Strata and community scheme villages

Some retirement villages are set up as strata or community schemes. They are covered by additional laws, rights and obligations. Residents should understand their rights and obligations under both sets of laws. Below are some of the things that residents in a strata or community scheme retirement village should know.

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 and 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.

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. Levies are approved by the owners each year at the annual general meeting.

Residents can also pay recurrent charges to the village operator for general or optional services they provide. 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.

Owners' meetings and residents' meetings

In a strata or community scheme retirement village, there must be an annual general meeting. At this meeting, owners vote on 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 for village residents should be held when a vote is needed that requires their consent.Owners' meetings and village meetings can be held on separate days or one after the other, but not at the same time.

Voting rights

In a strata or community scheme general meeting, there is one vote for each lot. Non-residents can 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.

Proxies

Proxies can be given under both sets of laws. There are different proxy forms for residents' and owners' meetings. 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 is one, if the strata scheme has 20 lots or less; and a number no more than 5 percent of the total number of the lots, if the strata scheme has more than 20 lots.

Budgets

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 need to approve the budget, then it should be voted on at a meeting. This cannot be done at the owners corporation or community association annual general meeting.

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. 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 and the strata or community scheme accounts cannot include income from recurrent charges or expenditure on services funded by them.

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, these 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.

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 can 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.

Resolving disputes

If you have a problem with the retirement village laws, you can apply directly to the NSW Civil and Administrative Tribunal to hear your case. In most cases where the dispute relates to the strata and community scheme, mediation with NSW Fair Trading needs to be completed before it can be taken to the Tribunal.

Leaving a strata or community scheme village

A resident who owns a unit in a strata or community scheme village needs to make arrangements to sell it when they leave the village. The resident can 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.

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