with matters like noise and pets. In a strata or community scheme, such matters are dealt with under by-laws. To avoid confusion, the sections of the Retirement Villages Act about village rules do not apply to any part of a village that forms part of the strata scheme.

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Managing the strata or community scheme 

In a strata or community scheme, the owners corporation/community association is responsible for administering the scheme and maintaining the common property. An owners corporation/community association may delegate some or all of its functions to a strata managing agent and may also employ a separate caretaker or building manager.

A strata retirement village will also have a village operator. The managing agent and operator may or may not be the same person. Some owners corporations/ community associations prefer to appoint a separate person as their managing agent to avoid potential conflicts of interest.

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Resolving disputes 

If a dispute is about the retirement village laws, an application may be made directly to the NSW Civil and Administrative Tribunal.

In most cases where the dispute relates to the strata and community scheme, an application for mediation by NSW Fair Trading must be made before the matter may be taken to the Tribunal.

The Tribunal has separate application forms depending on whether the dispute is about the retirement village or strata/community scheme laws. The Tribunal is able to refer cases to the right system if an application is inadvertently made under the wrong Act or using the wrong form.

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Leaving a strata or community scheme village 

A resident who owns a unit in a strata or community scheme village will need to make arrangements to sell it when they leave the village. The resident is entitled to set the sale price and appoint a real estate agent of their choice. This can be the operator if they hold a real estate agent's licence. The person who buys the unit will need to sign a sale of land contract with the outgoing resident as well as a village contract with the operator.

Depending on the terms of the outgoing resident's contract, the operator may be entitled to a share of the capital gains on the sale of the unit and/or a departure fee. In some villages, the payment of departure fees is set out in a separate deed that the resident signed when they moved in to the village.

For more information, see the Leaving a village section of the NSW Fair Trading website.

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